How to set and evaluate KPIs in marketing correctly

You have surely come across the term KPI - Key Performance Indicators - in your work, or at the very least you have heard of it. Many people associate this term with some goal they want to achieve. If you want to look deeper into what KPIs mean, though, and find out how to set them, read on.

What to picture under the term KPI?

The abbreviation KPI defines a key performance indicator - a quantifiable measure of performance over a certain period for a particular goal. KPIs are an excellent help in measuring progress towards strategic goals. Many businesspeople use KPIs to assess the factors supporting their company's efforts on the road to success.

The abbreviation SMART is often associated with key performance indicators. This abbreviation represents the qualities a properly set KPI certainly should not lack:

• Specific - specific to a particular goal or task,
• Measurable - it can be measured numerically or as a percentage,
• Attainable - it should be realistically achievable,
• Realistic - realistic,
• Time-bound - bounded in time.

A KPI is not a metric

A particular metric may have occurred to you in connection with KPIs. There are differences between them, though, that set them fundamentally apart.

Why setting measurable goals matters

You are probably asking yourself whether setting KPIs is really so important for your business. Judge their importance for yourself. To make the decision easier we have written down the basic benefits of KPIs for you:

• KPIs let you measure a project's success or employees' performance.
• Key performance indicators give a realistic view of your organisation's state, from risk factors to financial indicators.
• KPIs bring a clear view of your successes and failures, so you can focus more on what works and less on what does not.
• Make sure every worker brings a certain value. KPIs help employees track their progress and managers move things forward.

Primary and secondary KPIs

When setting KPIs we distinguish two basic groups - primary and secondary.

• Primary KPIs are the direct measurable output we want to achieve.
• Secondary KPIs give additional information that can be helpful in reaching the set goal but is not directly connected with the result.

KPIs in the individual phases of the buying cycle

When setting KPIs you also need to take account of activity within the buying cycle. The buying cycle is made up of 4 basic parts:

SEE - In this phase consumers do not yet know the brand or product. KPIs in this phase should be aimed above all at building brand awareness. When setting KPIs we recommend focusing on impressions, viewable impressions, frequency and brand lift.

EXAMPLE: Gain 371,000 impressions in March at a CPM of €1.40 and a budget of up to €520.

THINK - This is the consideration phase. The audience already knows the brand or product, compares it with competitors and thinks about the options. KPIs in this phase consist in supporting prospective customers' purchase intent and supporting brand search. In this phase it is suitable to orient KPIs towards engagement, on-site interactions, reading an article to the end, post-view conversions, newsletter sign-ups and click-through rate.

DO - The phase in which consumers want to carry out a particular conversion, buying for instance. In this phase customers move to a purchase. The most suitable KPIs in this case are oriented towards supporting and increasing sales. When setting KPIs we recommend focusing on cost-of-sale ratio, ROAS, CPL, conversion rate, turnover and lead count.

EXAMPLE: Increase turnover month on month by 30% at a cost-of-sale ratio of up to 25% and a budget of €1,200.

CARE - Customers have already used your product and plan to use and buy it in the future too. This is the phase of caring for a customer already won. In this phase we aim KPIs at lifetime value (an estimate of the average revenue a customer will generate across all their future purchases), the number of repeat purchases, cost-of-sale ratio and conversion rate.

Let us move on to setting KPIs correctly

The right approach to setting KPIs that are genuinely meaningful matters. If setting KPIs is hard for you, try to find answers to the following questions.

What is the goal of your measurement? Why is this goal important for the business? How much time do you need to fulfil this goal? What specifically will you measure in the company? How do you want to measure it? How often will you measure it?

When putting together a proper KPI, do not forget the basic qualities every KPI should meet:

• It must be quantifiable - the measurement has to be based on data.
• The goal should be easy to understand and the materials (tables, charts) easy to read.
• Measurements should prompt action and serve to motivate the whole team of workers. You can of course set KPIs for each employee separately too.
• You can assess the process and plan strategy only if you can evaluate measurements regularly.
• Every KPI should be assessed on an ongoing basis.

KPIs for e-shops

With e-shops the most commonly used KPIs are:

The best and most suitable KPI we can set for e-shops is margin - the percentage share of the difference between the selling and the purchase price.

Where to evaluate these KPIs?

Whether the key indicators you set were met or not can be tracked simply and clearly in Google Analytics. In some cases, though, shortcomings and inaccuracies can arise in collecting and measuring data, which is why we recommend evaluating the results in the admin panel too.

KPIs for lead generation sites

The most common KPIs we can track with lead generation sites are above all bounce rate, conversion rate, quality and relevant leads and cost per lead.

The best KPIs we recommend measuring with leads are above all lead relevance, return on investment and offline conversions such as in-store purchases.

Where to evaluate these KPIs?

When evaluating whether lead KPIs were met we proceed the same way as with an e-shop. So in this case too Google Analytics is an excellent tool.

Another excellent tool that can simplify evaluating your marketing efforts is a CRM (Customer Relationship Management) system. With a CRM system you can automate and integrate data about customers and the activities aimed at them, such as sales, marketing, service and e-commerce.

KPIs for brand campaigns

With brand campaigns we focus on supporting the brand and building awareness of the brand or products. In this case the most commonly used KPIs are unique users, CTR and impressions.

The best KPIs you can set for brand campaigns are above all brand lift and estimated brand lift. This indicator measures the direct positive effect on the brand's overall image. Tracking brand lift should not consist of clicks and impressions. Instead it should focus on brand awareness, ad recall and purchase intent.

Where to evaluate these KPIs?

Tracking these KPIs is ideal in the advertising systems. An advantage the Display & Video 360 advertising system offers is that we can track reach at display and video level at once. We then recommend tracking the rise in direct traffic to the site or in searches in Search Console.

After reading this article I firmly believe the term KPI is now a little more familiar and clearer to you. Setting the right KPI is not such a demanding matter at all — you only have to follow the recommendations about what a meaningful KPI should contain and orient the KPI to your business. 

Should you have any questions, do not hesitate to get in touch. ?