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When it comes to Marketing KPIs Choose the Correct Few

by Wayne Morris, CEO, myDIALS Inc.Thursday, November 18, 2010

No matter the industry, the biggest challenge businesses face as it relates to potential metrics and measurements to track is that they have too many.  There are literally thousands of measurements to track if you choose to. That couldn’t be more true than in the realm of online marketing – especially with the explosion of social media marketing opportunities, tracking online marketing results has become a marketer’s biggest headache. However, there are steps you can take to avoid a marketing scavenger hunt and choose the correct efforts that are most important for marketing success.

Our customer advisory boards have provided a successful best practices framework that can provide you with guidance on evaluating online marketing initiatives. But before we begin, we need to take a fresh look at how we define performance metrics for modern marketing.

  • Key performance indicator, KPI outcomes that measure business results and align with business goals and strategies. Within the context of online marketing, the true KPIs will be incremental revenue and profit that can be directly related back to online marketing campaigns.
  • Key performance driver, KPD – primary contributors to outcomes that may or may not be immediate actionable. These drivers behind the KPI outcomes measure the combined effect of multiple performance metrics. For example, when the combination of click through ratio (CTR) + total cost per click (CPC) + bounce rate are related to each other, you can measure keyword effectiveness. A keyword with a high bounce rate and a high cost per click is probably not worth the investment.
  • Performance metric – a single activity, such as a banner ad or paid search, which can be leading indicators to drivers and outcomes.

Don’t get so focused on the trees that you forget the forest; you only need a small number of KPIs, and if dollar signs and profitability aren’t involved, then you’re probably looking at a metric that is not really a KPI. Furthermore, if you’re only looking at the KPIs without the context of the KPDs that contribute to those outcomes, then you will have no way of understanding how those KPIs were achieved or how to improve your results.

Remember that the goal isn’t just to get people to click on something. The purpose is to drive incremental revenue and profit. KPDs, which represent the incremental metrics that make up a KPI, may be expanded by different aspects, such as media type or keyword.  Each time you take another step in the expansion (or discovery) process, you uncover more actionable information that you can use to make changes to your online marketing mix and ultimately, increase incremental revenue and profit.   

Drilling for Drivers

Especially with today’s marketing efforts – which encompass the mayhem of online conversations, social media channels, etc. – how should you choose which of those metrics to track and measure against? And, underneath those KPIs, how do you define KPDs as the stepping stones to meeting the more business-focused KPIs?

The answer is seemingly simple, yet often overlooked: work backwards in order to pick actionable KPDs that will get you to your goal:

  • Start with determining your goal. It’s not about leads; it’s about incremental revenue and profit resulting from those leads. These are the KPIs you need to care about and get buy- off on from your business team. Then work backwards.
  • Based on sales win/loss rates and conversion rates for opportunities and leads, you can determine the number of quality leads you need to generate.
  • Based on your marketing mix, you can then set goals for the number of qualified leads you expect to generate from your online marketing programs.
  • From here you can determine the online marketing flow: What paths do people take to get to your site? Do they find you organically? Through paid search? Facebook or Twitter?
  • Then, for each of these paths: Where on the site do they land? Which pages are most relevant once they’ve arrived? How do you engage each visitor based on the context of where they are coming from and their expectations?
  • Only now can you truly optimize the effectiveness of your online marketing programs, including the sources you use to attract prospects to your web site and the landing pages related to each source.

Each of the steps #2-6 provides another set of KPDs.  If you can home in on these KPDs, they will provide you with the knowledge you need to drive to the outcome you want.  A sample process flow and associated metrics, KPDs and KPIs is shown below.

Sales Process Flow Chart

At each step in the process, think of actionable information that leads to the outcome. Look upstream: Can you achieve more cost effective click through ratio? Greater engagement on the web site (e.g. low bounce rates, greater time on the web site, greater page depth)? Look downstream: now that you have the measurement of cost effectiveness of click and web site engagement, does the prospect engage in a sales cycle through a registration contact, interactive demonstration or trial download?

What This Means for You: Getting to Go
If we consider the type of questions that online marketing professionals ask every day, we can see a number of additional KPDs that, when tracked and acted on, will improve profit and revenue. These include:

Paid search effectiveness:

  1. What keywords have the highest bounce rate?
  2. How much am I paying for people to bounce off my web site and how does that vary by keyword?
  3. What is the cost-effectiveness of keywords? (Relating CPC, total cost and bounce rate)
  4. What incremental revenue and profit do these campaigns generate? (Relating orders back to CPC marketing campaign and taking into account revenue, cost of goods sold (COGS), and campaign cost.)

Web site optimization:

  1. Which pages on my web site should I tune? (Combination of bounce rate by page and exit rates by page;  review messaging and format of these pages)
  2. Which pages lead to great engagement?  (Shown by time spent and page view depth; determine if you can use these as landing pages for marketing programs)

Social media outreach:

  1. Is my outreach on Twitter helping to drive traffic to my web site?  (Combine trends in followers, mentions, retweets with trends in visit/visitor referrals from Twitter) Repeat the same outreach question for Facebook
  2. Which pages on my web site are getting the most referrals from Twitter / Facebook?  What is the bounce rate on those pages?  (This may help you tune those landing pages for the social media audience)
  3. How is social media affecting my brand image? (Combination of reach, e.g. followers, fans, mentions, retweets, etc. and sentiment.)

By monitoring all the combined metrics in aggregate, whoever’s tasked with tuning online marketing gets much more valuable information than only looking at single metrics in silos. If you drill down into actionable KPDs, you can get the answers to the questions that matter.

Less is more in modern marketing, so choose your KPIs carefully and be sure to get buy-in from your management team. Through this process, you can then turn elusive marketing data into knowledge that will ultimately map to Return on Marketing Investment, and the only true KPI outcomes of online marketing: incremental revenues and profit.


Wayne Morris has more than 25 years of experience in executive management, strategy, marketing, sales and technical roles in software, services and hardware companies. As CEO of myDIALS, Wayne helps companies optimize operational performance by connecting to multiple internal and external data sources and delivering Key Performance Indicators and Key Performance Drivers in a highly visual, intuitive, interactive dashboard suitable for all employees

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