Among the multitude of your digital marketing efforts across different channels you can do, we often question ourselves, what works best? What activities are harmful, and what should we do to improve and start bringing better results? The short answer is that you should start measuring your key performance indicators (KPIs for digital marketing).
Peter Drucker once said, ’If you can't measure it, you can't improve it.’ and we couldn’t agree more.
So the real questions are - what are the most important digital marketing KPIs? Where do you start? How to plan your next moves? We’ve prepared a list of 10 KPIs for digital marketing your business cannot survive without in a couple of years. Thus, without further ado, let’s dive right into the details.
Digital Marketing KPI examples for outlays
Cost Per Acquisition (CPA)
Since customers are what you need to generate more sales and, consequently, revenue, you need to know how much you spend to gain a new prospect. The idea behind this formula typically includes the amount of money paid to the staff, expenses on marketing material, software required, and fees for other services involved.
You can calculate the cost per acquisition separately for inbound and outbound marketing channels. Also, you are able to figure it in general or for specific activities you need to do for each campaign you organize. Knowing all these little expenses and activities will help you estimate the effectiveness of your marketing. Proper calculations will let you distribute the budgets for different marketing channels based on the received numbers.
Customer Value (CV)
Customer value is an important and helpful KPI for digital marketing that lets you determine how much revenue to receive from a customer. Using a simple formula (down below), you can compare the cost per acquisition versus the amount of value to extrapolate.
Customer value = Average sale per customer * the Average number of purchases per customer each year * Average customer retention time (years, months, weeks, etc.).
If the difference is slight or the price of gaining a new prospect is too high, it is an indication that you should pay more attention to retaining the existing customers and keeping them happy.
Inbound Marketing ROI (IM ROI)
Return on investment or simply ROI is perhaps the most well-known and one of the most crucial marketing KPIs a company can track. The core reason you need to measure it is that it either proves or disproves that the results/revenue received is worth the money spent for marketing campaigns.
The formula is quite simple too. Simply use Lifetime Value minus Customer Acquisition Costs, then divide by Lifetime Value. And that’s it. You now have enough information to start doing effective budgeting. These metrics are indispensable for future planning in that they help different functional activities from bad ones.
How to Choose the Right KPIs to Track Customer Engagement
Website Traffic to Lead Ratio (WTLR)
The WTLR indicator is of particular importance to the businesses that use their website as an effective customer acquisition tool. Just tracking the number of unique visitors is not enough. Your website’s growing popularity can easily fool you, as that doesn’t mean you’ll be getting positive financial changes.
Instead, you need to keep tabs on how the targeted audience performs by looking at the number of converted leads per visit. Suppose the ratio is no less than 2-4%. That means your content strategy is working to attract the right customers. If you are instead seeing plenty of people on your website and no conversions, we suggest that you head over to your analytics system.
Make sure you are making the most of your marketing dollars by analyzing your website traffic. The best way to do it is to segment your traffic by source - organic, direct, referral, social media, etc. All these will help you find out which channel brings the most visitors and most conversions.
Landing Page Conversion Rate (LPCR)
You take so many efforts to drive a potential customer down the funnel, but they end leaving your site right on your landing page. It’s a puzzle. What went wrong? Was the message poorly communicated? Was it the site's performance that affected the sale? Or maybe it was something else entirely?
Well, your landing page conversion rate might know the answer. Head over to your analytics page, and if you are seeing the conversion rate being below 10%, you know that it is your page that doesn’t work as it should.
Many factors might affect the performance of the page. Sometimes it's a slight alteration in the design; sometimes, it’s the CTA wording. We suggest that you use A/B testing to determine precisely what the problem is. Once you find a working combo, don’t stop, as it should be a continuous process since there’s no such thing as perfection.
Email Marketing Performance (EMP)
Suppose you’re working on email marketing as one of the means to convert leads into customers. How do you measure whether it is successful or not? Well, actually, there are several markers for each email campaign you can keep an eye on. Chief among them are as follows:
- Open rate;
- Click-through rate;
- Conversion rate.
By comparing and analyzing these metrics, you’ll be able to locate possible drawbacks in your email campaigns and work on a plan to improve them. What drawbacks? Well, let’s say your Open rate is reasonable, but the Click-through rate is low. As in, the message is open, but the prospect didn’t hit the CTA button. This means that your message has an enticing enough headline and a not-so-good inside text, let alone a CTA message. You don’t need to fix the headline but the content. Work smarter, not harder.
Social Media Engagement (SME) another - another marketing KPI
Your boss considers your SMM efforts a total waste of time? Well, time to prove him wrong and demonstrate the value you bring by introducing him to the following list of data your work helps generate:
- Show how much traffic is coming from social networks;
- How your traffic relates to other traffic sources;
- Show how many visits from social media are converting into leads;
- Which social media channel is the most profitable in terms of conversions.
And even if your boss doesn’t ask you for this information, knowing the numbers can still help you out. You see, KPIs for digital marketing can help you single out social media channels with the most significant potential in your niche. This will allow you to maximize the channel's effectiveness as you will no longer spend hours on end using ineffective media.
Mobile Traffic Conversions (MTC)
We don’t have to tell you how more people are starting to use their phones to access the Internet. You probably already know the figure is cosmic. However, what you should know is how you can use MTC data to your advantage.
Each industry has its device preference when it comes to visitors. Some use phones to access your site. Others might be using PCs. Knowing what kind of traffic you are getting more will allow you to adapt your content to their needs. So, make sure you track the following:
- Percentage of traffic from mobile devices;
- Bounce rates from mobiles;
- Conversion rates from mobiles;
- Compare mobile to PC traffic figures.
These numbers will be an excellent ground to decide whether it is cost-effective to invest in making your website mobile-optimized or whether you should focus more on the desktop experience. And if you are getting a 50% to 50% split, tackle both to not lose on prospects.
The Most Important Digital Marketing KPIs to estimate your team
Sales Team Response Time (STRT)
If you take a look at how long it takes for a sales team to respond in a B2C scenario, we get an average of 5 minutes. However, when it comes to B2B leads, the time the sales team needs to form a reasonable response is not even in the realm of minutes. We are talking hours, if not days, for a reply.
So much so that a Harvard Business Review study points at a 42 hours mark. That’s forever in B2C. Worse yet, the lead quality usually drops down over time, resulting in wasted commerce time.
This is why you need to pay close attention to this KPI in digital marketing. See how fast your competition responds and compare it to how fast your team is working. See whether it is a staff problem or a tech one. Having answers to these questions will point you in the right direction.
MQL to SQL Ratio
This particular metric will allow you to learn the cooperation between your sales and marketing teams. If both teams are not in the know, you’ll expect a low figure which is a problem as it leaves the customer in a difficult spot, or rather, confusing even.
Why? Each team should play the same song using different instruments, not the same instrument but different songs. It’s essential that one powers the other. See whether your marketing team generates a ton of leads and whether your sales team can handle them all. There’s usually a disconnect between the two groups. Your job is to make them work as a tandem.
KPIs for digital marketing - final thoughts
Knowing where to look for problems in your marketing campaign means knowing how to improve it. No business can survive or appear, for that matter, without a well-developed advertising plan. These 10 KPIs for digital marketing will help you keep your efforts in line with your goals, but that’s all we got for today. Be sure to come back again for more content like this!
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