Defining Your Marketing Metrics
How to Write a Marketing Plan, Part 9
By now, you’ve spent a considerable amount of time researching, planning, and executing your marketing strategy. But how do you know if your efforts have been effective? There is no point in doing the work if, in the end, you have no results to show for it. This article will explain how to set key performance indicators (KPI) that you can use to measure marketing results, at both the macro and micro levels.
What is a KPI?
Investopedia defines a KPI as a quantifiable measure used to evaluate the success of an organization, employee, etc., in meeting objectives for performance. The most important words are “quantifiable measure.” A KPI is a number that measures how close you are to a target. It is not vague or anecdotal. A KPI is hard data that provides clear evidence of progress. But how do you know what measurements to use?
Your KPIs Are Goal-Driven
Think back to the article titled “How to Define Your Marketing Goals.” This is the perfect place to start establishing KPIs. If you’ve followed the advice in that article, you’ve set marketing goals that support your business goals. That could be to grow sales, maintain clients, acquire more funding, a combination of all, or something unique to you. These marketing goals are a step to achieving your overall business goal. Most likely, these marketing goals are broad aspirations which mean a more long-term commitment. You are not expecting to see results right away.
For example, to increase sales, you’ve set a marketing goal to increase brand awareness in your target market. Brand awareness is defined in many different ways. Hopefully, you’ve clearly identified what you are working towards, and if you achieve it, you’ll see an increase in sales. If you have done that, you’ll be able to set brand awareness KPIs both in the short term and the long term.
What Do We Mean By Short Versus Long Term?
Let’s break it down with an example. Say your business goal is to build sales. Your long-term or macro KPI for this goal could be to increase product sales by 10% by the end of the calendar year.
To meet that business goal, you set a marketing goal to raise brand awareness in your target market. The long-term KPI for this marketing goal could be to grow your general social media engagement by 25% by the end of the calendar year.
Your short-term or micro-goals would depend on what marketing campaigns you’ve decided to execute. Each campaign should have at least one KPI that would measure success and contribute to the total measurement of the corresponding long-term or macro goal. So if you’ve launched a Facebook ad campaign that targets non-followers in your market, your short-term KPI could be to increase your overall follower count by 15%.
Here’s the example in graphic form:
Each micro metric should “roll-up” or contribute to the macro metric. If it does not, it is not pertinent to that goal.
Overall Marketing KPIs
Now that you’ve seen a specific example of a marketing goal/KPI roll-up, let’s discuss some other long-term marketing KPIs you may want to consider. Again, these KPIs should measure how you are doing on your general marketing goals. If they don’t, they are not relevant to your business. Remember, KPIs are measurements, so be as specific as possible when setting them.
If your business goal is to grow overall sales and your corresponding marketing goal is to increase your lead list, here are some KPIs to consider:
- Attend five trade shows during the year
- Increase traffic to your website by 25%
- Increase number of qualified leads by 15%
- Add ten viable lead referral sources
If your business goal is to build your repeat customer base and the corresponding marketing goal is to increase customer loyalty, your KPIs might be:
- Increase repeat purchase rate by 15%
- Increase loyalty program members by 25%
- Increase subscription rate by 10%
- Increase customer satisfaction ratings by 18%
We’ve already talked a little about the marketing goal to increase brand awareness. If your corresponding business goal is to break into a new market, here are some possible KPIs:
- Increase paid search traffic to your website by 25%
- Increase social media followers by 10%
- Increase Share of Voice to 40%
- Earn ten stories in targeted media sources
Please note that these KPI figures are arbitrary. You should decide what is reasonable for your business when setting your targets.
KPIs for Marketing Tactics
As you plan your marketing campaigns, it is essential to set KPIs for how each campaign performs in each marketing channel or platform. These are your short-term goals. A campaign is a time-bound project or tactic to promote your business, such as a Facebook ad campaign or a press release. Of course, you would like every campaign to be successful. Remember, your campaigns should focus on achieving these goals. How do you measure the effectiveness of a campaign? Here are a few examples.
Return on Investment (ROI)
Return on investment is probably the most used tactical measurement. If your business goals are bottom-line driven, meaning profit is the goal; this is the metric to use. And it’s pretty simple:
So, if you spend $1,000 on digital advertising (your investment) and you can attribute $5,000 worth of sales to clicks on those ads, your ROI calculation would be:
ROI is a simple and reliable way to measure the effectiveness of a marketing campaign, provided that you can attribute specific revenue to specific investments.
If you launch a marketing campaign to increase your repeat purchase rate, measuring how many existing customers converted again due to that campaign is a great KPI. If one of your business goals is to build a loyal customer base, measuring your retention rate is a necessary KPI.
For example, say you are planning a conference and your primary source of revenue is ticket sales. You have a marketing goal to maximize ticket sales from attendees who have attended your conference last year. In other words, to increase your retention rate. Your marketing strategy for this goal might be to deploy an email campaign to those customers highlighting the benefits of attending the conference again. The applicable KPI would be the percentage of past customers who attend the upcoming conference.
Each marketing campaign should measure conversion rates. This KPI is the percentage of those exposed to the campaign who become paying customers. This measurement should be performed for each marketing channel, and then rolled up to measure the entire campaign. It would then roll up to measure all of your sales marketing efforts at the macro level.
Social Media Engagement
If one of your marketing goals is to build your reach online, social media engagement is an excellent KPI to track. Engagement is more than the number of people who follow you. Engagement is a measure of how many followers are actively engaging with you via your social media marketing campaign. This could mean clicking on a Facebook ad, commenting on an Instagram ad, or sharing a Twitter ad. Most social media platforms will provide this data to you. The more people engage with you online; the more visible your brand will likely be within your target market.
Often, an important measurement is the number of qualified leads generated by a marketing campaign. Examples of this type of campaign could be staffing a table at a trade show, a cold email campaign with a purchased email list, or a retargeting ad campaign resulting in new leads completing the contact form on your website. When setting this KPI, it is crucial to establish what a qualified lead is, versus someone merely showing passing interest in your offerings. Keep in mind that this KPI could not only be appropriate for an individual marketing tactic, it may also roll up to be your KPI for an overall marketing goal.
Other Marketing Tactic KPIs
Here are other KPIs to consider:
- Increasing website or landing page traffic via a digital banner campaign, measured by the click-through rate
- Increasing gated content downloads from your website via an online e-newsletter
- Increasing email subscriptions via a retargeting campaign
- Earning two broadcast stories via a dedicated press campaign
Remember, some of these tactical marketing KPIs may also be an overall marketing goal metric. That’s fine. You want your metrics to integrate in a way that makes the data meaningful to your goals. No matter what your marketing goals are, it’s important to measure the results of every marketing tactic you deploy with consistent metrics. This is not a “one and done” exercise. You should record your KPIs regularly, say, monthly or quarterly. A benefit of measuring KPIs continuously is that you learn which marketing tactics are working and which ones aren’t. You can then iterate and refine your upcoming campaigns to better meet your marketing and business goals.
More Marketing Plan Articles
This article is part of a series to help you create a robust marketing plan:
- Part 1: How to Write a Marketing Plan
- Part 2: How to Define Your Marketing Goals
- Part 3: How to Define Your Target Audience
- Part 4: How to Analyze Your Competitors and Their Marketing Plans
- Part 5: How to Conduct a Marketing Asset Assessment
- Part 6: Creating a Marketing Budget for Your Business
- Part 7: How to Choose the Best Marketing Platforms for Your Business
- Part 8: How to Create a Content Marketing Calendar
- Part 9: Defining Your Marketing Metrics