Marketing is all about the numbers. The key to achieving your organization’s mission is to translate those aspirational goals into hard targets your marketing team can work towards.
You can measure almost anything about your marketing, but you need to focus on the numbers that, when changed, create the greatest improvements. These are called key performance indicators.
In this article, we’ll explain KPIs and what makes a good one, plus we’ll go over some top KPIs your marketing team should pay attention to.
We’ll conclude by demonstrating how to perform various marketing duties in staging-mondaycomblog.kinsta.cloud while keeping an eye on those KPIs.
What are marketing KPIs?
A key performance indicator (KPI) is a critical metric that tells you your progress towards your goals.
So a marketing KPI informs you how well your marketing efforts are performing.
The opposite of a KPI is a vanity metric. These make you look good but aren’t useful for formulating strategy or understanding business performance.
There are dozens, if not hundreds, of marketing metrics you can look at, but with limited time, you want to evaluate the things that have the most impact on your business.
Types of KPIs
There are several types of KPIs.
- Inputs: these measure your resource usage to produce the intended result. Input examples for marketing campaigns could be dollars and hours.
- Processes: these KPIs analyze your business processes’ efficiencies at turning out the output you seek. For example, a process KPI might be how quickly your team can produce a marketing campaign.
- Outputs: outputs show how much work was done. An example would be the number of pieces of advertising collateral you produced for a campaign over a time period.
- Outcomes: outcomes are your outputs’ results. Intermediate Outcomes are outcomes not at the end of the sales funnel, such as brand awareness or website traffic. End Outcomes — such as conversion rate — are at the end.
- Project: these deal with the project itself, such as schedules and risk.
Important KPIs may combine several of these.
For example, return on investment is a marketing metric that combines input, such as money invested, with output, such as sales made.
What makes a good KPI?
Good KPIs meet a few criteria:
Aligned with strategic goals
KPIs must align with the organizational mission and vision. They should be the bridge between high-level strategic goals and the “on-the-ground” efforts.For example, a firm that strives to provide the best customer service should care more about customer retention than acquisition. Higher customer retention implies the firm is accomplishing its mission of providing best-in-class customer service.
Straightforward
KPIs should be easy to track and measure. They should provide helpful information without raising additional confusion or questions from anyone.
Simple KPIs make it easy for people to understand how their work contributes to moving the organization forward.
Actionable
People should be able to easily understand how to use the information the KPI provides.
staging-mondaycomblog.kinsta.cloud makes it simple to view a range of KPIs in our intuitive and colorful dashboards. Which makes agreeing on concrete actions that can be taken to improve against the KPI that much easier.
Relevant
Of course, KPIs should be relevant to what you’d like to measure.
For a digital marketing campaign aimed at spreading brand awareness, KPIs related to customer satisfaction — such as retention — won’t be that important.
On the other hand, measures like blog views or shares would be relevant.
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The top 6 marketing KPIs to stay on top of
There’s a near endless list of metrics you can track, but the majority of them are little more than noise.
Instead, focus on the most important KPIs — such as those below — to save yourself time while moving your organization forward.
1. Sales growth
Sales growth crosses over with sales KPIs, but it’s still vital to marketing.
This KPI measures how much sales have increased over a period. It informs strategic decision-making at the executive level.
Of course, consistent, positive sales growth numbers are generally a good sign.
To calculate sales growth, you first subtract last period’s net sales from this period. Divide the result by the last period’s net sales to get a decimal, then multiply by 100 to arrive at your net sales growth percentage.
Let’s look at an example.
Say you made $100,000 in sales last period. During this period, that number was $120,000.
Subtracting $100,000 from $120,000 gets us $20,000. Divide that by $100,000 to arrive at 0.2. Finally, multiply by 100% to get 20%.
2. Return on investment (ROI)
ROI is one of the most critical KPIs for your marketing activity. It measures how much revenue you generate for each dollar spent on all marketing efforts, from people involved to tools used and so on.
Marketing ROI helps justify spending to executives. If a marketer can demonstrate that investing X in a campaign will bring, say 5X, management will be quick to sign off on your campaign.
This metric is helpful for optimization efforts, too. You can tweak your campaigns to see if you generate more or fewer dollars, helping to refine your marketing strategy as a whole.
To calculate ROI, subtract your marketing investment amount from total revenue, then divide the result by your marketing investment amount. Finally, multiply by 100%.
For example, if a $10,000 marketing campaign brought $30,000 in revenue, you subtract $10,000 from $30,000 to arrive at $20,000. Then, you divide that $20,000 by $10,000 to get 2. Multiply by 100% to arrive at a 200% ROI.
3. Return on ad spend (ROAS)
ROAS is a specific type of ROI dealing with the revenue you generate per dollar spent on ad campaigns. It most often refers to digital ad platforms, like Google or Facebook ads.
Unlike ROI, it excludes non-ad costs and activities — such as those involved in content marketing campaigns.
Thus, it’s suited mostly for determining ad platforms, structures, angles, and copy to use.
Still, the calculation is much the same. Subtract your ad spend from your campaign’s revenue, then divide by your ad spend number.
4. Customer acquisition cost (CAC)
CAC measures the money you spend to gain the average new customer. You can calculate CAC for individual marketing campaigns or across your entire business.
For example, if you spend $100,000 on marketing and gain 50 new customers, the campaign’s CAC is $2,000.
Once you know CAC, you can determine if it’s too high, then brainstorm ways to cut it — such as increasing organic traffic through SEO or encouraging loyal customers to be brand advocates.
You can also determine how many customers you want to acquire over a specific period, then multiply that by CAC to determine an approximate marketing budget.
5. Marketing qualified leads to sales qualified leads ratio
The more leads you have in your sales pipeline, the more opportunities for selling.
There are 2 kinds of leads, however.
- Marketing qualified lead: an MQL is a lead that is more likely than average to become customers based on your research and data but is not sales-team-ready opportunities.
- Sales qualified lead: an SQL is a lead that is worthy of direct engagement with your sales team.
You can calculate MQL to SQL ratio merely by dividing SQL by MQL.
Understanding MQL to SQL ratio helps you develop or refine your lead generation process.
For example, a high ratio demonstrates the marketing team is bringing a ton of leads in, but they aren’t converting or moving through the funnel. That could indicate problems with targeting the wrong customers or inconsistency in marketing messaging.
Keep in mind, however, that good MQL to SQL ratios vary by industry. Some industries may naturally have a large number of either type of lead.
Don’t forget about sales cycle length, either. Longer sales cycles — such as those in B2B marketing situations — can affect how long it takes for an MQL to become an SQL.
6. Customer Lifetime Value
CLTV measures all the revenue one customer generates over their entire time spent with your brand.
Therefore, improving CLTV can drastically boost your revenue and profit. After all, you’re getting more money out of the same customer — lowering your reliance on new customers.
CLTV is calculated by multiplying average sales revenue by average gross margin, then multiplying the result by the average number of times a customer buys.
Say you sell a $1,000 product with a 30% gross margin, and a customer buys from you 10 times over their lifetime on average.
You’d multiply those 3 numbers together to arrive at a $3,000 CLTV.
You probably think that it seems complicated to get an exact CLTV figure based on the above example — and you’d be right in many cases. You’d have to pore over customer purchase data to find an average number of purchases.
If you sell more than one product, it becomes even harder to figure this metric out.
However, an estimate like the one in the example above is good enough to work with. As long as you’re consistent in what data you use to arrive at your CLTV, all you have to do is try and raise it.
Track your KPIs with the staging-mondaycomblog.kinsta.cloud Work OS
Inside staging-mondaycomblog.kinsta.cloud, there are plenty of features and templates marketing teams will find incredibly useful for tracking KPIs and doing work in general.
For example, if you’re running a new marketing campaign, you want to define the campaign’s KPIs while planning.
This Campaign Tracking template is a good place to start.
In this template, you can plan out the marketing campaign, assign tasks to teammates, track task statuses and deadlines, and more.
Once your marketing campaign gets going, this template is designed to let you view certain KPIs — such as spend per marketing channel — right in your dashboard.
Keep your finger on the pulse of your marketing
It’s easy to get distracted by hundreds of metrics that are out of your control or don’t impact your business much.
Ignore those and focus on the most impactful KPIs, such as those listed above. Working relentlessly to improve these KPIs will do much more for your organization.
With staging-mondaycomblog.kinsta.cloud, you can track your KPIs with a host of reporting and analytics features. That’s not to mention the customizability staging-mondaycomblog.kinsta.cloud offers when it comes to monitoring KPIs in your boards. Get started with staging-mondaycomblog.kinsta.cloud today.
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