Business promotion is associated with major risks and costs. In order for the money invested in promotion to pay off, it is important to objectively evaluate the advertising strategy and promptly identify weak points. For this purpose, there are special indicators known as Key Performance Indicators. Marketing KPIs allow you to evaluate how effectively a business is developing. Let’s find out how to correctly implement and calculate these indicators.
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- 1 What is KPI
- 2 Key Marketing Department Indicators
- 3 How to Set KPIs for a Marketer
- 4 KPIs for a Marketer: An Example of Calculating Indicators
What is KPI
KPI (Key Performance Indicators) are the performance indicators of individual employees, entire departments or specific actions, on the basis of which the company can plan its promotion strategy. With their help, you can simply and objectively evaluate the success of marketing activities.
Key performance indicators (KPIs) are selected based on a company’s goals, whether it’s increasing brand awareness, driving traffic, or maximizing sales conversion. Marketing KPIs are like a compass that will tell you whether your business is on track.
KPI analysis greatly simplifies a number of processes, including:
- Analytics. Using key indicators, you can track the effectiveness of marketing strategies over time and find out whether the investment will pay off.
- Decision Making: KPIs give marketers real-time data on what’s working and what’s not, helping them make informed changes to their strategy.
- Setting goals. Clearly defined KPI requirements help control the work of the marketing department, defining clear and measurable goals for the team.
- Planning. Implementation of key performance indicators allows for the calculation of labor costs for performing work in advance and their accounting.
- Motivation. Based on KPI indicators for marketers, you can build a system of incentives for good results and exceeding the plan.
There are dozens of different KPI metrics that are commonly used in online marketing, such as click-through rate and conversion rate. However, not all of them will be valuable to you. You need to choose the right metrics based on the channels you use, your industry, and your company’s goals.
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Key performance indicators of the marketing department
KPIs can be quantitative (results can be displayed in numbers, for example, sales volume or the number of new subscribers) and qualitative (assessed subjectively, for example, the level of satisfaction or convenience of services).
In addition, the indicators can be:
- Absolute (result in numbers) and relative (determined in fractions or percentages).
- External (assessment of market activity) and internal (efficiency within the company – for example, performance indicators of a marketer).
- Lagging (evaluation of work performed) and leading (forecasting future results).
Marketing KPIs can also be divided into the following categories:
- Financial KPIs. Reflect the financial impact of marketing efforts, such as ROMI (return on marketing investment) and cost per action (CPA).
- Attraction KPIs. They evaluate the effectiveness of attraction strategies and include such indicators as the cost of customer acquisition (CAC), conversion rate (CR) and click-through rate (CTR).
- Retention KPIs include churn rate (CR), customer lifetime value (CLV), engagement rate (ER), and other metrics for assessing customer loyalty.
- Content Marketing KPIs. This group includes website traffic, bounce rate (BR), dwell time, and other metrics.
- KPIs for SMM. These include metrics for measuring the effectiveness of social media marketing, including audience growth rate (AGR), authorization rate (AR), and reach.
When evaluating employees, indicators should be selected in accordance with their job responsibilities. For example, an SMM manager does not need to calculate the KPI metrics of a marketing analyst. The correct productivity criteria depend on the goals that the business pursues.
How to Set KPIs for a Marketer
The choice of performance indicators for the marketing department can significantly affect the results of its activities. First of all, it is necessary to clearly define the current goals of the company. Increase brand awareness, increase sales or strengthen customer loyalty – the most suitable metrics for assessing success are selected for each specific task.
It is very important to set KPIs in accordance with the main business channels. If you are heavily investing in content marketing, metrics related to engagement and lead generation may become a priority for you. If you are interested in the SMM sphere, then KPIs like the number of views of posts or the rate of audience growth in social networks will be more important.
Make sure that the marketing department’s approved metrics can be easily measured and tracked using the analytics platforms and tools at your disposal. If the metrics you choose cannot be adequately monitored, they are unlikely to help you achieve the results you want.
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KPI for a marketer: an example of calculating indicators
Let’s look at the implementation of marketer KPIs using SMM marketing as an example.
Let’s say you want to increase brand awareness by promoting it on social media.
Then, to evaluate the marketer’s KPIs, you can choose the following metrics:
- Coverage.
- Engagement.
- Cost per click.
Define goals and weights for each metric:
- Total reach (number of content views per day) – 0.5.
- Desired Engagement Rate (ER) is 0.2.
- Expected cost per click (CPC) – 0.3.
The weight determines the importance of each indicator and should add up to one.
Having analyzed the past indicators, determine the planned values for the specialist. For example, in 30 days, all of them should increase by at least 10%.
After a month, calculate each indicator using the formula:
Index = (actual value/target value) * weight
Let’s say the coverage has grown to 150 with a planned value of 100 – then the first index will be equal to 0.75. We calculate the indices for other indicators in the same way and sum them up to get the final result.
Need help implementing a KPI system? Digital agency 360 MEDIA will help you quickly select the ideal metrics for your goals. We will teach you how to use key indicators to optimize business processes and evaluate employees. Leave a request on the website to accelerate the growth of your company!