When I was cooking steak the other day, I had to use a meat thermometer to check and see if the meat was cooked all the way through.
In other words, I had to look for an indicator to see how the cooking process was coming along.
Marketing is fairly similar.
As a marketer, instead of a meat thermometer, you're going to use key performance indicators (KPI) to measure success.
Below, let's learn more about KPIs and review some examples of marketing KPIs that can help you improve your marketing.
Essentially, KPIs are measurable metrics that gauge overall performance over time. A great way to analyze and report on your KPIs is to create custom dashboards in your automation software.
So, now that we understand what a KPI is, let's look at some examples.
For today's purposes, we'll focus on marketing KPIs, but to learn more about sales metrics, check out our ultimate guide.
Customer acquisition cost (CAC) measures the amount of money it takes to convert a potential lead into a customer.
This metric can be used to improve your marketing because it helps you make important budgetary decisions.
For example, you don't want to spend too much money acquiring a customer if it won't result in a profit. Basically, this helps businesses decide how much money to spend on attracting customers.
Another metric that can help determine how much money to spend on marketing is the lifetime value of a customer. This metric indicates the total amount of revenue a business can expect to make from a single customer.
This is a useful metric to compare to CAC. For example, if your CAC is higher than your LTV, then you're probably spending too much money acquiring your customers.
Return on investment in marketing refers to the amount of money you gain compared to the marketing cost.
To calculate this, you'll subtract marketing expenses from sales growth and then divide that by marketing cost to get the return on your investment.
In marketing, keep in mind that it can be hard to directly attribute sales growth to a marketing campaign. If that's the case, you can subtract your average organic sales growth and marketing cost from your sales growth and then divide it by your marketing cost.
Return on ad spend is a more specific KPI that you can use to determine the success of your ad campaigns.
This metric measures the revenue that's generated compared to every dollar you spend on an advertising campaign. It's usually a ratio.
For example, let's say you made $10 for every $1 spent on an advertising campaign. That means your ROAS for that campaign is 10:1.
An MQL is a lead that has engaged with your company and could become a more serious prospect if you nurture that relationship.
This is a great KPI to measure because it helps your marketing team understand how many leads they're bringing in.
Additionally, when compared to sales qualified leads (see below), your marketing team can measure how many MQLs become SQLs and then customers.
If an MQL is nurtured correctly, then eventually they become a sales qualified lead. An SQL is a prospective customer that's ready to talk to someone on your sales team.
Usually, these leads have been researched and vetted by your marketing department.
Again, this KPI is helpful because it can help your marketing team understand how many of their leads are talking to your sales team.
As a marketer, one of your duties might be to manage social media accounts for your company. If you work on the social team, a helpful KPI to track is follower growth.
Most likely one of the goals of your social media team is to increase brand awareness and interact with your audience. Increasing your followers is a great way to measure success for those goals.
To grow your follower base, you might consider running sponsored campaigns. One brand added 36X its typical number of followers each day during the 4 days it ran a set of sponsored posts on Instagram, increasing its follower count by 18.15%.
Conversion rate is the percentage of visitors who complete a desired action. The desired action could be anything from completing an online form to signing up for a service or purchasing a product.
This is a helpful KPI to track because it can let you know how successful you are at attracting leads.
For example, if the desired action was filling out a web form, measuring your conversion rate could let you know that your web page isn't converting many leads. If that's the case, then you could start to rethink your strategy.
As a marketer, attracting people to your company is the main goal. A great way to do that is to attract website visitors.
Website visitors is an important KPI because it could track the success of several campaigns.
For instance, if you're tracking organic web traffic, then you'll be measuring the effectiveness of your SEO team.
On the other hand, if you're tracking web visitors from social media, then you could use web visitors to see how many referrals your social team sends to your site.
Not to reiterate, but a major role in marketing is social media. One of the main KPIs for social media is engagement.
You could track likes, shares, comments, messages, tags, or mentions. Any way that a customer or lead is interacting with you, you can count as engagement.
Measuring engagement can help you analyze the success of your social media posts.
Referral traffic is a KPI that can help you understand where your web visitors are coming from.
This is a great KPI to track because it helps you understand how most people find your company. This could be useful information when building your overall marketing strategy.
Net Promoter Score is a way to measure customer satisfaction. This KPI measures how likely your customers are to recommend your business to a friend.
When you calculate your NPS, you'll most likely leave additional space for comments. This metric can give you direct, actionable feedback and insights from your customers.
As a marketer, it's important to listen to your customers and truly understand them. This KPI will help you do that.
It's important to measure the success of your SEO efforts. To do that, you'll likely track the KPI of organic traffic and keyword performance.
With an SEO tool, you can see how well your company is ranking on search engines for certain keywords.
This KPI will inform your overall organic and SEO strategy.
As a marketer, you'll have KPIs for every campaign you're operating.
If you're running an event, for example, then you'll most likely track event attendance. This KPI will let you know how well your marketing team did at attracting people to your event.
While you might think customer retention isn't a marketing KPI, it actually is important to consider.
Customer retention is a great KPI to track for marketers because you can use the information in your messaging for your marketing campaigns.
Additionally, this metric helps you better understand your customers, so you can market to them better.
Ultimately, KPIs are important because they're how you measure success as a marketer. You'll use KPIs in almost every situation because you're going to need to track success for short and long term campaigns.