Using the right KPIs in determining the success or failure of your digital engagement is critical as a business owner. Marketing dollars are limited, and spending money to read fancy numbers every month does no good if you aren’t moving products or selling services.
Worse yet, for companies who outsource their digital marketing efforts, their consulting firm may justify their expense with a slew of pointless metrics that don’t match the organization’s goals, When this happens, any strategies for moving towards business goals will be built on a flawed foundation.
Understanding which KPIs matter most is critical whether the organization aims to scale up, increase engagement, or edge out competitors.
What Are Key Performance Indicators for Digital Marketing?
Key Performance Indicators (KPIs) are data points that help gauge the effectiveness of certain efforts. They reflect the hard, pure truth of what works, and what doesn’t when it comes to achieving your goals.
Knowing which ones to use can be tricky, especially when working with a digital marketing firm that supplies metrics that don’t actually correlate to an organization’s ability to reach its goals. For this reason, it’s important to know the nuances of KPIs, such as the differences between sales metrics and sales KPIs.
KPIs give business leaders the ability to quickly determine what works and what doesn’t during marketing campaigns. This helps to make course corrections and plan campaigns more effectively.
By focusing exclusively on the right data, companies will save time and stress on pointless numbers and irrelevant analytics. The company is empowered in holding their digital marketing team accountable and can see past any dishonest attempts at justifying expenses with worthless KPIs. After all, many commonly-touted KPIs are completely worthless.
The Major KPIs That Businesses Should Be Tracking
Which KPIs should be used for digital marketing? Making a decision on which KPI to focus on comes down to various factors. Different data will help with different objectives. Therefore, care should be taken in selecting which KPIs will be used to evaluate success and guide adjustments to your plan.
Let us look at the three biggest KPIs that, when combined, give all the info that a company needs to evaluate their digital engagement.
Sales – It’s simple, and yet it gets grossly overcomplicated- how many sales do you get, and how much do you get from those sales? Many digital marketing firms try to beat around the bush when it comes to this question. They throw other numbers at their clients to justify the expense. Sales are what get revenue flowing in, at the end of the day, and nothing else matters that much.
Customer acquisition cost – This KPI tracks all the costs associated with acquiring a new customer. It’s a valuable tool for planning a new marketing campaign and ensuring that the expected payoff will outweigh the cost of getting each customer into that funnel. If a company needs to pay $20 to get a $10 sale, for example, it will be obvious that something is very wrong.
Conversion Rate – This is the one-size-fits-all indicator of how effectively an organization’s traffic is being converted to sales. When used in conjunction with customer acquisition cost, it gives a bulletproof way to ensure that the sales channel in question is profitable and effective. If conversion rates fall too low, it is a clear indicator that the marketing is targeting the wrong market segments, the landing page fails to match expectations, or the value proposition is amiss.
KPI Measurement and Tracking Tools
The internet offers a wide range of powerful tools to track any and all KPIs that you need.
Geckoboard: This provides a live KPI tracking dashboard for businesses, and is specially designed for fast-moving teams that struggle to focus on the most important parts of their business. Geckoboard integrates with all of the most popular business software including Google Analytics, Salesforce, and Shopify.
Semrush: This is a popular general-purpose SEO tool that is most noteworthy for its great ability to track performances of competitor websites, in addition to your own. It’s an extremely powerful tool for determining how the traffic and brand authority of your website compares to that of competitors. It’s also going to help you build a plan of attack to dethrone competitors and stay ahead in engagement.
Google’s Many Services: Google provides many surprisingly powerful and useful tools for tracking a wide range of KPIs. Google Analytics is a great free SEO tool, perfect for keeping an eye on web traffic. Google Optimize helps you do A/B testing with your website content, as well as track a range of on-page KPIs like conversion. Google Ads come with their own metrics to help you keep track of the cost and payout of your marketing efforts when advertising with Google. There are plenty more, so feel free to give them a look!
Google Analytics warrants special mention here. The gold standard in analytics, it allows customized goal tracking and utilization of UTM data to enhance insights into core metrics. Just be careful to use this data to supplement understanding of the core KPIs, not to excuse poor numbers.
Tracking and using the right KPIs is critical in order to understand your position in the digital marketplace, and stay profitable.
By understanding these three core indicators (sales, acquisition cost, and conversion rate), decision-makers can arm themselves with the knowledge to prevent shady marketing agencies from using smoke and mirrors to obscure the actual results of their marketing efforts.
In short: it makes it quick and easy to ensure that organizations can see the truth of how they’re performing, and adjust their strategy accordingly.