Measuring the success of digital marketing activity is a critical part of growing a business. Effective online advertising, customer support through optimized business phone systems, and seamless in-app experience all work together to drive sales. These days most businesses have a wealth of data to mine for gauging performance. Insight-driven organizations see high annual growth rates, and data-driven businesses are more likely to acquire customers.
This abundance of data can also be a minefield. How can we target vital information without getting bogged down in statistics? This is where defining the Key Performance Indicators (KPIs) comes in. Defining and focusing on the right KPIs helps a business to track the right data to optimize its digital marketing strategy.
A KPI is a quantifiable measure that evaluates performance over a key business procedure or goal. For every business with unique goals and strategies, there are some universal metrics that can be easily calculated to provide insight into revenue, costs, and return on investment.
For many small businesses, tracking KPIs is a tedious, often manual process. By utilizing the best business management software on the market, small businesses can be more confident in the visibility they're getting into their business.
The KPIs relevant to digital marketing revolves around sales growth, lead generation, brand awareness, and search engine optimization. You need to evaluate marketing strategies to check what works for your brand and what the areas of improvement are.
We have identified 10 KPIs that are critical to the performance of any digital marketing plan.
This metric tells you if your marketing strategy is making a positive contribution to the company’s profits. The basic formula for this is:
Marketing Return on Investments = (Revenue from Sales-Marketing Costs) / Marketing Costs
Apply this to different revenue streams and marketing plans to check their returns.
This is a key metric to evaluate the expenses and investment going into marketing and creating the right budget for future marketing projects. You can focus the largest share of investment on the marketing pathways that generate the highest revenue after expenses.
Measuring the cost of acquiring a customer helps a business understand the success of specific programs and the marketing effort as a whole. Defining the marketing costs for manpower, investment in technology, and overhead costs, the customer acquisition cost can be calculated as:
Customer Acquisition Cost = (Marketing expenses + Sales Expenses) / Number of New Customer
Customize this formula to check the success of individual marketing campaigns, which will help you identify the best-performing channels of customer acquisition and commit more resources in those areas.
There may be any number of people who visit a company’s digital channels in a given time frame. The proportion of these people who are identified as actual leads, providing a real business opportunity, is known as the lead conversion rate. This is calculated as:
Lead Conversion Rate = (Number of Leads / Number of Visitors) x 100
Although this figure is hard to generalize, across industries a Lead Conversion Rate above 10% is an indicator of a very effective strategy.
It is also important to measure the cost of acquiring new leads to identify the strategies that are working the best. Similar to the previous metric, for any campaign, this is calculated as:
Cost per Lead = Cost of creating each lead / Total number of Leads Acquired
Mobile apps and websites have to be optimized for smartphones to ensure an organization’s success, as 80% of people shop from their smartphones.
The total traffic to these channels shows how attractive the site is for users. The lead and customer conversion numbers are also important to show the success of website and app content. Using cloud-based contact centers provides seamless digital support to online customers and generates more repeat business.
Every organization knows the importance of social media to a successful digital marketing strategy. On average, a social media user jumps between seven different networks each month. This is an excellent space to create visibility, generate interest in a product or service, and ultimately increase the customer base. Therefore, it is important to track the success of social media campaigns to measure their effectiveness.
An effective digital marketing strategy is one that works across a few different social media channels. For each of these channels, we need to measure the total traffic, the number of leads generated, and the number of customers converted. Tools like all-in-one marketing platforms can help you manage an omnichannel approach.
There are multiple channels, such as TikTok, Instagram, Twitter, and Facebook. Each of these is dominated by different demographic groups. Understanding which platform generates the most customer engagement and revenue helps streamline social media strategy to give optimum results.
Image sourced from wordstream.com
This is simply the number of people who click through to the content linked in a marketing email divided by the number of people who actually received the emails. This is a good way to track the effectiveness of email marketing materials, whether you send emails yourself or use Klaviyo or one of these Klaviyo Alternatives.
This is the revenue that individual customers generate for the organization and the projected revenues they are expected to generate in the future. This is calculated for a given time frame, say a year. Marketing campaigns geared towards the interests of high-value customers are more successful. This metric also identifies the high-value generating demographic to focus on with future marketing campaigns.
Well-designed landing pages may attract a lot of traffic. However, if this traffic is not actually generating leads, this may indicate a problem. Calculating the landing page conversion rate, i.e. the proportion of traffic to the landing page that gets converted into leads is, therefore, an important metric.
If the design of the landing page is of a high standard, but few leads are being generated, it may be time to revisit the actual content. The written content should convey important information in a short, attention-grabbing format. A few short sentences should convince the customer of the value of the organization’s product. Any achievements proving high industry standards should be displayed on the landing page to convince visitors of high-quality delivery.
It’s very useful to understand how traffic is directed to your website. This may be organic, through referrals, social media, or a number of other channels. Traffic to a website is organic when it is directed through search engines like Google or Bing.
SEA is the traffic created through paid marketing. This can add an additional cost to the organization versus the organic traffic. However, the value generated from increased sales and revenue will likely make up for it. Keeping track of which avenue generates more traffic and sales is critical to know where to invest.
Using a project status report template, regular tracking of these metrics will streamline planning and execution. Marketing efforts based on clear statistics and trends deliver high returns on investment. The overall goals of increasing the customer base and generating revenue can only be achieved through innovative strategies. Designing strategies based on these KPIs will help you meet those goals.