The success or failure of every outcome of marketing strategies in business can be measured precisely. This is the biggest benefit of online marketing for traders. But when it comes to marketing, how exactly can strategy data be measured? Or how to make online marketing successes understandable? It is possible to answer this question with KPIs. But first you need to know “What is a KPI?”.
A key performance indicator, or KPI for short, is a measurement system that can be used to gauge the performance of an organization or company’s activities. There are many different KPIs for different business areas and activities. Easy-to-understand performance indicators can be used to continuously monitor goal achievement.
KPIs are metrics used to measure, present and review the performance of various activities of an organization or business. In a company, there are many KPIs that can be used for different areas and business processes. The KPI can refer, for example, to a single employee, a department, practices or the whole company. A key performance indicator shows whether and to what extent a specific target has been achieved. It also shows whether the marketing areas or system is fulfilling its purpose.
How to Determine KPIs?
KPIs (Key Performance Indicators) make the success and progress of online marketing measures measurable and comparable. In this whole process, KPIs can be said to be simple and understandable key performance indicators.
In order to reach clear results with KPIs, it is necessary to utilize clear data. In short, it is true for every system and company: there are no “right” KPIs. Depending on the relevant company objectives, KPIs should be identified and implemented. However, there are some general criteria that can be applied when determining KPIs.
To give you an idea of which metrics you can measure, here are some examples of important KPIs from the marketing field. These are:
- Conversion rate,
- Target rate,
- Display/access,
- Click Through Rate (CTR),
- Exit Rate,
- Number of visitors,
- Unique visits,
- ROAS (Return on Advertising Spend),
- Sales volume,
- Cost per click – CPC,
- Total expense calculations,
- Daily cost,
- Cost per lead (CPL),
- Interaction rate.
It is also possible to multiply the data in this list or determine it according to the marketing strategy. The important thing is to evaluate the data in line with the company’s marketing strategy and way of working. The above data is adaptable to almost every e-commerce system.
Why are KPIs Important?
KPIs can be used to measure both the performance of individual business areas and the success of the entire company. Strategizing with KPIs in marketing helps you create a basis for decisions about the future and goals. Indeed, seeing and analyzing the present correctly is the golden rule for making the right investments in the future.
Since performance and success are only tangible through KPIs, they should be an essential part of an online marketing strategy. The KPI will thus help to sharpen organizational goals.
The use of KPIs is also prominent in the field of information technology. KPI in the IT environment, for example:
- Determining the performance of an online store,
- Checking the effectiveness of SEO measures,
- Monitor the performance of IT systems,
- Used to determine the success of online marketing.
It is possible to achieve professionalism with KPI in many areas. Marketing areas where KPIs are used are usually the following:
- Marketing
- Sale
- Logistics
- Project management
- IT operations
- Accounting
- Customer Service
In many areas such as these, KPI is a tool to professionalize the marketing strategy.
What are the Types of KPIs?
KPI types vary according to their areas of use. Depending on which area you will use it in, it is possible to benefit from various KPI formats. In general, there are many different types of KPIs, depending on the specific purpose and the KPI chosen to measure it.
In general, there are many different types of KPIs, depending on the specific purpose and the KPI chosen to measure it. Financial KPI refers to all the key figures that affect a company’s cash flow, liabilities or assets. For example, metrics representing net profit or the ratio of current assets to current liabilities are considered in this area.
Non-financial KPIs refer to all indicators that are not directly related to the company’s cash flow, liabilities or assets. A more detailed list of KPI types is as follows:
- Quantitative and Qualitative Metrics: The former are statistics and data that can be given as a numerical value, while the latter cannot be given numerically and relate to quality.
- Lagging and Leading Indicators: The former are used to measure success and leading indicators are used for forecasting.
- Input and Output Metrics: Input metrics measure the resources used to achieve a particular result, while output metrics assess the outcome of a process.
- Process and Actionability Metrics: The former is used to assess the efficiency or productivity of business processes. The latter is actively used by decision makers in the company to drive change.
Another option is to separate the different types into field codes. Consider measuring key figures for sales (e.g. sales growth), marketing (e.g. return on investment) or finance (e.g. net profit margin).
As a result, there are many different ways to categorize the types of KPIs. However, it is crucial to choose the key figure that best and transparently measures success or performance in relation to the goal you have set in advance. Therefore, you should always know exactly what you want to measure and how you want to measure it.
What are Examples of KPIs?
There are hundreds of examples of KPIs that companies can evaluate and use. The important thing is to use the example that best fits the sales strategy. Finding the right indicator for your target is not always easy. However, there are two common KPI best practices to help you find the right one.
One way to assess the relevance of a given metric is to use the SMARTER criterion. This method is often referred to by the words specific, measurable, achievable, relevant, time-bound, evaluated and re-evaluated. This means that, according to the SMARTER criterion, each key figure should have a specific target, this target should be feasible or measurable, the target should be realistic and relevant to the company, the time frame for achieving the target should be clearly defined and the key figure should be continuously (re)evaluated.
The second KPI example is related to the so-called 6A method. It is named after the English words for harmonious, accessible, lovely, true, actionable, alive. In detail, this means that the key figures must be aligned with your specific objectives, the target must be realistic, the KPIs must have high information content and be calculated from valid data, and the information obtained can ultimately be applied operationally.
Based on these two methods, it is possible to produce some examples of KPIs. For example in sales;
- Sales Growth,
- Sales Target,
- Customer Acquisition Costs,
- Customer Value (CLV),
- Customer Churn Rate,
- A KPI metric consisting of the evaluation of data such as Sales Cycle Length can be used as an example.
KPI Target and Benefits
KPIs are used by company management, control unit or various levels of management. If monitoring KPI data reveals that targets are being missed, the company can quickly take measures to optimize its processes. The measures to be taken can be deduced from the data obtained with the KPI, the key figures, so that the implementation of the measures can be initiated.
In general, key performance indicators (KPIs) are used in day-to-day business to monitor how effectively a company is achieving its key objectives. They make it possible to operationalize specific company objectives and validly assess success in achieving operational and strategic goals.
The KPI goal is to obtain detailed data used to analyze a concrete business objective. Here it is very important to set the right KPIs for the pre-selected target. In this way, the KPI helps individual company departments, teams or managers to assess deviations and unforeseen events. It also helps units to react faster and better to steer sales and marketing in the right direction. The KPI will also help the company to focus on common goals.
