What are KPIs?
Key Performance Indicator is known as KPI. It is a quantifiable statistic that shows how successfully a business is achieving its goals. KPIs are used to assess whether an organization, department, or person has been successful in achieving their goals and objectives. They allow companies to monitor and assess progress toward particular goals and support data-driven decision-making.
KPIs frequently used as examples include:
- Rise in sales revenue
- Cost of acquiring new clients
- Rate of conversion
- Rate of employee turnover
- Net promoter rating
- Website visitors
- Market timing for new items
The selection of Marketing KPIs that are directly related to the goals being pursued is crucial.
The goal of any marketing effort, aside from obviously gaining clients, should be to make the most of the money spent on getting more customers, and the overall marketing strategy. Ensure that you have a way to measure the effectiveness of anything you do to get clients. Doing this will also provide a means to determine if you’re meeting short-term objectives and help calculate annual return on investment.
Planning and establishing a way of doing things is also known as operational order. This is important because it helps guide the decision-making process. Here are some variables to keep in mind as you plan.
Customer acquisition cost (CAC)
CAC helps reveal your average cost of gaining new customers. This information is also used to determine how much of an investment your company is making to attract clients on a monthly, quarterly, semi-annual or annual basis. This is important because it affects the bottom line. The lower the cost to acquire customers, the more money you make.
Customer life cycle
The customer life cycle is a term used to describe the progression of steps a customer goes through when considering, purchasing, using, and maintaining loyalty to a product or service. You must be aware of the costs associated with influencing a customer to buy your product and/or service and maintain that relationship. It’s a big part of your customer life cycle and affects your bottom line.
Return on Investment (ROI)
The costs your company incurs to land a client, which can include anything from packaging to marketing materials, commercials, and web sites are just one half of the investment part of ROI. The return is when a client purchases a product or service. How much they spend and what products they buy will provide a clear impression of the effectiveness of a company strategy.
Measuring ROI is one of the most effective ways of ensuring that a marketing campaign or anything associated with marketing is working. Comparing customer acquisition costs (CAC) against sales is a good way to estimate your ROI. It’s important for internal or external marketing teams to inform you about how they will measure the success of any campaign before that campaign is launched. If they don’t do this, you need to ask. Your ability to measure determines if your money is being well spent.
Examine data and measure performance
Data measurements help companies compare expected results to actual results, and influence adjustments when necessary. In order to answer questions about improving sales, marketing strategies, and customer acquisition, these things need to be measured in some form or another.
For example, what are your sales for the year, and the last four quarters? What marketing strategies did you use and how much did they cost? What were your customer acquisition costs for the year and the last four quarters? While numbers aren’t the sole reason for a company to move in a certain direction, it helps leadership confirm the current path is effective, or that a new direction is required.
Marketing plans and flexibility
All companies strive to have a proven and consistent strategy to earn revenue, but the most successful are those who don’t rest on the accomplishments of the past. A marketing plan remains effective if data is examined consistently – especially if a company is successful.
You don’t take your hands off the wheel when you’re driving a car just because it’s going straight ahead. Constant corrections and vigilance are key. Checking data, coupled with reliable employees can identify trends that work well, but also reveal situations that require minimal correction if you catch them early.
An organization’s marketing KPIs and plan should be established through extensive examination of data, and input from employees and leaders. The plan must be interactive and have some flexibility built-in; changing as needs or as the organization require. Success lies in strong internal collaborations that help companies anticipate and navigate challenges, and meet objectives.
In other words, numbers are good, but the people involved need to be able to speak frankly to one another about what works and what doesn’t. This combination is the foundation of most successful organizations.
People power is the single most important component
Companies often have a good portion of what’s needed to make them successful in relation to staff, and tools. Using the experience of the staff is a highly effective way to learn what is most important in building a good business and practices. Leaders who trust the knowledge and experience of staff members make their teams feel valued and important to the success of the company. Strong working relationships are the most significant component, and high performance the byproduct.
Some leaders fear that making employees feel valued may influence them in asking for a raise. If this is the case, it requires some consideration on the part of the leader. It makes business and financial sense to reward those whose impact improves the business. In the long-term, it’s a cost-saving to keep a valuable employee rather than spend time and money to hire another who may or may not be as effective.
Training staff before they begin to add value to your company takes time and affects your bottom line. High turnover is also one of the single most important causes of product and service inconsistency, which lead to loss of revenue. Keep and reward good employees. It’s the hallmark of an exceptional and profitable company.
For more information on success strategies for your organization, contact the experts at Advertising Avenue. We’d love to help.