general EN AUD start site leaderboard green

Marketing Key Performance Indicators (KPIs) allow you to measure progress towards your strategic marketing objectives. Focusing on the right metrics and choosing the most suitable marketing KPIs for your business is essential for your marketing strategy to succeed.

All good marketing KPIs are tied directly to business growth. Forget about vanity metrics and tracking everything for the sake of it. It’s counterproductive. Know your metrics, measure them well, apply the “less is more” principle, and you’ll be on the right track.

But you’re here for specific examples. Here are seven marketing KPIs you need to know about:

  1. Sales metrics
  2. User and customer acquisition
  3. Quantity and quality of leads
  4. Customer Lifetime Value (CLV)
  5. Share of Voice (SOV)
  6. Brand awareness metrics
  7. Net Promoter Score (NPS)

Sales metrics directly reflect the growth of your business, making it the most straightforward KPI. But you need to know which financial metrics make the most sense to measure given your business model and planning.

For example, Ahrefs and other SaaS products can safely use Monthly Recurring Revenue (MRR) or Annual Recurring Revenue (ARR) as a KPI. VC-backed companies can even take a “grow at all costs” approach and be successful—even when costs are greater than revenue.

But that’s rarely the case. Most companies are better off taking both revenue and costs into account. In other words, profit usually beats revenue as a KPI.

How to measure it

Sales metrics are easy to measure as you know their exact value. If you didn’t, you’d be in some real trouble with your accountant and local tax bureau. You need to have these numbers in your Customer Relationship Management system (CRM), checkout systems, or whatever financial dashboard you’re using.

For marketing analysis purposes, you might want to use Enhanced Ecommerce tracking in Google Analytics or its alternatives that can attribute sales to your marketing efforts. Just keep in mind that any web analytics tool is inherently skewed and may not track everything properly. Don’t use those numbers for the KPI.

2. User and customer acquisition

Accelerating user base growth doesn’t necessarily mean more profit, but it has implications way beyond any financial metrics.

For example, in September 2020, we launched a free version of our SEO toolset called Ahrefs Webmaster Tools. Increasing our word of mouth, broadening our user base, and familiarizing more people with our product leads to long-term growth.

How to measure it

Use numbers from your CRM. Of course, you need customers to sign up to be able to track any of this.

3. Quantity and quality of leads

If you have a subscription-based business, this might be the right KPI for you. It reflects how effective your marketing communication is at attracting users who are likely to buy something from you. The quantity and quality of your leads is a precursor to a growing customer base and sales growth.

How to measure it

It’s easy to figure out lead quantity as that information should be in your CRM. It’s the lead quality tracking that needs more work and planning. This is where we get into lead scoring. Develop an automated system that scores all your leads based on the data they provide.

Here are some data points you should consider evaluating:

  • Estimated purchasing power of the company
  • User behavior and actions taken in your app or website
  • Trial tier and setup
  • Anything the user said to your customer or sales team
  • Any other data you collect from your user registration process

For this, it’s worth consulting an analytics expert. Some CRM platforms like Hubspot have a lead scoring functionality built-in, but it may not be the best solution for your use case.

4. Customer Lifetime Value (CLV)

Customer lifetime value (CLV) is a metric that estimates how much money an individual customer will spend on your products or services. Increasing your average customer’s worth not only improves your financial metrics but also allows you to spend more on acquiring new customers.

How to measure it

This is the most basic formula to calculate CLV:

Avg. Order Value x Avg. Annual Purchase Frequency x Avg. Customer Lifespan

If your AOV is $100, customers buy the product four times a year, and they stay loyal to your company for three years on average, the CLV would be 100*4*3 = $1,200.

Naturally, you need to have at least a few years of sales history to get the metrics for CLV calculations. But if you already have this, you can also estimate which of those three metrics need improving the most. If you increase any of them, overall CLV goes up.

Share of Voice (SOV) is traditionally a measure of your advertising share compared to competitors. However, with most brands now fighting for visibility on organic channels like social and search, we can broaden that definition to how visible your brand is in the market.

This is an excellent marketing KPI because there’s a strong relationship between SOV and market share. Once your SOV is higher than your market share, you create excess SOV (eSOV). Your market share should follow in the same direction in the long run.

pasted image 0 5

Of course, it’s undeniably tricky to get one comprehensive SOV number encompassing all of your marketing channels. The solution? Pick a metric for each channel that reflects the principle of SOV.

How to measure it

Here are a few marketing channels and their respective metrics that can represent SOV:

Organic search: visibility in SERPs
Paid search: Impression Share
Organic social media: brand mentions relative to your competitors
TV ads: Gross Rating Points (GRP)

So, for example, with organic search, the simplest method is to track your main keywords in Rank Tracker, add your competitors’ domains, and check the visibility metric in the Competitors overview tab.

The visibility metric shows the percentage of all clicks from tracked keywords that land on you and your competitors’ websites.

Recommended reading: What Is Share of Voice? How to Measure It Across Channels

6. Brand awareness metrics

Brand awareness represents your brand’s level of familiarity with your target audience. For example, the brand that first comes to mind when you think of electric cars is probably Tesla, not Rivian. That’s because Tesla enjoys a higher level of brand awareness among consumers.

Here are two things you can measure regarding your brand awareness.

  • Saliency. Does your brand come to people’s minds in your industry? In other words, what percentage of your market knows about you?
  • Positioning. Do people resonate with your positioning? Is your marketing communication creating the right associations around your brand?

How to measure it

Measuring brand awareness requires market research resources because you need answers from a representative sample from your market. Market research agencies specialize in this and are your only option to get comprehensive data.

7. Net Promoter Score (NPS)

Net Promoter Score (NPS) represents customer satisfaction and loyalty based on how likely they are to recommend your product or service to others.

You’ve likely seen one of these:

revolut nps

The score the user selects dictates whether they’re a detractor, passive, or promoter.

marketing kpis

The NPS score is then calculated by subtracting the percentage of detractors from the percentage of promoters. It can range between ‑100 and 100, and anything above zero means that you have more promoters than detractors.

Generally speaking, scores above 70 are considered exceptional, but the threshold can be lower depending on the industry you’re in. Just think about telecommunication companies that we all need but also dislike. They’d be happy to see scores above zero, as you can see from these industry benchmarks.

Overall, NPS is an easy-to-measure metric that reflects your customer loyalty, satisfaction, and brand strength. 

How to measure it

There are many NPS survey distribution channels—physical, online, email, or just a popup window in the browser. 

The calculation is easy, and some pieces of software already do it for you. But keep in mind that it’s still just one number without any context. If you decide to measure NPS, you should also look into the motivation behind users’ score decisions. You can ask follow-up questions as a part of the survey to get this qualitative data.

Final thoughts

You might be wondering why I left out metrics like Return on Investment (ROI) and Customer Acquisition Cost (CAC). The short answer is that although they’re good metrics to track, you need to be careful with them. They lock you in for short-term decision making.

Sure, use these metrics as KPIs for channels where they make sense, like PPC ads. But if we shift to display advertising—something that also tends to be covered by PPC specialists—it doesn’t make sense to look at ROI or CAC.

The long-term effect of getting your brand in front of people with display ads can be bigger than having people actually clicking through. And it makes even less sense to use these metrics to evaluate purely brand-related channels like TV or billboards.

But most importantly, don’t measure any metric just for the sake of it. Make sure to set strategic marketing objectives that use these KPIs.

Got any questions? Ping me on Twitter.



general EN AUD general hosting leaderboard light

Source link