Measurement is an important aspect of marketing campaigns and other marketing activity. Measurement makes some people very nervous because it brings accountability into marketing activity. In fact, this step can be one of a marketer’s best friends. If you don’t measure the impact of your marketing efforts, you’ll have no idea whether what you are doing is effective or not. On the other hand, if you do measure the impact, it will help you understand what is working, and where and how to improve your efforts. By nature, marketing is a dynamic field because markets change and people change. What works beautifully this year may be a complete flop next year, and vice versa.
Measurement–and the results or “metrics” this process collects–are like a compass that helps marketers adjust course so they can reach their goals more quickly and effectively.
Deciding What to Measure
Measuring just for the sake of having numbers misses the whole point. It’s actually essential to determine the right things to measure first, if you want to get a relevant picture of what’s happening. To do this, marketers typically go through a process of identifying key performance indicators (often called KPIs). A KPI is something measurable that indicates the progress an organization is making toward its business objectives. The KPI is not the same as the actual company goal or objective; instead it is something measurable that helps managers understand how well they are progressing toward the goal.
To understand the importance of KPIs, let’s say you are a track coach who wants to capture data about the sprinters on your team. You could measure all sorts of things about the athletes: their shoe size, how many cups of sweat they produce during a typical workout, how fast their hearts beat during a race, and so on. Would all those measurements be key performance indicators? Maybe not. You might decide that the key performance indicators for sprinters are their best running times and their average running times (or something else).
In a company, KPIs can be determined for many different levels of the organization. These are described below:
- Company-level KPIs indicate the overall company performance on company-wide goals, in terms of total revenue, profitability, customer-satisfaction rating, market share, or percentage of growth in the customer base.
- Department-level KPIs track performance at the department level. For the marketing department, it might be brand awareness, the number of qualified new leads generated, cost per lead generated, or the conversion rate: the percentage of leads who are converted into customers.
- Team-level KPIs track the impact and effectiveness of a team’s activities. A team focused on digital marketing, for example, might track KPIs such as email-marketing click rates, the number of Web-site visits, or SEO sales conversion rate: the percentage of individuals who come to the Web site via a search engine and result in a sale.
- Campaign-level KPIs track the impact of individual campaigns. By tracking similar metrics across multiple campaigns, it is easy to see which ones are most effective with target audiences and then use this information to refine tactics and replicate successful approaches. Campaign-level KPIs are somewhat dependent on the campaign design; for example, campaigns typically track the “open” rate: i.e., how many people open an email message once it is delivered. If a campaign doesn’t use email, the open rate doesn’t exist. However, there are some “common denominator” campaign metrics marketers can track across IMC activities to determine impact and progress. Cost per impression, impressions per campaign, and conversion rate are metrics that can be tracked for virtually any campaign.
- Marketing tactic-level KPIs track the effectiveness of individual marketing tactics and tools. For example, content-marketing KPIs track the effectiveness of individual content pieces used on a Web site and in IMC campaigns. These metrics, such as page views per article and number of social media shares provide insight for marketers about which types of content are most popular with target customers and which content pieces get little interest.
Different companies select different sets of KPIs, depending on what they are trying to accomplish and the strategies they are pursuing to reach their goals. At any given level, it is important to limit the total number of KPIs to those that are most essential and indicative of progress. If too many things are measured, managers have trouble prioritizing and homing in on what is most important. In addition to KPIs–which represent key, strategic indicators of progress–a company may also track a variety of other metrics to inform its operations.
Alignment with Goals and Objectives
Figuring out what to measure starts with considering the organization’s overall goals and objectives, as well as the marketing team’s goals and objectives. The highest-level KPIs should tell managers about how well marketing is doing at meeting its goals as a team, and how the team is contributing to the organization’s overall performance. KPIs may reflect absolute figures, such as total market share. Or they may track progress toward a target, such as progress toward achieving 1,500 new customers over the course of a year. KPIs should provide information to guide managers in their decision making about what is working and where to adjust course.
It is helpful for an organization to define a standard set of KPIs for measuring the effectiveness of marketing campaigns and for the contributions made by different functions within the marketing organization: public relations, advertising, social media marketing, etc. When marketers define S.M.A.R.T. goals at the outset of a campaign, these goals may incorporate KPIs to confirm what the campaign aspires to achieve and how well it does at achieving these goals. KPIs for awareness-building campaigns, for example, should be focused on campaign reach, such as number of impressions or post-campaign brand awareness.
Managers should be attentive to how many KPIs they are tracking to ensure that measurement remains a useful activity rather than a burden that cuts into the productivity and effectiveness of the broader team. Fortunately, as marketing becomes more data rich and technology driven, many KPI-type metrics are calculated automatically by systems that support the marketing function, making them readily available. Tools are also available that create dashboards for marketing managers and team members to help them easily monitor KPIs on an ongoing basis.
Defining the Metric
Every marketing metric or KPI requires some type of measurement, and it should be based on legitimate data. When marketers define a KPI, they should also define what data will be used to calculate the KPI, as well as the source of that data. At times, different people or teams might have different assumptions about how to calculate the metric, so it is wise to clarify this during the definitional stage.
It isn’t uncommon for people to identify KPIs and then discover that they don’t have ready access to the information needed for measurement. This can be a good motivator for defining a process to obtain that information. Or it can be a cue that perhaps a different KPI based on more readily available information would be a better option.
When to Measure
When to measure depends on what is readily available for marketers and managers to track and maintain. If it takes a lot of manual effort to generate a KPI report, or managers are spending hours per day or week compiling and reporting metrics, it could significantly cut into productive work time—and it might be wise to investigate alternatives. Fortunately, CRM and other systems that build KPI dashboard reports into their regular, day-to-day functions are readily available. In these cases, systems automatically calculate KPIs, which makes them easy to monitor over time and adjust course as needed. Typically managers should monitor KPIs at least once per quarter, in order to gauge progress and learn what’s working and how to improve.
Video: Defining KPIs
The following video provides an overview of different types of key performance indicators and the process of defining them.
Examples of Key Performance Indicators
Different types of KPIs focus on measuring progress and effectiveness in different areas related to marketing. In fact, hundreds of possible KPIs exist, so marketing managers should figure out which ones matter most for achieving their goals and focus attention accordingly. The section and table below lists a variety of KPIs that apply to different aspects of marketing communications and the marketing function generally.
MARKETING-RELATED BUSINESS OBJECTIVES SAMPLE KPIS
Sales/Revenue Generation Sample KPIs
- Total sales/revenue
- New/incremental sales revenue
- Profitability
- Average revenue per customer
- New customer acquisition
- Number of customers
- Customer retention
- Number of registrations/sign-ups
Market Share Sample KPIs
- Market share in category
- Relative market share (share relative to largest competitor).
Lead Generation Sample KPIs
- Number of qualified leads
- Cost per lead (by source/platform)
- Traffic source breakdown.
Build Brand Sample KPIs
- Brand awareness
- Brand equity
- Price premium
- Brand valuation
- Share of voice: mentions of your brand/mentions of others
- Brand community membership.
Foster Dialogue Sample KPIs
- Audience engagement
- Share of voice: mentions of your brand/mentions of others
- Conversion reach.
Develop Customer Advocates Sample KPIs
- Active advocates
- Advocate influence
- Advocacy impact
- Online review ratings.
Customer Support Sample KPIs
- Resolution rate
- Resolution time
- Satisfaction score
- Net Promoter Score (NPS).
Innovation Sample KPIs
- Topic Trends
- Sentiment Ratio
- Idea Impact.
| Business Objective | KPI Examples |
|---|---|
| Sales/Revenue Generation | Total sales/revenueNew/incremental sales revenueProfitabilityAverage revenue per customerNew customer acquisitionNumber of customersCustomer retentionNumber of registrations/sign-ups |
| Market Share | Market share in categoryRelative market share (share relative to largest competitor) |
| Lead Generation | Number of qualified leadsCost per lead (by source/platform)Traffic source breakdown |
| Build Brand | Brand awarenessBrand equityPrice premiumBrand valuationShare of voice: mentions of your brand/mentions of othersBrand community membership |
| Foster Dialogue | Audience engagementShare of voice: mentions of your brand/mentions of othersConversion reach |
| Develop Customer Advocates | Active advocatesAdvocate influenceAdvocacy impactOnline review ratings |
| Customer Support | Resolution rateResolution timeSatisfaction scoreNet Promoter Score (NPS) |
| Innovation | Topic TrendsSentiment RatioIdea Impact |
MARKETING COMMUNICATIONS ACTIVITY SAMPLE KPIS
Reach: Campaigns, Owned Media, Earned Media, Social Media, Marketing Content
Sample KPIs
- Impressions
- Potential Reach: Followers, Fans, Subscribers
- Confirmed Reach: Views, Post/Page Views, Video Views
- Hits/visits/views
- Repeat Visits
- Conversion rates (from visitor or buyer)
- Buzz indicators (web mentions)
- Net Promoter Score (NPS)
- Customer acquisition cost
Engagement: Owned Media, Earned Media, Social Media, Marketing Content
Sample KPIs
- Likes/Stars/Hearts
- Comments
- Shares
- Retweets/Reposts
- Positive/negative sentiment
- Impressions
- Cost per click (CPC)
- Cost per impression (CPM)
- Click-thru-rate (CTR)
- Customer Retention Cost
- Profits per customer
- Customer acquisition cost
Paid Media: Advertising Sample KPIs
- Impressions
- Cost per click (CPC)
- Cost per impression (CPM)
- Click-thru-rate (CTR)
- Customer Retention Cost
- Profits per customer
- Customer acquisition cost
SEO/Web Site Sample KPIs
- SEO keyword ranking
- SEO sales conversion rate
- Number of unique visitors
- Total sessions/visits
- Average time on site/page
Email Marketing Sample KPIs
- Open rate
- Click-thru-rate (CTR)
- Bounce rate
- Unsubscribe rate
Public Relations Sample KPIs
- Advertising value equivalency
- Clip/article counting
- Brand mentions
| Marketing Activity/Tool | KPI Examples |
|---|---|
| Reach:Campaigns, Owned Media, Earned Media, Social Media, Marketing Content | ImpressionsPotential Reach: Followers, Fans, SubscribersConfirmed Reach: Views, Post/Page Views, Video ViewsHits/visits/viewsRepeat VisitsConversion rates (from visitor or buyer)Buzz indicators (web mentions)Net Promoter Score (NPS)Customer acquisition cost |
| Engagement:Owned Media, Earned Media, Social Media, Marketing Content | Likes/Stars/HeartsCommentsSharesRetweets/RepostsPositive/negative sentiment |
| Paid Media (advertising) | ImpressionsCost per click (CPC)Cost per impression (CPM)Click-thru-rate (CTR)Customer Retention CostProfits per customerCustomer acquisition cost |
| SEO/Web site | SEO keyword rankingSEO sales conversion rateNumber of unique visitorsTotal sessions/visitsAverage time on site/page |
| Email Marketing | Open rateClick-thru-rate (CTR)Bounce rateUnsubscribe rate |
| Public Relations | Advertising value equivalencyClip/article countingBrand mentions |
