Welcome to Jargon Busters, the series where we help you get to grips with the complicated world of marketing jargon. In today’s post, you’ll learn all about the elusive KPIs and why and how you should be setting them. Let’s get into it!
KPI stands for Key Performance Indicator. It’s a way that businesses and marketers alike can accurately measure their success. When you observe your KPIs over time, you can see if your progress is advancing or not.
A KPI isn’t a goal itself but more a way to monitor your progress towards specific goals you have set. Pretty useful, right? Once you’ve got the data, you can appropriately adjust your marketing goals accordingly.
Let’s take a look at some KPIs worth keeping an eye on:
Reach shows you how many people have come across your content. It gives you a good idea of how familiar the world is with your brand. There are two types of reach:
It’s also worth pointing out that reach is a blanket term for the group of KPIs listed below. To keep track of reach, pay close attention to the following:
Engagement shows you how well your content strategy is performing, and whether or not it’s producing the expected results. To keep track of engagement, pay close attention to the following:
Retention and loyalty reveal how great your customer service and products truly are (or aren't). It’s an important thing to track, especially when your business model relies on repeat buyers. To keep track of retention and loyalty, pay close attention to the following:
Having a high retention rate is great. It means that people like your brand and love spending money on your products and services. Congrats! You have loyal customers.
A high churn rate, on the other hand, is bad news as it means disloyal customers. It also reveals that your customers don’t stick around, potentially spending money on your competitors instead.
It’s good to know that there are a handful of causes that negatively influence retention and loyalty. The most common of these include high prices, poor website performance, and bad customer service.
Conversion KPIs are as valuable as they come. They measure how effective your marketing strategy is at creating desired outcomes. This doesn’t always mean a sale. For example, it could mean somebody signing up to your newsletter.
To keep track of conversion, pay close attention to the following:
Ideally, you should aim for a high conversion and click-through rate. This will indicate that your messaging is having the desired effect on your audience.
Meanwhile, a high bounce rate is something that should be avoided. If your bounce rate is high, something might be wrong with your website. Perhaps your content is boring, or your site performance is bad.
The very first thing to consider when setting a KPI is your objectives. Do they have meaningful business outcomes? If not, you’ll want to reconsider. There’s no point investing your time and money into a strategy that won’t achieve results.
Once you know what your objectives are, you can identify KPIs to monitor that effectively measure success. For example, your goal might be to increase website traffic. To monitor success you might track conversion rates.
Finally, you need to pick an appropriate timeframe to work with. Your KPI might be to reduce your churn rate, but by when? Three months, a year, a decade? Without a clear timeframe, your goals become meaningless.
Once you’ve set your KPIs, the hard work doesn’t end there. The pros revisit their KPIs every three to six months. This ensures that whatever you choose to monitor aligns with your marketing goals.
KPIs are great, but you need to be careful not to focus on vanity metrics. These metrics look great on paper, but in reality, aren’t achieving business goals.
Follower count is a classic vanity metric. Don’t get us wrong. Having a high follower count is impressive, but do you have the right kind of followers?
Consider this: would you rather have a million followers who spend no money or a hundred followers who each spend thousands? For results that translate into business success, pick the latter.
So, if your goal is to increase your followers, add real value by finding the right followers. Perhaps a certain demographic you want to sell to, or people within a specific region. Don’t just let fancy numbers sweep you away.
When the time comes to set your KPIs make sure that they help you achieve actionable results. Frequently ask yourself why you’re choosing to monitor your chosen KPIs and how this will help.
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There we have it, folks. KPIs in all their glory. Hopefully, you have managed to wrap your head around what exactly KPIs are. With a bit of luck, you’ll be setting your own KPIs and accurately monitoring your marketing success in no time!
If you have any questions, feel free to ask away in the comments. If you’ve enjoyed this post, give it a like or a share.
Catch you in the next installment of Jargon Busters!
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