Your Guide to KPIs and Why They’re Important for Marketing
Why Your KPIs Are Important for Your Marketing Agency
To track your marketing performance, your marketing agency will track your KPIs. Here’s why they’re important for marketing.
If you’re anything like most business owners, you know all too well how vital sales are to your bottom line.
But are you making use of all the tools at your disposal to ensure that you’re maximizing your profits?
That’s where Key Performance Indicators (or KPIs) come into play in regards to the success of your business.
KPIs are specific measurements that are used to track the progress of certain goals that have been set by an organization.
You may already know about the importance of measuring the most obvious KPIs, such as leads, revenue, and acquisition cost.
But there are quite a few other marketing KPIs that your marketing agency should be tracking for you to make sure that all of your sales campaigns are as effective as possible.
Let’s take a deep dive into KPIs and why they play such an essential role in the work that your marketing agency does for you.
Marketing KPIs Fully Defined
In business development and management, “Key Performance Indicators” tends to be a phrase that is often used but less often understood. All too frequently, they are taken to mean any piece of data that measures performance.
But the truth is that KPIs play a much more important role in your business and what your marketing agency does for your company.
In truth, KPIs may very well be crucial guideposts for every business and how productive and profitable they can become.
Here’s what you need to know about Key Performance Indicators:
- KPIs are an actionable record that keeps your marketing strategy on track
- KPIs allow you to control, manage, and achieve your ideal business goals
Don’t start to worry that you need a ton of metrics to make good use of KPIs! But you do need to pay attention to which ones you choose, track, and take action on.
You want to make sure that your digital marketing agency has a clear picture of what you’re looking to accomplish when you first start the conversation with them about your desired KPIs.
There’s nothing wrong with a simple goal statement like “I want to sell more,” but you might want to get a bit more in-depth to help your business thrive.
Try using goal statements like these:
- Cut sales cycle in half
- Gain 50% more leads
- Get 30% more customers
If you’re clear about where it is you want your business to be in the future, you’ll be able to give your marketing agency the information that it needs to help you form KPIs what will get you there.
Let’s take a look at the top 10 Key Performance Indicators that you should be keeping an eye on for your business.
The Top 10 KPIs to Track
You don’t want to waste time and money on poor marketing activities that aren’t making your business any money, right?
Of course, you don’t! That’s why tracking the right marketing KPIs is so critical to the financial success of your business.
Your marketing agency should be taking a look at these critical Key Performance Indicators to make sure that your company is headed down a profitable path…
1. Revenue from Marketing Campaigns
Your first step in tracking KPIs should be to look into how much money any of the marketing campaigns you’ve taken part in so far has brought into your company.
Getting a real-time idea of your sales revenue is crucial to understanding the effect that your digital marketing efforts have had on your bottom line.
The last thing that you want to do is spend marketing dollars on something that isn’t generating any sales!
If your marketing agency uncovers that a certain campaign isn’t bringing in any profits, they will most likely want to move that money into other, more successful marketing activities.
Want an easy technique for calculating sales revenue from your inbound marketing efforts? Just use this simple formula:
(Total annual sales) – (Total customer revenue from inbound marketing)
2. Lead Acquisition Cost
You also want your marketing agency to keep track of what sales leads are costing you in terms of what it takes to acquire a new customer. This is important in both inbound and outbound marketing campaigns.
In order to calculate your customer acquisition costs, you will need to integrate your CRM platform and marketing automation systems, as well as account for all related costs.
Related costs for inbound marketing include:
- Creative and technical manpower
- Software and relevant technology
- Typical overhead costs for the company
Related costs for outbound marketing include:
- Distribution of advertising materials
- Sales and marketing workforce
- Typical overhead costs for the company
Once you have calculated all of the associated inbound and outbound marketing costs with your marketing agency, you will be able to account directly for new revenue from sales, as well as be able to better budget for marketing campaigns.
This data will help you to improve all of your sales campaign activities and gauge how they have become more effective over time.
3. Average Customer Value
When it comes to inbound marketing, the best way to measure the value of your customers is by reaching out to your current customer base, which will help you to stay in contact with leads, as well as reduce churn and increase customer satisfaction.
Doing this will allow you to expand on the lifetime value of your customers!
How do you calculate the lifetime value of your customer base? Just use this simple formula:
(Average customer sale) x (Average annual sales per customer) x (Average customer retention time)
Another great way to boost the lifetime value of your customer base is to develop some lead nurturing campaigns that make contact with your current customers.
This provides your sales team with the chance to inform your existing customer base about new products, services, or resources.
4. Ratio of Leads to Customers
After putting so much time and effort into your marketing campaigns, it’s critical that you know how many leads your sales team is actually able to close.
Your marketing agency should be helping you to calculate the conversion rate of both qualified and accepted sales leads.
But what’s the difference between qualified leads and accepted leads?
Sales Qualified Leads: These are leads that are considered to be ready for sales based upon their “lead score” or the specific activities they have triggered. Most companies consider a lead who has filled out a “contact sales rep” form to be qualified and ready to buy.
Sales Accepted Leads: These are leads that are considered to simply be future opportunities in the eyes of your sales team, as they have either contacted the prospect directly or have scheduled some form of future contact.
When taking a look at these two types of sales leads, ask yourself:
- Does my campaign capture qualified leads?
- Does my CRM pass those leads to the sales team?
- Does my sales team have a high closing rate?
If you’ve answered “no” to any of these questions, you should meet with your sales team to see if any marketing activities are missing that could improve your lead-to-customer ratio.
Here are five questions to help get the lead conversion conversation started:
- What does our sales process look like?
- What qualities make for a “qualified lead?
- What expectations (high or low) do leads have?
- What are the most common objections you face?
- What do leads have to say about our competitors?
5. Ratio of Traffic to Leads
When it comes to getting the best sales leads possible, understanding your website’s traffic is an integral part of your company’s KPIs.
Are your traffic sources organic, paid, or referred?
If you see a steady increase in your web traffic but your lead count is still low (or worse yet, decreasing) that’s a huge red flag that something is missing in your on-page content.
Your marketing agency should be tracking your traffic-to-lead ratio to make sure that your website design is on-point and working hard to gain you new leads.
6. Sources of Organic Traffic
Your inbound marketing goal is to get the most traffic possible from organic searches.
A high level of organic traffic means that visitors to your site are finding it on their own with search engine inquiries, which minimizes your need to pay to get their attention.
Your marketing agency should know that organic traffic is directly related to your company’s Search Engine Optimization (or SEO) strategy.
And it should be monitoring the traffic sources to your site to make sure that you’re getting the highest number of organic searches possible.
7. Return on Investment of Inbound Marketing
Who doesn’t want to see a return on their investment with their marketing efforts?
Making sure that your marketing agency is calculating your ROI on inbound marketing campaigns is a huge help in boosting your monthly and annual sales performance.
After all, you don’t want to keep increasing the budget for a marketing activity that is actually costing your company money, right?
Want to know your inbound marketing ROI? Use this simple formula to calculate it:
(Sales Performance – Marketing Investment) / Marketing Investment = Inbound Marketing ROI
8. Rate of Landing Page Conversions
So, you’ve got a gorgeous landing page up for your product or service, and it was created with all of the best landing page design practices, but is it converting?
If your landing page isn’t generating leads for your company, it’s useless, no matter how beautiful it is or how much traffic it gets.
You should be monitoring the conversion rate of all of your landing pages and using that data to improve how many leads your landing pages are gaining for you.
Similar to your traffic-to-lead ratio, you’ll know something is wrong with one of your landing pages if it gets a lot of traffic but has a low conversion rate, and your marketing agency should help you come up with a solution for the problem.
You might want to try A/B testing on some of your landing pages to see which one is raking in the highest conversion rate with some of these tactics:
- Change the color of the CTA
- Add more value to your CTA
- Make written content more persuasive
- Add social proof with reviews or share buttons
9. Rate of Social Media Conversions
Many business owners tend to be wary about making use of social media in their inbound marketing efforts, but social media marketing has been shown to be invaluable to a company’s success.
Some of the social media marketing KPIs to look out for include:
- Number of lead conversions from each social network
- Number of customer conversions from each social network
- Percentage of organic traffic generated from each social network
With so many social media platforms like Facebook, Twitter, LinkedIn, and Instagram available to choose from, monitoring the effectiveness of your social media marketing campaigns might seem a bit overwhelming without help.
That’s where your marketing agency should step in and take control of measuring the number of leads, customers, and organic searches that are coming from each and every social network.
This information will help you to determine where you should be focusing your time and effort when it comes to marketing through social media.
10. Rate of Mobile Traffic Conversions
There’s one more area that you should be monitoring for your marketing KPIs, and that’s with mobile website traffic and conversion.
If your site hasn’t been optimized for mobile performance, you’re missing out due to the high number of mobile device users logging onto the web with their smartphones and tablets each day.
Be sure to look into the following mobile traffic conversion data:
- Percentage of mobile visitors
- Number of leads from mobile devices
- Conversion rates on mobile landing pages
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