If you are in any type of management role at your agency, you probably already know the answer to the question, “what are KPIs?” For those of you that may need some enlightenment, or even just a refresher, this article is for you.
What are KPIs?
KPI stands for key performance indicator and, in short, it’s a standard to measure your performance against key business objectives. A KPI will help you understand, in quantifiable terms, how your business or department is performing. A list of KPIs will act as a guide to help you understand whether or not you are on target for hitting your goals.
How do you know if a KPI is effective?
There are several hundreds of key performance indicators to choose from, so selecting the right one for you and your department can be challenging. It’s also important to realize that KPIs can differ from department-to-department, depending on what the specific department’s goals are.
To make sure you are setting an effective KPI, it takes a bit of thought and attention. Here are some guidelines that will help you get it right.
Your KPI should be:
- Well-defined. Well-defined KPIs make it so that everyone understands what is expected and what constitutes hitting a KPI and what means you are missing the mark.
- Quantifiable. This will help with measurement and reporting.
- Crucial. If a KPI is not crucial, or key, to the success of your business, skip it.
- Relevant. Along the same lines of crucial is relevancy. Your KPIs should measure a direct action of your employees and/or campaigns.
If your key performance indicators meet the criteria listed above, you know it’s a great tool for measuring the success of your department or business.
Keep in mind that not only should you set KPIs, you also have to communicate them to your team. Make sure that everyone on your team understands the expectation behind the KPI. Otherwise, it will just be a meaningless number on a report.
What are KPIs for Marketing Agencies?
As mentioned above, KPIs will differ from department to department, but there are a few KPIs that are almost always relevant to all marketing agencies.
- Sales Revenue – This KPI should track how much sales revenue your marketing team is bringing to your agency.
- Cost Per Lead – How much money are you spending per lead, and is it paying off in the long run? This KPI will help you make adjustments where necessary to save your agency money, or divert money to more important areas.
- Customer Acquisition Costs – This KPI will tell you how much money is required to convert a potential customer.
- Landing Page Conversion Rates – Marketing agencies are more than familiar with landing pages, and it’s important to know the rate at which landing pages are actually converting.
- Organic & Paid Traffic – Measuring organic and paid traffic will tell you just how well your SEO and PPC efforts are paying off and where you need to make adjustments.
- Social Media Conversion Rates – Want to know how well Facebook, Twitter, and Instagram campaigns are working? Then, make sure to track your social media conversion rates.
- Email Marketing Conversion Rates – Email marketing is often touted as one of the highest converting marketing tactics. Is it true for you? Find out by measuring your email marketing efforts.
These are just a few of the top KPIs you will want to measure, and you will need to make adjustments based on your agency’s actual goals.
Remember every marketing agency should be able to answer the question, “what are KPIs?” and should use them to measure company success.