Key Performance Indicators

posted under by CLYDE
Key performance indicators (KPIs) are the metrics that guide and measure your progress toward your business goals. KPIs support both the strategy and tactics for your business decisions. By knowing your KPIs, you’ll know how to manage your marketing campaigns for maximum profitability.

The most important KPIs for your business are average order value (AOV), customer lifetime value (CLV), project rate of return (PRR), cost-per-action (CPA), cost-per-lead (CPL), and close rate (CR). These numbers quantify your goals and provide guidelines for your marketing efforts.

Business is also a social activity. For your projects to be successful, you need cooperation and collaboration with your team. To win support for your project, you need to be able to show the value of marketing in a simple and powerful way. Communicating information is just as important as gathering and analyzing data. By clearly stating the KPIs, you can tell the story you
need to grow your business as well as your career.

There is often a conflict between the finance and marketing departments. The two camps don’t speak each other’s language. Marketing sees the accountants as bean counters who don’t understand that it takes money to make money, and finance thinks marketing is a black hole with no connection to the bottom line. With a set of simple metrics, both sides can understand each other. You don’t need more than third-grade math to calculate these numbers.

A KPI-Driven Business Process
KPIs inform and guide the business process. They give you a rational method, based on objective data and results, for making business decisions. You first set your goals and then you establish how to measure the progress toward those goals. Thus, you will be able to answer the questions What is working? and What needs to be changed?

The following process will help you make the most of KPIs:

1. Define your tactical goals. This comes down to a simple goal: You want to get more ________. This may be leads, sales, subscriptions, downloads, views of a video, and so on.

2. Establish the target KPIs. By knowing the KPIs, you’ll know how much you can spend and still make a profit.

3. Launch your marketing campaigns in SEO, PPC, radio, TV, print, and so on. Use the target KPIs to set the budgets.

4. Measure the actual KPIs. Collect the results and see the actual KPIs for each campaign.

5. Optimize your marketing channels. Improve the successful campaigns and reduce or close the unsuccessful campaigns.

6. Communicate the results to your team, including coworkers and upper management.