Eager to keep a close eye on the progress of your business, but struggling to identify which marketing metrics matter?
Let’s imagine you’re a Sheffield-based business owner.
Perhaps you own a friendly coffee shop in city’s leafy suburbs or you’re an artisan producer with a studio in the centre of Sheffield.
You might be using social media to publish attention-grabbing content as well as utilising more traditional marketing methods – like dropping flyers through the doors of local residents, but how can you accurately judge the effectiveness of your efforts?
Cue, marketing KPIs (Key Performance Indicators).
No matter what kind of company you’re running, how long you’ve been in business, or what your target market looks like, it pays to pay attention to your marketing KPIs.
After all, how can you know how successful your marketing efforts have been if you’re not sure what to measure or what the various KPIs available to you even mean?
To help you understand which marketing KPIs you should be prioritising, the team of digital marketing professionals at Aqueous Digital has put together this handy guide.
Below, we explain why marketing KPIs are important alongside the top 10 indicators you should be paying attention to.
What is KPI in marketing?
From the sales department to the financial aspect of running a company, KPIs can be applied to all areas of a business.
These quantifiable metrics are simply used to help different teams within a company measure how close they are to achieving a specific goal.
In marketing, these key performance indicators play a vital role in helping you to determine which marketing activities have been the most successful for your business.
Common KPIs in marketing include ROI (Return on Investment), CTR (Click-Through Rate), and CAC (Customer Acquisition Cost), to name just a few.
These metrics, along with many others, are important for ensuring your marketing efforts are delivering tangible and cost-effective results, typically in the form of sales or leads.
By paying attention to your marketing KPIs, you’ll benefit from greater business awareness and should therefore be able to make more informed decisions.
This can help to improve your marketing strategies, subsequently supporting the success of your business.
Top 10 most important marketing KPIs
Now we’ve answered the fundamental question of ‘what is KPI in marketing?’, let’s move onto identifying the most important KPIs for your marketing team to measure.
While the KPIs you should prioritise will naturally vary depending on which marketing activities you’re currently using (or plan on using), these top 10 marketing KPIs are worth bearing in mind!
1. Customer Acquisition Cost (CAC)
As the name suggests, this marketing KPI measures the cost of getting a customer to buy your product or service. Typically, this number can be calculated by taking into account the salary of your sales and marketing team as well as the cost of your marketing activities, tools, and anything else that helped you to acquire customers over a certain period.
This marketing expenses figure should then be divided by the number of customers acquired over the same period.
Put simply, your CAC = (Cost of sales and marketing) ÷ number of new customers.
2. Return on Investment (ROI)
Your marketing ROI is perhaps one of the most important KPIs because it compares your revenue against your expenditure. As a result, it’s one of the most effective ways to measure the effectiveness of a marketing campaign, even if the campaign has been carried out across multiple channels.
Use this equation to calculate your ROI as a percentage: ROI = (Marketing campaign net profit ÷ marketing campaign total cost) x 100.
3. Organic traffic
Organic traffic refers to the number of visitors that find your website (or Google business listing or social media) from unpaid search engine results. For example, if an online user was to search for a ‘coffee shop in Sheffield’, you’d want your Sheffield-based coffee shop to naturally appear in the results.
Monitoring your organic traffic can therefore help you to determine how successful your SEO (Search Engine Optimisation) efforts have been and where this traffic is coming from. Keyword-optimised content, higher domain authority, and quality backlinks can all help you to boost your organic traffic.
4. Marketing Qualified Leads (MQLs)
An MQL is simply a type of lead that the marketing department has highlighted as showing an interest in your products or services. For example, an MQL may have put items from your website into their basket, but not made the final step in purchasing them.
Following up this interaction with a discount or some other kind of incentive can encourage them to make that step and convert, so knowing who they are and how these leads have been generated is essential.
5. Sales Qualified Leads (SQLs)
Working in the same way as an MQL, an SQL is just a lead that has been identified by the sales team as more likely to buy your service or product. They may have called to request a quote following the receipt of a flyer or sent in a product enquiry after a networking event.
Having an understanding of where sales are getting these leads from can help marketing to create more targeted and effective marketing strategies.
6. Social media metrics
Nearly all businesses have social media accounts. Whether they use it to build their credibility, engage with their audience, or expedite brand awareness, there are several key marketing KPIs that they should be measuring.
This includes the number of impressions, their engagement rate (likes, comments, shares, messages, etc.), follower count, and the amount of traffic that’s directed to the website from social media.
7. Net Promoter Score (NPS)
NPS simply refers to how likely it would be for customers to recommend your product or service to someone else. To obtain this score, you’ll need to conduct market research and ask your customers, on a scale of 0-10 how likely it is that they’d recommend your business to another person.
Those that respond with 0-6 are considered ‘detractors’, while 7-8 respondents are labelled ‘neutral’, and 9-10 respondents are ‘promoters’. You can then calculate your NPS score easily using this simple formula: NPS = % promoters – % detractors.
Using NPS as a KPI is a great way to get an overall picture of the customer experience and their loyalty to your business.
8. Click-Through Rate (CTR)
Your CTR refers to the number of clicks that your online advertisement, email, or page receives divided by the number of times it’s sent or shown (also known as impressions). For example, if you send out an email campaign and half of all recipients it was sent to navigate to your website via a link in the email, you’ll have generated a CTR of 50 per cent for that specific campaign.
Using CTR as KPI allows you to identify the most successful campaigns and tailor your approach towards them, helping to increase your website traffic and conversions.
9. Lifetime Value of a Customer (LTV)
Your LTV is simply the estimated average revenue that a customer will generate your business throughout their entire relationship with you, i.e. – how much a customer is ‘worth’ to your company. Marketing teams often calculate and measure LTVs for the purpose of setting a marketing budget as well as tracking profitability and growth.
You can calculate LTV using the following equation: Customer lifetime value = customer value x average customer lifespan. To estimate your customer value, simply multiply the average purchase value by the average number of purchases.
10. Conversion Rate
Similar to your CTR, your conversion rate (expressed as a percentage) measures the number of customers that have completed a desired action after engaging with your marketing activities. For example, you may create an advertisement encouraging your target market to sign up to your newsletter or request a free consultation.
If they see this advertisement and complete the desired action, they’ll be considered ‘conversions’. To calculate your conversion rate, use the following formula: Conversion rate = (number of conversions ÷ number of users who engaged with your marketing activities) x 100.
Contact Aqueous Digital today
Do you require professional help with understanding or improving your marketing KPIs? You’ve come to the right place!
At Aqueous Digital, our award-winning agency can help you with tracking your marketing KPIs and translating them into straightforward, jargon-free language, so you know exactly where your business is succeeding and where it requires further support.
To find out more about our services or to discuss your specific marketing requirements, please feel free to get in touch with the digital marketing experts at Aqueous Digital.
Alongside reaching out using our online contact form, you can also speak to a member of our team by calling us on 0800 285 1424.
Alternatively, why not send your enquiry via email to hello@aqueous-digital.co.uk? No matter how you choose to reach out, we look forward to learning more about your business soon!
