As a marketer more than once you will have come across the term KPI. What does it mean and what can it contribute to your day-to-day marketing?
Let’s start from the beginning.
The acronym KPI stands for Key Performance Indicator.
That is, the KPI is an indicator of the performance of the work you are doing on the objectives you have set and it is the way to know if you are meeting them.
KPIs are metrics but not all metrics can be considered KPIs
In other words, KPIs are the key metrics of your work or project that will help you know if your marketing strategy is helping you achieve your goals.
Metrics measure a specific action, that is, they track a part of the process, such as the interactions of a post. On the other hand, the KPI measures the performance of your entire project, that is, it tells you how close you are to achieving your goals or targets.
So, is it essential to keep track of the KPIs to know how your business is doing? The answer is yes.
Advantages of setting KPIs
Measuring and obtaining results from the actions you take is key to improving.
Why apply the KPIs to your business or project?
- It allows you to keep track the general results of the actions you are taking in your business. Thus, you will be able to know which strategy gives you positive results and which ones are not working.
- It offers exact information of the data and results that you are obtaining in your strategy or actions.
- You can make decisions on the fly whether the results are positive or negative.
- It helps to keep your team constantly motivated to achieve the proposed objectives.
In other words, the KPI is key to achieving the objectives in your business.
Now, what does the perfect KPI look like?
Characteristics of KPIs
When you apply a KPI to the actions you are taking, the indicators must meet a series of characteristics to be useful.
They must be SMART: Specific, Measurable, Attainable, Relevant and Time-Bound.
The indicator you work on must be specific to facilitate the monitoring and control.
In other words, it is not the same to set a broad goal such as: “sell more wireless headphones” than a more specific one: “Increase wireless headphones sales by 30%.”
KPIs are data and, therefore, must be measurable for study.
For example, are you taking actions to sell more wireless headphones? You must be able to measure the units of the productto be able to establish the objectives.
When we set indicators, they must be realistic. In other words, they have to be achievable, otherwise you are doomed to failure.
When you establish the KPI you must bear in mind that it actually influences your business or project.
Not all data is key, selecting the important ones will help fix negative actions in time.
It is necessary to set a deadline to achieve the objectives and thus, adapt the actions to be taken to the established period. For example: Increase sales of wireless headphones by 30% in the fourth quarter of 2020.
As you can see, KPIs meet several characteristics so that you can optimally measure the result of your actions.
If you still have some doubts, below you can find some examples of KPIs.
It is important that you know that these indicators are adapted to any type of company or business. For this reason, the example that we show you now is related to the subject matter: Marketing.
➡️ Return on Investment (ROI)
ROI is a great indicator of how your strategy has worked, as it takes into account the income you have generated with your campaign in relation to the expenses incurred to carry it out
➡️ Traffic Sources
These allow you to know the origin of the traffic that reaches your website: it can be direct (if they write the website directly), organic, through Google, or through social networks.
In Metricool you can identify the traffic source where your visits come from. A useful piece of information to know where to focus your strategy: sharing content on social, improving SEO, etc.
➡️ Cost per Lead
Obtaining new leads is a great success in marketing, since it allows you to collect valuable data about users. It is also a great indicator of how the campaign you created to achieve those leads has worked.
The appropriate cost per Lead will depend on the type of business, the cost incurred to get leads to sell luxury cars is not the same as to sell wireless headphones.
➡️ Increase of sales
A simple KPI indicator to know the evolution of your sales. At the sales level it is useful, it compares the sales of one month to another, or during a year if you have established it this way.
However, it is a bit abstract in general since it does not take into account other expenses such as production, promotion, etc.
➡️ Email Marketing Engagement
How have your email marketing campaigns worked? In this case, the KPI indicator will show you the success of your strategy.
When launching your campaign, depending on the platform from where you do it, you can obtain interesting data such as opening and click rate. This will tell you if you need to change the subject or content to attract more users.
➡️ Community Growth
Measuring the growth of your followers in the different social networks in which you have a presence will tell you if you are meeting your goals.
How to keep track of it? In Metricool you can see the growth of your community and see how it has evolved in different time frames.
Now you know what a KPI is and how useful it is for your strategy and planning. Put it into practice to know the results and make the right decisions to improve them.
To keep up with the technicalities of online marketing: Click on our Marketing Dictionary.