There is no doubt that well-defined KPIs (key performance indicators) are extremely important for any business. Without them, converting ideas into goals, evaluating investments, and defining strategies for further growth and development of the business will simply be impossible.
Determining KPIs for marketing campaigns is a complex and comprehensive process involving many aspects of the business.
Because KPIs are a reflection of the performance of advertising campaigns or the progress of a marketing strategy, they should not be vague or abstract.
KPIs, which the business defines as priority, should be understandable to absolutely anyone involved in the business, whether it is the in-house staff or contractors because they will be used by the business in analyzing the result of the strategy.
Different departments use different KPIs to evaluate the effectiveness of budget/man-hours invested in the business, so it is important to emphasize that in this article we will talk about the KPIs that are used in digital marketing.
In this case, we are referring not only to those KPIs that help track the effectiveness of advertising campaigns, but also those that make it possible to evaluate strategic changes.
The following factors must be considered in this case:
- current stage of the business and, accordingly, the business goals relevant to this stage;
- advertising tools used for promotion (each advertising channel may use a variety of performance indicators, but those that will be the KPIs for that channel must correlate with business objectives);
- performance indicators, namely primary and secondary, determining the vector of business development.
The right KPIs narrow the focus only to meaningful indicators, so the team can quickly see if it’s moving in the right direction.
KPIs are divided into two main types: quantitative (number of sales or revenue generated) and qualitative (level of user engagement, feedback, etc.) The choice, again, depends on the business objectives, the chosen strategy, the stage of business development, and the channels in the marketing mix; for this, you need to consider everything comprehensively, and not get hung up on any one factor. It should also be borne in mind that not all channels involved in the marketing mix will cater to the selected performance indicators, but they can help other channels to do that. Combined, they will help meet business objectives.
We developed a framework in which the choice of KPIs fits into the overall marketing canvas. Our aim is to show that everything is interconnected: the choice of business goals determines the choice of KPIs, the choice of KPIs determines the choice of channels, and vice versa.
Any business owner or marketing employee will be familiar with these KPIs, and CPO, CPA, CPI, and ROI will not be anything new to them. But it is important to understand the relationship between performance indicators and business goals, as well as the fact that, when choosing a particular indicator as a target, you need to think about what advertising channels and tools will be suitable to achieve the desired KPIs, and that it is not necessary to dwell only on those channels that work to realize the leading KPIs.
For example, for ‘Getting and staying profitable’ (which corresponds to the lowest stage of the funnel), we define orders, purchases, CPO, and ROI as leading KPIs, as these indicators can give insight into whether the business is moving in the right direction and whether it remains profitable.
According to these indicators, we can tell that the most effective channels for the implementation of these indicators will be Paid Search and CPA. At the same time, we are well aware that the business cannot operate only at one stage of the funnel as the path of the user is non-linear. So, we must also use the tools of Paid Social, which, depending on the type of business, may bring fewer orders, but have an impact on media indicators, which in turn will lead to an increase in orders, for example, in Paid Search.
We hope that our roadmap will help you take a comprehensive look at the choice of KPIs for your business and will become a handy tool in choosing advertising tools. We will be happy to answer any questions you may have.