Top 5 Marketing KPIs (Metrics)
I was asked to write some articles on my top 5 Metric/KPI recommendations for various business functions. Here are my “Top 5 Marketing KPIs”.
(Note: I use the terms Metrics and KPIs interchangeably – but prefer to use Metrics these days in an effort to reduce the use of 3 letter acronyms).
My observation is that most companies seem to have a pretty good handle on the Sales function of their operating model. They track things like appointments, meetings, orders, and conversion rates in their CRM (Customer Relationship Management) systems, and it is not too hard to determine the small handful of activity, effectiveness and outcome measures that are the key driver of performance in this function.
However, when it comes to the Marketing function, clients are less forthcoming when it comes to sharing their current measures with me. Their marketing teams are busy building websites, creating collateral, organizing events, developing advertisements, posting on social media and writing articles. Marketing staff love creating things, but some teams are resistant to having their performance measured, or they offer up measures that I would not consider to be good Metrics (KPIs).
Fortunately, the increasing prevalence of digital marketing platforms is making the marketing function much more quantifiable than it was in the past.
If you’re new to Metrics, I recommend taking a quick read of some of my previous articles first:
Every business model is different and you need to choose the right metrics that drive the performance of your Marketing team, but here is a list of 5 generic metrics that are commonly used by my clients, and a brief explanation of each:
1. Webpage Conversion Rate.
This is a measure of the effectiveness of your online marketing messages and brand collateral. It calculates the percentage of visitors to a web page who respond to your Call To Action (CTA) by taking the desired action (e.g. they fill out a form, subscribe to your blog, download a whitepaper, request a demonstration etc).
2. Net New Subscribers.
This is the net of new subscribers minus unsubscribers each week/month. Hopefully, you are building a database of target market prospects who have opted-in to receive information from you, and you are publishing regular content that is relevant to them and their needs. Some companies measure the number of emails, social media posts or blogs they publish etc, but these activities are just a means to an end. What is more important is whether your content is resonating with your target audience, and you are growing your subscriber base.
3. Marketing Qualified Leads (MQL).
It’s not the total number of leads you attract that is important. You don’t want to spend money to attract people who have no intention to purchase from you, or who are not a good fit for your product/service.
Marketing Qualified Leads (MQL) counts only the number of leads who meet the qualifying criteria as being an ideal target market customer for your offering, based on the identifying information you are able to obtain from them.
Thus, you need to get very clear on who your ideal target customer is first. Then you need to design your marketing messages and filtering mechanisms to deliver a sufficient number of target customer prospects into your sales funnel every week/month. We call these Marketing Qualified Leads. You have not spoken to them yet, but they have clearly identified themselves, or taken the necessary interactions with your digital assets to achieve a “lead score” that indicates they are primed for someone from your sales team to reach out and make contact with them.
4. Sales Qualified Leads (SQL).
Many sales teams are split into two distinct roles; “bookers” (sales development reps who qualify the leads and book appointments), and “closers” (account management reps who conduct the demonstrations and close deals).
MQLs are handed to your sales team “bookers”. They speak to the lead to confirm whether they are interested in your product/service and whether the potential customer has the authority and budget to make a purchase decision within the desired timeframe. These “hot leads” are then booked into an appointment with the “closers” on your sales team, who will take them through your sales process and close the sale. The lead is now a genuine sales opportunity. We call these “hot leads” Sales Qualified Leads (SQL).
You could debate as to whether this could be considered a marketing metric or a sales metric. Whilst the sales team is involved at this point, your marketing team must work closely with the “bookers” on the sales team to provide supporting marketing collateral that ensures that a sufficient quantity of Sales Qualified Leads are being generated every week/month/quarter to fuel your business model.
5. Cost Per Sales Qualified Lead.
Your marketing needs to generate plenty of hot leads, but it needs to do so in a cost-efficient manner. Spending millions of dollars on Superbowl TV commercials is probably not an option for most of us. Cost per Sales Qualified Lead is calculated by taking your total spend for the period to obtain these SQLs (marketing and sales salaries, plus marketing expenditures) and dividing it by the actual number of new SQLs generated over the period.
Of course, there are many other Marketing Metrics that you could consider, but these five common ones should give you a good start point for discussion.
Regardless of which Metrics you choose to measure, it is vital that your team meets every week to discuss performance.
There is a saying, “You can only manage what you measure, and what gets measured, gets done”.
I disagree with this statement. Just measuring the numbers will not deliver the outcomes you are looking for. I see plenty of companies who measure the right things, but they still don’t get the results they want, because they fail to meet to discuss performance every week, and they fail to hold people accountable for achieving the agreed standards.
I have my own saying which I think captures it better: “Successful Business Execution is 20% giving people clarity about what needs to be done, and 80% following up to make sure it actually gets done”
Until next time…
Stephen Lynch is the author of the award-winning book; “Business Execution for RESULTS: A practical guide for leaders of small to mid-sized firms” winner in the “Management” category of the 2014 Small Business Book Awards in the USA.
He’s also written articles on strategy and management for The Economist magazine.
Need a Strategic Plan Facilitator for your next planning session? A Business Coach to help you scale your business? Management Training to upskill your team? Contact Stephen to discuss your needs.