A key performance indicator (KPI) is a way of measuring the success of an activity in which an organization or department is involved. KPIs are values that can be measured based on desired results.
Without measuring the right KPIs, your marketing team could be spending a lot of time on projects that don't really matter for the overall goals of the department and the company.
As they say , "If you cannot measure it, you cannot improve it".
- Sales Revenue
Track the revenue from each of the marketing campaigns run by your department, understanding customer journeys from the top to the bottom of the funnel.
- Revenue per product: is there a particular product that performs well? If so, should your marketing team spend more time promoting it?
- Revenue by territory/place: is there a certain Place that is willing to buy your product? Should you rework your marketing strategy to align with this sales territory?
- Revenue per customer: how much revenue are existing customers contributing to total turnover? What about new customers?
2. Customer acquisition cost (CAC)
The customer acquisition cost is the total value of how much it costs to convince a lead to become a customer. This marketing KPI is usually also considered a company-wide KPI; if the amount it costs to acquire customers is greater than the amount of revenue coming from those customers, your business model needs reviewing.
- Cost per Lead (CPL)
Determining your cost per lead (or cost per acquisition) can show your team exactly how much you spend on acquiring new customers.
You and your marketing team need to measure each channel and medium, understanding individually which one generates the most leads and what its cost is, optimizing investments and maximizing lead generation.
- Customer lifetime value (CLTV)
Customer lifetime value is a forecast of the total amount of money a customer will spend on your business during that relationship with your brand, product or service. This KPI helps you and your marketing team make decisions about investments in acquiring new customers and retaining existing ones.
- Customer retention rate
Customer retention is crucial for marketing teams, as it indicates how well you are communicating your company's value, product or service. The longer you keep a customer around, the higher the customer lifetime value, allowing you to focus your efforts on acquiring new customers who are better suited to that persona.
6. Lead-to-customer ratio (sales closing ration)
This is a way for you and your marketing team to measure the percentage of leads that have become customers and what products or services they have bought.
- Form conversion rate
Converting website visitors into leads (whether marketing or sales qualified) is usually done with a form. Forms are a way of exchanging relevant information between visitors and your brand. For example: You may realize that an offer isn't as valuable as you thought; your form may contain a lot of fields to fill in that aren't really necessary, in exchange for a small reward.
- Marketing ROI
Companies invest a lot of their money in many different activities. Return on investment, or ROI, is usually a general company KPI that measures your ROI with the equation: (return - investment) ÷ investment.
To make it easier for a company, marketing departments usually track their own ROI, so that it can be combined with the sums of other departments to find the company's total sum.
It's important to define what criteria your company uses, the same term can have different meanings, for example, the term "return" can mean:
- Total revenue generated from a campaign
- Gross profit (revenue - cost of goods sold)
- Net profit (gross profit - expenses)
It's worth pointing out that there is no right or wrong way to measure marketing ROI, the most important thing is to define the criteria adopted and stick to them in all measurements, which can be weekly, fortnightly, monthly, quarterly or annually.
Text originally published in HSM Management*
