Enter the keyword ‘marketing KPIs’ into Google and you’ll return nearly 15 million results. The thing is, there’s good reason behind that volume. In an age where data defines everything we do and every decision we make, it’s only natural that we’re turning to quantifiable values to inform our next steps in business.
Your marketing KPIs, or Key Performance Indicators, will tell you how effective your marketing activities are against your company goals. In other words, which workstreams are making your business a success, and which ones aren’t. And who wouldn’t want that kind of insight to play with?
If you’re not tracking your marketing KPIs, then you’re not being smart enough. After all, why would you want to waste time, money and energy on activities or processes that aren’t getting you the right ROI?
While this isn’t an exhaustive list of marketing KPIs, we’ve rounded up some essentials…
For any business, it’s crucial to know who’s visiting your website, where these people are coming from and what they do when they get there.
The first thing to consider is the source of traffic. And there are multiple.
- Direct traffic – visitors who have typed your site into the search bar directly, or have bookmarked you from a previous visit
- Organic traffic – visitors who have found your website via a search engine, having entered a particular keyword. Organic traffic is directly linked to your SEO strategy
- Referral traffic – traffic that’s come via links from other sites – this could be from a partner or news site, for instance
- PPC traffic – visitors who have clicked on an advert – i.e. on Google ads or via another website
- Social media traffic – click-throughs to your site via social channels
Once you know where your visitors are coming from, you’ll want to monitor their on-site activity.
Here are some handy measurables…
- Number of visitors – how many people are actually coming to your site?
- Page views per visitor – the higher the better, as this will show you that your content is useful and engaging
- Average time spent on the site and on a particular page on that site – again, you want this to be as long as possible
- Exit pages – which pages are visitors leaving from?
- Conversion rate – the percentage of website visitors who actually purchase something on your site
Track and understand all of the above and you can finetune and reassess where necessary. There’s no point having a beautifully designed website, for example, if it’s not ranking on Google, as no one will be able to find you. And ranking for keywords through good SEO is all well and good, but if your content doesn’t persuade your visitors to buy anything when they get there, then your sales will go down the toilet. Knowledge is power.
Customer Acquisition Cost
Put simply, your Customer Acquisition Cost (CAC) is how much it costs on average to gain a new customer. It refers to the point where you first get an individual’s attention, right through to them making their first purchase. By tracking CAC, you can explore how effective your sales and marketing investments are.
How to calculate CAC
To calculate your Customer Acquisition Cost, you need to add up your sales and marketing costs in any given period – including salary and overhead costs – and divide this number by the number of purchases made by new customers in that period.
So, if you were to invest £12,000 in your sales and marketing activity over a month-long period, and in that period you made 750 sales from new customers, your CAC would be £16.
Once we’ve acquired new customers, we want to hang onto them. This is especially important if your business involves subscriptions or memberships. Your goal is to keep your customer retention rate as high as possible.
How to calculate CRR
Here’s a formula for measuring customer retention rate:
CRR = ((E-N)/S) x 100
For formula-phobes, this might look a little scary, but it’s actually fairly simple when you break it down.
- The customers you have at the start (S)
- The customers acquired during the measuring period (N)
- The customers you have at the end (E)
Let’s say you begin the measuring period with 100 customers (S). You then lose 10 customers, but you gain 30 (N). You’re left with 120 (E). So…
- 120 – 30 = 90
- 90 / 100 = 0.9
- 0.9 x 100 = 90
So your customer retention rate for this period is 90%.
Customer Lifetime Value
Customer LTV is less commonly talked about and it takes a bit of getting used to, but it’s really important to understand. The lifetime value of a customer basically refers to how much a customer is worth to your business, based on their lifelong relationship with your brand.
For example, a 19-year-old girl may book a clubbing holiday with a tour operator’s youth product. At the age of 29, that same female could book her wedding overseas with the same operator, and then return for family holidays once she has children. Upon retirement, she and her husband may then enjoy the company’s cruise lines.
That’s a hypothetical example, but you see how an initial purchasing decision can lead to a lifelong relationship? It’s significant stuff, and you need to know what it means for your business.
How to calculate LTV
To determine a customer’s LTV, you take the LCC (lifetime customer costs) away from LTV (lifetime customer revenue).
So if, for instance, James purchases £3,000 worth of Adidas goods in his lifetime, and in that period, James has cost the business £1,100 in products and services, James’ LTV is £1,900.
It’s 2020, so your social media channels are undoubtedly a big part of your marketing strategy. And if they’re not, then they should be. Not only are social platforms a great place to build brand awareness and connect with your customers directly, they’re actually incredible market research tools. The data you can collect on social media is gold dust, and will help you understand customer motivations, patterns and behaviours.
Now, your social media metrics will vary depending on the type of business you run, not to mention the life-stage and goals of that business. For example, a newly launched brand will likely be focused on growing its social media presence at pace, attracting new followers and increasing reach and engagement.
Here’s a list of the most important social media metrics:
- Followers – your fans, as it were
- Reactions – customer response to your presence and messaging
- Impressions – the number of times content is displayed to the desired target audience
- Reach – the number of people who have actually seen your content (i.e. via shares)
- Click-through rate – the percentage of impressions that resulted in a click
- Social traffic – those coming to your business website via social channels
Your social media analytics will then fall into two buckets – ongoing and campaign-specific.
Ongoing social media metrics
This refers to the monitoring of your social channels over time. Your growth rate, for example – how many followers or subscribers are you gaining on each of your channels month by month or YOY?
It’s crucial to track this against your competitors – tools like Social Blade can help with this. If your competitors are seeing much faster growth than you then something needs adjusting.
Ongoing analytics also refers to brand perception. Based on the comments and conversations on your socials, what does that look like? Is there ambiguity around pricing or products, for example? Or a need for some PR intervention around negative customer feedback?
Just like it says on the tin, these metrics are specific to your campaigns each month. To track these, you’ll need to define the purpose and outcome of each activity. For example, if you’re running a competition, how many entries are you expecting? And how many likes/shares/retweets off the back of this? Decide what you want to achieve and why and then assess performance after each campaign.
When done well, email marketing is one of the best ways to connect and engage with your customer base. It allows you to build, grow and nurture your relationship with your audience, encourage loyalty and, ultimately, increase sales.
Like all others, email marketing KPIs should be monitored closely and activity adjusted or overhauled where necessary. For example, if not enough of your customers are opening your emails, you’ll want to look in depth at your subject lines and why these aren’t working hard enough.
Here are the need-to-know email marketing KPIs…
- Bounce rate – an email that bounces cannot reach the intended recipient. This could be due to an invalid address, or because your business may be considered as spam
- Open rate – the percentage of customers that are actually opening your emails
- Click-throughs – has the reader clicked on an offer or message within the email content?
- Unsubscribes – the rate of those opting to no longer receive email communications from your business
- Conversion rate – the percentage of people who’ve actually acted based on the offer presented to them
There are lots more where they came from, but these marketing KPIs will give you a good starting point. Don’t leave it to chance. Be insatiable when it comes to curiosity and learning. Your customers – and your bottom line – will thank you.
For more on effective marketing strategies, get in touch with the Bubbli team.