Key performance indicators (KPIs) are guideposts for success versus a set of targets or objectives. The term KPI is often overused, leaving true potential overlooked as it relates to business management and development. More often than not, the meaning is just applied to advertising or data, but the reality is that a KPI plays a major role in business. High-level KPIs may focus on the overall performance of the business, while low-level KPIs may focus on individual departments. Here we will discuss several different attributes of KPIs starting with formulation and functionality.
There are five main types of KPIs: Business, Financial, Sales, Marketing and Project Management.
To figure out when and how to utilize KPIs, start by defining your core business objectives and follow these simple steps.
- Create short and long term targets
- Strategically set measurable and attainable goals based on realistic data
- Devise a plan for achieving each goal by implementing best practices
- Understand goals and what it takes to reach them
- Effectively measure your progress with relatable benchmarks
- Analyze performance to build future campaign vitality
After objectives are clearly defined, a performance management plan needs to be implemented across the organization. The ability to look at real-time information about performance allows you to make informed goal-oriented decisions based on concrete data instead of just intuition.
The responsibility of a KPI is to isolate the connection between your company’s objective and its performance through a series of supported quantifiable measurements. Establish each of your marketing KPIs with your business objectives in mind.
Evaluate your defined KPIs against the SMART criteria to make sure they follow each rule.
Specific – is your objective specific?
Measurable – can you measure your progress?
Attainable – is your objective realistically attainable?
Relevant – what is the relevance to your company?
Timely – what is the time-frame for completion?
When creating well-defined marketing KPIs, use the breakdown method below to ensure you are meeting all aspects of the SMART approach.
Marketing KPI: Increase conversions from organic search.
Goal: By 25% in the next 6 months.
How to measure: Google analytics, website traffic report and using your CRM lead sources.
How to improve: SEO strategy to rank high for highly target keywords that focus on lead-to-customer conversions.
Regularly tracking performance is essential to the maintenance and development of your marketing strategy. Determining your company’s strengths and weaknesses can be accomplished through implementing various KPIs. This helps you understand which strategies are vital in finalizing the connection between your KPIs and future ROI, making it easier to replicate success. Comparing KPI results gives you the opportunity to fine tune productivity, assess for improvement, update metrics, and learn best practices.
As a final touch point, we would like to explore how KPIs predict future end performance as opposed to looking at past performance. KPI metrics focus on navigating the short game while ROI is in it for the long haul. Using your KPI insights to optimize current campaign efforts helps guide decisions to meet your objectives. It is important to note that KPIs do not show you the full picture as it relates to ROI. It’s like looking at specific excerpts of a blog and then clicking through to see the full post. Keep this in mind when reporting efforts to a client or viewing your own forecast, if you want a holistic overview take a look at your ROI metrics.
Not sure where to start? Having trouble defining SMART KPIs?
Let the experts at RJ Donnelly Media help you establish a cohesive marketing strategy. Schedule your complimentary consultation today!