You won’t know the true state of your business without taking a close look at your key performance indicators (KPIs).
You might be overwhelmed by the number of metrics out there but you don’t have to track them all. You only have to focus on the critical ones—your KPIs.
KPIs are your lifeline. They tell you when you’re striking it rich or if you’re on a slippery slope with your marketing efforts. Simply put, these metrics help you to measure your progress against the targets you set up for your business. Are you close to target or way off mark in relation to your marketing objectives?
Suppose you want to increase your customer loyalty. Then customer retention should be one of your KPIs. Why is that?
Customer retention measures your ability to keep customers over a particular period of time. It offers you insights on whether your customers are satisfied with your service, whether they find value in your product, or whether they truly trust your brand (or in short, whether you can make your customers stay).
So if you’re seeing a rise in your customer retention rates, it means your customers are either connecting with your brand or they’re satisfied with what you’re putting out there. This suggests that you’re close to your goal of improving your customer relationships and increasing customer loyalty.
But if you notice a dip in this metric, then it's a clear sign that there’s something prompting your customers to disengage with your brand—perhaps there’s a disconnect in your messaging, a pain point in your experience, or a defect in your product. This tells you that changes are needed to meet your objectives.
You can see how choosing the right KPI helps you make an accurate assessment of your performance—and even diagnose problems in your campaigns in order to meet your targets.
With that said, it’s imperative that you select the right KPIs—those that show the true state of your marketing initiatives. So here’s a 5-step guide to choosing these critical metrics (Analythical, 2021).
Set the Anchor
Before selecting KPIs to evaluate your performance, you first have to determine what your main objective is at a macro level. This will serve as the backbone for your KPI selection method.
Zoom in on what you want to achieve. Do you want to build brand awareness, improve brand positioning, improve brand perception, increase sales, grow market share? By setting these objectives, you’ll know which marketing aspects you should focus on and which metrics will help measure these areas.
Part of identifying your objectives is narrowing down your scope in terms of location, audience, and timeframe. What specific region will you be targeting? What specific audience segment do you wish to concentrate on? When do you want to achieve your objectives? These are the things you have to answer when determining your marketing objectives.
Call the Turn
The next step is mapping out a clear, definite strategy. How do you plan to achieve your objectives? What marketing activities do you plan to employ to help you achieve your objectives? Are you planning to use search ads? Are you looking to build a new landing page? Do you wish to integrate influencer marketing?
List the specific marketing efforts you think would help you achieve your goal. At the same time, identify the outcomes you expect to get from these efforts. This method will help you align your marketing activities with your main objectives and make sure you won’t go amiss when mapping out a strategy. For example, you expect to get prior customers to repurchase on your site through retargeting search ads.
Set the Stage
After plotting out your steps, determine the channels among your paid, earned and owned channels that you’ll be utilizing. What is the purpose of each channel in the context of your marketing campaign? How will you use each one? Identifying the channels you want to focus on will help you sketch out the details for the next step—choosing metrics.
From websites to social to email, metrics are different for each channel. So start by listing all the channels you will use and the metrics for each. There are different types of metrics: exposure, engagement, perception, experience, acquisition, and conversion. For example, reach and impressions are examples of exposure metrics while shares and comments are examples of engagement metrics. Detailing the categories they belong to will help you track what aspects of your campaigns these metrics are focused on tracking.
Trim, Trim, Trim
When listing the metrics for each channel, you’ll notice that there are a handful. But they can’t all be your KPIs. You have to trim it down. Rate each metric according to its importance to your campaign so it will be easier to narrow your list. If possible, you can also identify the metric source to know where you’ll be getting this metric.
From there, you can finalize your list. While you can monitor numerous metrics, you can only track a handful of KPIs. It’s best to keep your KPIs no less than 20 metrics. Furthermore, when identifying your KPIs, set a benchmark to evaluate your performance against so you’re not just tracking metrics. You’re also evaluating whether they meet certain benchmarks that indicate success or failure.