If we were to take a poll in small business marketing departments throughout the country, we’d likely discover that very few are effectively and accurately tracking success. Would you count yourself among this cohort? If you aren’t using the right KPIs, then the answer is yes.
Why KPIs Matter
How do you really know if your business is performing well in terms of marketing success? If you’re like many business owners, you probably don’t. Most have very little insight into how different marketing strategies and efforts are doing and whether or not they’re producing positive results.
This is where KPIs – or key performance indicators – come into play. These are very specific calculations that evaluate and measure the performance of a specific activity or action.
“The success of any business depends on management identifying KPI’s and paying careful attention to what they are telling them,” writes Bill Walls, business owner and marketing expert. “They can be measured over a long period of time to see how well an area of business is performing, or short period to determine how a specific campaign has performed,” he continues.
3 KPIs You Need to Track
Different KPIs will tell you different things – so it’s important that you identify the ones that are specific to your needs. With that being said, almost any modern businesses will find the following KPIs useful when tracking digital marketing success and efficiency in 2016.
1. Cost Per Conversion
“Cost per conversion has been dubbed “the only metric that matters” because you can calculate the profit and ‘true’ return on investment when putting cost per conversions in relationship with your actual revenues per conversion,” Kalie Moore of datapine says in this article on Google Analytics KPIs. “These web analytics KPIs make sure you aren’t paying more for a customer than they are worth. A poor ROI or cost per conversion can signify ineffective marketing activities.”
There are two basic formulas for calculating cost per conversion – and they’re both pretty straight forward. The first simply takes cost divided by conversions. The second one is used with PPC advertising and takes your cost per click divided by conversion rate.
2. Organic Traffic Growth
In order to truly understand the health of your business and how your marketing efforts are working in the long term, you need to track organic traffic growth. Every analytics platform will break down your traffic sources – with one category being organic – so all you have to do is monitor this segment. Furthermore, when studying this data, be sure to identify which keywords are being searched. This will give you an idea of how users are finding you.
3. Lead-to-Conversion Rate
Another very important KPI to track is the lead-to-conversion rate. This metric essentially tells you the percentage of your marketing leads that actually turn into paying customers. This gives you an idea of how well you’re doing at moving targets through the conversion funnel. In order to calculate this, you simply take your total number of customers over a period of time and divide this figure by the total number of leads during the same period. You’ll end up with a percentage that will tell you, on average, which fraction of leads are becoming customers.
Make KPIs a Priority in 2016
If KPIs haven’t been a component of your digital marketing efforts in the past, they need to be a major part of your analytical efforts moving forward. You may just find that a few relevant KPIs are what you’ve been missing. Keep the handful referenced in this article in mind and find a way to leverage rich insights to push your business forward.