5 marketing KPIs that successful companies always hit.

You always want your marketing campaigns to be a success, but you need a method of confirming that. Marketing KPIs give you a way to measure this success. You can then use that knowledge to decide how to best use your budget.

With marketing KPIs to guide you, you will not have to worry about wasting funds on campaigns that do not produce results. As soon as you notice they are not working, you can make the necessary adjustments.

Knowing you should use marketing KPIs is one thing, but choosing which ones to track is another. There are dozens and dozens of KPIs and metrics that can provide valuable insights. Your team simply does not have enough time to track all of them; it is not practical. But how do you choose which ones are the best? 

We have made it easy to choose which marketing metrics to focus on by gathering a list of the most important ones. These are the KPIs that successful companies always include. Remember, you can also measure other KPIs not listed here. You simply want to put more weight on the results of these. 

As you choose your KPIs, remember that 95% of the leading marketers emphasize the importance of them connecting to your overall business goals.

What are KPIs in marketing?

A marketing KPI is a key performance indicator. Think of it as a measurable metric that lets you track your progress towards your business goals. An essential aspect of KPIs is that they connect with your marketing campaign’s goals. Remember that marketing KPIs are closely connected to your progress, so that is the information they provide you.

KPIs are incredibly important because they let you know when you need to make adjustments. They let you know if you are on track to completing your goals. If you are on track, you know your marketing strategies work, and you can continue them more or less as-is. If you are not on track, the KPIs let you know that it is time to make changes.

What are KPIs in digital marketing?

While marketing KPIs can connect to any aspect of your marketing strategy, digital marketing KPIs must connect to your digital marketing strategy. There is a great deal of overlap today, especially with digital marketing making up such a significant part of overall advertising.

That said, there are also some differences between the two. Most notably, marketing KPIs can look at progress for non-digital marketing, such as radio or tv ads or billboards, but digital marketing KPIs never do. 

With that background in mind, what are the most important KPIs you should consider tracking?

Five necessary marketing key performance indicators

The following are just the most important marketing KPIs that you should consider. There are also dozens of others, and the ones that will be best for your company will depend on your specific needs.

1. Cost per lead

What it is and why it is important

The cost per lead (cpl) or customer acquisition cost (cac) lets you know how much money you spend to get each lead. It helps you keep your budget in perspective and looks at the various costs related to marketing. It will account for factors like tech use, overhead, and software investments.

Calculation

To calculate the cost per lead, use the following formula:

         (your total ad spend) / (your total leads attributed to that ad spend)

Real-life example

For example, assume that you spent $10,000 on your google ads campaign, and it generated 100 leads. You would divide $10,000 by 100 and get a cost per lead of $100.

2. Traffic to lead ratio

What it is and why it is important

The traffic to lead ratio tracks how much of the traffic to your website converts into leads. It is also called the conversion rate at times, typically specified with the word “lead” in front.

If you have low traffic to lead ratio, you will need to adjust your website or marketing efforts to make sure you attract visitors that account for meaningful conversions.

If you skip this KPI, then make sure you track website traffic.

Calculation

Calculating your traffic to lead ratio or conversion rate is as simple as doing the following:

          (number of conversions) / (number of interactions)

Real-life example

As an example of the traffic to lead ratio, consider an ad that has 10,000 views and attracts 500 leads. You would divide 500 by 10,000 and get 0.05. To convert this as a percentage, just multiply it by 100, and you will get 5%.

3. Return on investment (roi)

What it is and why it is important

The return on investment measures how much you spend in marketing compared to how much profit you bring in during it. 

This KPI is crucial as it lets you know that your marketing efforts are worth it. The higher your roi, the more effective your marketing efforts are.

Calculation

Measuring the roi is incredibly simple. It is: 

         (gain in sales – marketing costs) / marketing costs

 The most complicated part of the calculation is adding up all of the costs and profits. Examples of costs include paid advertisements, salaries, and software used.

Real-life example

Assume you spent $10,000 on an ad campaign and ended up making $25,000 in sales from it. You would subtract $10,000 from $25,000 to get $15,000 then divide this by $10,000. This gives you 1.5.

4. Customer lifetime value (ltv)

What it is and why it is important

As you complete other calculations to see how your marketing efforts are going, you will also likely want to see the customer lifetime value. You will also have to decide if you want to use this figure in calculations like roi or prefer to focus on the initial purchase.

This KPI is important because it lets you know how valuable each of your customers is. As mentioned, you will likely use this figure in other marketing KPIs. Additionally, it helps you gauge whether you need to increase your remarketing efforts.

Calculation

The customer lifetime value is straightforward to calculate, assuming you have all of the necessary information. It is:

(the average sale per customer) x (the average number of purchases per customer per year) x (the average lifetime of a customer in years)

Real-life example

For example, assume an average purchase price of $5.90, an average frequency rate of 4.2 visits per week, and an average customer lifetime of 20 years. You would multiple $5.90 by (4.2 by 52 – there are 52 weeks in a year) x 20. The result would be $25,771.

5. Lead to customer ratio

What it is and why it is important

The lead to customer ratio lets you see what percentage of your leads turn into customers. It is sometimes called the sales conversion rate. There are two variations of this: the sales qualified lead and sales accepted lead conversion rates. 

Keep in mind that sales qualified leads are your leads that seem ready to make a purchase. You can likely place a lead in this category if they fill out the form to contact you to start services. Sales accepted leads are those that are still thought of as opportunities. They have either scheduled a meeting or call or already contacted you. Some leads can fit in both categories. 

The importance of the lead-to-customer ratio comes down to knowing if you need to improve aspects of your sales funnel. If you have a low ratio, you need to figure out why you have trouble converting leads. If you have a high ratio, you will want to see what you are doing right and continue to use that strategy. 

Calculation

To calculate the lead to customer ratio, take the total number of sales and divide it by the total number of leads.

         (total sales from unique customers) / (total leads)

 As with most figures on this list, you will multiply it by 100 to see a percentage.

Real-life example             

Assume you had 100 leads and made 25 sales. You would divide 25 by 100 and get 0.25. This indicates a 25 percent conversion rate.

Bonus: other important marketing KPIs

In case some of the above marketing key performance indicators do not make sense for your company to track, the following are some other KPIs to consider. All of these are also useful and frequently recommended. They are just not recommended or used as often as those above.

•   landing page conversion rate
•   lead sources
•   bounce rate
•   email engagement
•   email click-through rate
•   customer retention rate
•   mobile traffic
•   mobile conversion rates
•   sales revenue
•   social media traffic
•   social media engagement
•   social media conversion rates

Conclusion: why marketing KPIs matter to your business

Tracking your marketing KPIs lets you confirm that your company is successfully working towards your goals. They can give insights into when you need to make improvements and do not need to make any adjustments because you are doing well.

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