We all know that digital marketing is magical because you can measure it… in minute detail. Today’s measurement tools let you track and quantify every click, impression, view and sale.
But how do you use all this data to drive your business objectives?
Experienced digital marketers set objectives — known as key performance indicators (KPIs) — against which they measure campaign metrics. Each KPI is a quantifiable metric, for example, a desired number of leads generated per month, that aligns with an organization’s overall business goals.
Easily said. What are the ideal digital marketing metrics to define the success of a campaign? And once you decide on metrics, how do you set a measurable KPI that’s both aspirational and realistic?
There’s no one KPI to rule them all — no magical metric you can assign to each type of digital marketing campaign. Each and every digital marketing project you launch will require its own KPIs. And all these KPIs must be aligned with your organization’s business objectives.
This only feels overwhelming if you start with the (possibly myriad) campaigns you are managing and work up to business objectives. Instead, zoom out and start with the objectives of your organization around selling the product or service you are promoting.
Maybe you need to meet specific sales or lead targets. Or perhaps your organization has set growth objectives rely on your marketing campaigns. Regardless, start with those high level objectives and work backwards to the metrics that will best drive and inform this objective.
The best way to explain this process is through an example.
1. Start with your overall business objectives.
Maybe you work for a sales-oriented company that relies on lead generation to gather sales prospects. And you know that three out of every 100 leads generated results in a sale. In other words, your lead generation program has a three percent conversion rate.
Now your organization has set new targets. They’ve asked you to launch a paid search campaign to cast a wider net. Surely with that new optimized lead generation page and a tighter sales cycle, your campaign will help improve the lead to sale conversion rate from three to four percent.
2. Assess similar, previous marketing activities. Incorporate learnings and adapt.
Your previous paid search campaign had a one percent conversion rate, from ad click to lead generated. Based on your learnings from the last campaign, the anticipated higher volume of the next campaign, and improvements made to your lead generation landing page, you can expect this campaign to have a higher conversion rate.
You feel that better targeted keywords and ad copy will pre-qualify leads. Maybe your clickthrough rate will be lower, but the campaigns will attract leads who are further down the conversion funnel… and therefore more likely to convert into paying customers.
4. Calculate the KPI that will realistically drive your business objectives.
With this in mind, you are targeting a 1.25 percent click to lead conversion rate. This is your KPI — a metric you came up with based on campaign history, learnings and improvements. Based on other improvements to the sales cycle, increased traffic and a more strategic campaign, this higher conversion rate will drive more qualified leads and will increase the lead to sales conversion rate by one percent.
We can’t tell you which KPI is ideal for your individual campaign. You need to ask yourself: based on business objectives, which metric will ultimately advance those overall objectives? If you’re branding, it may be display impressions. If you’re increasing ecommerce revenue, maybe you need to drive down the cost per conversion. You won’t know until you understand the bigger picture about how your campaign contributes to a quantifiable business objective. Without this, you’re optimizing in the dark.