As you begin to start planning for 2023, you’re likely to be setting company goals and targets. And with this, you may also be thinking about evaluating the success and progress of the goals you set.
Knowing which key performance indicators (KPIs) to measure to best evaluate the performance of your marketing efforts is essential to ensure your marketing campaigns achieve their goals. But with a myriad of data available, it can also be confusing knowing which are best to track.
In this article, you’ll find 7 of the most important digital marketing KPIs that every business should track, and how you can use the results to elevate your business in 2023.
KPIs vs metrics: what’s the difference?
KPIs or key performance indicators act as measurable values that marketers use to track the progress of their marketing campaigns towards defined business objectives or goals.
Metrics are quantitative measurements used to track the performance of specific business processes at both operational and tactical levels. They help provide context to the performance of key business goals, but aren’t critical to its success like KPIs are.
What KPIs should you be tracking?
Whether it be email marketing, social media marketing or B2B marketing, these KPIs are paramount, and should be tracked in order to reach your goals and objectives.
ROI
Marketers need to be revenue-focused – this one isn’t just for your sales team. One of the most important digital marketing KPIs and perhaps the ultimate measure of success is ROI, otherwise known as return on investment.
ROI compares the amount of money spent across your marketing efforts, to the overall sales or profit your business made because of it.
You can calculate it with this formula:
ROI = net income / cost of investment x 100
ROI gives you a holistic view of your campaign as a whole, and knowing which lead sources provide the highest ROI means you can allocate marketing spend towards the most successful channels.
You should re-evaluate your ROI after three months, and repeat as needed.
LEAD GENERATION
To evaluate whether your lead generation tactics are paying off, you should monitor the cost effectiveness of your lead generation channels.
MQLS AND COST PER MQL
A marketing qualified lead, otherwise known as an MQL, is a user or customer who has shown interest in a company’s product or service based on marketing activity. They generally fit your ideal customer profile and have met your lead scoring criteria. They’re a much more accurate predictor of a campaign’s success than counting total visitors, clickthroughs, or other higher funnel metrics. Why? Because they demonstrate if your digital marketing strategy is reaching actual prospects, and the demographics of those prospects help you determine which markets you’re trying to attract.
Working out your cost per MQL can help you plan for similar campaigns in the future.
A general formula for this could be:
Cost per MQL = cost per lead / marketing spend for total number of new leads.
Remember, when calculating your marketing spend, don’t forget to include any ad spend, any third-party expenses (such as tools you use to create or distribute content), and also attach a monetary value to your time too, to get a better understanding of how hard your marketing needs to work to drive new leads.
TRAFFIC
Website traffic measures how many users visit your website. Like ROI and total MQLs, your website traffic year on year is a general indicator of your campaign’s success.
TOOLS
Google Analytics is the best free tool in measuring website traffic and is a good place to start when it comes to measuring your website’s performance. All you need to do is embed your Google Analytics tagging code on your website to begin tracking your users’ activity.
METRICS
- Users: total number of visits to your website at a given period.
- Unique users: an individual visitor coming to your site for a specific period. If a visitor goes to your site 5 times, they will be measured as one unique visitor.
- Page views: number of times a specific webpage has been viewed.
- Page/visit: tells you the average number of pages viewed during a visit.
- Traffic sources: lets you know where traffic is coming from, either Direct (user types in your URL into the browser), Referral (traffic from other sites or social media platforms that link to your site) and Organic (traffic that comes from search engines). This is a good way to track your online strategies and to verify the best social media channels to market your brand. This will also tell you if your SEO efforts (or the lack thereof) are making a difference to your site.
- Engagement rate: engagement rate is a percentage that represents the proportion of engaged sessions out of total sessions.
- Landing pages: this is the visitors’ point of entry to your site. The page with the highest number of entries may be the most relevant to visitors’ search queries.
We would recommend making website analytics a habit to check every week so you can fine-tune your site according to your learnings. With the list above, you can slowly explore other metrics as you go.
61% of marketers say their biggest challenges are generating traffic and leads. If your website traffic seems low, there are a couple of things you might want to ask yourself:
“Does my content fail to pique my reader’s curiosity?”
“Is my user experience or navigation inconsistent from page to page?”
“Am I using keyword targeting effectively so I can attract the right type of customer?”
Performing a full site audit might be your best option, and can give you a comprehensive view of your site’s performance. Don’t have the capabilities to do this?
Get in touch with us today to discover our website services and how we can help you.
ENGAGEMENT RATE
Engagement rate KPIs tell you how well your content resonates with your target market. We can assume that the higher the engagement rate (e.g. the more users who interact with your posts or pages), the more likely you are to gain their trust, loyalty and sales down the road.
‘Engagement’ on social media generally refers to actions that are more active than passive (such as views or impressions). With social media platforms evolving everyday, the actions we refer to as ‘engagement’ will change, but the metrics you should monitor for social media engagement are:
- Number of likes or reactions a post receives
- Number of social shares or mentions
- Number of comments or replies a post receives
Engagement rate can be calculated with this formula:
Social media engagement rate = total engagements / total followers x 100
Previously mentioned engagement rate is a vital metric to measure on your website, and a Key Performance Indicator (KPI) to the percentage of people who are engaged with your content.
As we see the demise of Universal Analytics, Google Analytics 4 replaces bounce rate with engagement rate. An engaged session can be defined (in Google Analytics 4) as a visitor doing one or more of the following:
- Reviewing several pages
- Spending at least 10 seconds on a page
- Triggering a ‘conversion event’ which signals that visitors completed a key business/campaign action.
The engagement rate data is particularly useful when setting up your customer targeting segments to see how people are arriving at your site.
Essentially, Engagement Rate helps you determine the top acquisition channels for your visitors and how this traffic engages with your website. For example, you can easily check if a specific marketing campaign delivers higher quality traffic versus your organic content. With all of this data, you and your marketing team can focus on the best-performing marketing sources.
CLICK THROUGH RATE (CTR)
Clicks are a vital indicator of your campaign’s success. In short, people click on your posts, ads or organic search results if they consider them relevant or valuable.
However, clicks alone don’t provide a holistic picture of your campaign’s performance, and you should always assess the clickthrough rate, otherwise referred to as CTR.
Calculating your CTR is pretty easy, and can be calculated using this formula:
CTR = number of clicks / total number of impressions x 10
CONVERSION RATE
Tracking your conversion rates across your digital marketing channels shows you which channels are performing well and which are not, allowing you to make informed strategic decisions around your overall business strategy.
Your conversion rate is calculated by dividing the total number of users who convert on your website, e.g. filling out a contact form, signing up for a service, or purchasing a product, by the number of total website visitors and multiplying that number by 100 to get a percentage.
The formula looks something like this:
Conversion rate = number of conversions / total visitors x 100
A good conversion rate means your website is well-designed, formatted effectively and is appealing to your target audience. However, a low conversion rate could indicate problems with your site such as website performance or design. Things like broken links, complex copy or lack of imagery could be factors of your poor conversion rate.
The average landing page conversion rate across all industries is 9.7%.
CUSTOMER LIFETIME VALUE (CLV)
Customer lifetime value, otherwise known as CLV, is the total worth of a customer to a business over a certain period of time.
CLV helps businesses develop strategies to acquire new customers and retain existing clientele while maintaining profitability. It’s very important to measure this as it costs less to retain a customer than to acquire a new one. Customer lifetime value is all about forming lasting positive relationships with your customers. By understanding the key drivers for your customers, you can analyse your customers’ spending and shopping patterns, the kind of messaging and creative they connect with, and what encourages them to keep coming back to your business.
Measuring customer lifetime value is easy. You can use the following formula:
CLV = customer revenue per year x duration of the relationship in years - total costs of acquiring or serving the customer
Marketing data supports informed decision-making, so armed with these metrics, you’ll be able to validate everything you do and deliver qualified leads to sales with every campaign.
Need more help? With combined strategy and creativity, our range of services can take your business to the next level, and support your digital marketing to make a memorable impact on your audiences.
Want to know more? Get in touch today.
