Identifying actionable key performance indicators (or KPIs) is arguably the most under-appreciated ingredient of a well-structured digital marketing plan. KPIs can empower the digital marketer to be proactive in responding to intelligence that is mined from campaign data.
Unfortunately, KPIs have the opportunity to be underwhelming when digital practitioners lack the skills or ambition to construct a comprehensive, strategic digital marketing program. The “set it and forget it” mindset that worked once upon a time, when the landscape was easier to navigate, will drown in a sea of campaigns with strong goals and analytics.
But today’s elite digital marketers recognize the importance of well-rationalized KPIs, and work hard to define precisely what they hope to accomplish before any unnecessary time or money is spent. So let’s crack the code on KPIs, beginning by defining the requisite vocabulary:
- KPIs: Primary indicators of the overall health and well-being of a digital marketing campaign. These data points must be clearly set from the beginning and allow for action on the part of the marketer when either opportunity or under-performance is identified. Think of the best KPIs being no different than what’s displayed across a car’s dashboard: data that informs the driver when it’s time to get more gas or slow down, even that a door is slightly ajar.
- Baseline: The initial starting value of a KPI. Baselines are often discussed and recorded before launching an entirely new campaign.
- Benchmark: The mean average of a KPI as seen over a period of time. For example, if the average cost per lead (CPL) in 2011 for an online business was $25, then $25 is then referred to as the benchmark against which future time periods will be compared.
- Trends: A progression of KPI data over long periods of time. It’s important to note that short-term fluctuations do not necessarily reflect trends.
The first step is to recognize what the organization is hoping to accomplish through its investment in a digital marketing campaign. As I’m sure you can attest, we all too often hear clients declaring that they “want more traffic” or “want more sales” as a result of their investment. But let’s be honest, those are bogus goals. To be actionable, we need something more concrete.
Let’s look at search, for example. If we are talking about more actionable KPIs, ideal objectives would look more like, “We’d like to enhance our marketplace awareness through increasing our search-referred visit count” or “We’d like to boost profitability by lowering our cost-per-lead by $10 this year compared to last.” These objectives are ones we can support with actionable KPIs like “Share of Search Clicks” or “Search-Referred CPL Trend.”
We’ve found, too, that those types of clear objectives often aren’t initially apparent or the program that’s being deployed is a first of its kind. In those situations, leveraging the first 60 to 90 days of in-market activity to establish an initial baseline for any KPI is highly recommended. That new baseline then becomes the data point against which the program is judged from that moment on. This approach is typically preferred, even if industry-wide benchmark data is known.
So the keys to defining mission-critical digital marketing KPIs are:
1) Assess the challenges facing the organization;
2) Determine the most appropriate role a digital marketing campaign can play to assist with those challenges;
3) Anticipate the resultant data that will then be available; and
4) Focus on and optimize against those metrics mash-ups that best highlight program successes.