When we’re talking about KPIs, we are referring to Key Performance Indicators or in other words the measurable values that are most important when understanding how a campaign has performed compared to the objective.
The bigger picture.
What distinguishes a KPI from a metric? They are both values that can be measured and tracked, but KPIs are the metrics that are key to measuring your business goals. For example, the number of visitors to your website would be a metric, however, if you incorporate website conversions, these values become measurable against the objective of increasing the website conversion rate (Total conversions / Number of Visitors) x 100).
The great thing about digital marketing is everything can be tracked; however, this also creates a minefield of metrics and data to analyse and sometimes people can get hung up on tracking vanity metrics over-identifying their KPIs.
KPIs are usually aligned to the marketing strategy, for example:
Objective: Increase the website conversion rate to 20%.
Description: The current conversion rate has stalled at 12%. To be competitive the conversion rate needs to increase in line with our competitors.
Completion: By the end of the year.
Reporting Frequency: Monthly.
Metrics: Number of website visits vs Number of conversions.
There is no one-size-fits-all when it comes to which metrics are important to your business, but we can give you some examples of a few we tend to use.
Number Of Clicks / Total Impressions
Clicks are an important indicator in the successfulness of a PPC campaign. The aim of the campaign is for the advert to be clicked; therefore, it is a good measure as to whether your ad is relevant and valuable to the targeted audience. Based on ad clicks, many marketers decide whether to pause their campaigns or boost their bids. It is worth noting that different industries have different click-through rates and what may be low for one, is high for another. The average click-through rate in AdWords across all industries is 3.17% for search and 0.46% for display. Wordstream 2020
Average Order Value (AOV)
Total Sales / Total Transactions
Your Average Order Value or AOV is simply the average amount customers spend on your products/services per order. By knowing your AOL, you can set your ad budget comparatively.
Cost Per Lead (CPL)
Total Ad Spend /Number Of Leads
The cost of a campaign is something that will no doubt be high on your list of things to report.
If you can attribute a lead to a particular advert, this will help in working out your cost per lead and therefore your return on investment (ROI).
For example, if you sell a high-cost item, you may get fewer leads than a low-cost item, but each lead will be worth more to your business (this is where AOV comes in).
If the cost per lead is greater than the average order value, it is time to consider whether a different platform or channel would be more cost-effective to target your audience.
Conversion Rate %
(Total Conversions / Number Of Visitors) x 100
Attracting visitors to your website is only the first step, you then want to turn them from a visitor to a customer. This will vary from business to business, as a conversion does not always equal a sale, it can also equal a customer completing a form or booking an appointment. Work out what you define as a conversion for your business or for the campaign.
If you have a low conversion rate, you can incorporate other website metrics to try to identify any gaps or potential hiccups.
- Is your Call To Action clear?
- Are your customers using the same exit page?
- Do you have a higher desktop to mobile conversion rates?
Cart Abandonment Rate %
(Total Completed Purchase / Total Shopping Carts Created) x 100
Like the conversion rate, cart abandonment is a useful metric to keep an eye on, especially in the retail industry. Statistically, the percentage of abandoned shopping orders is quite high, As of March 2020, 88% of online shopping orders were abandoned (worldwide) Statistica. There are many reasons for cart abandonment such as checking how much something would cost in total, dreaming of the perfect holiday, or simply changing their minds last minute.
However, keeping an eye on how often customers abandon the process can give you valuable insights if there is a recurring issue at a certain stage. For example, if the process is too long-winded, consumers may decide it is not worth it and exit early, if this is the case, try to refine the process to the most important sections only. Incorporate prefill options so that checking out is as easy as possible for the customer.
Cart abandonment does not mean the end with that customer, sometimes retargeting is the perfect way to entice your customers back to complete their purchase. Email retargeting is great for customers who have signed up to receive communications from you. You can automate these to send after a few hours or a few days, reminding customers of the item still in their basket, offering a discount or free delivery if they spend x amount more. Include testimonials to showcase the benefits of the product or the trust in the company.
Retargeting does not end with emails. Social Media is another way of reaching customers who have visited your website and not converted; platforms such as Facebook and LinkedIn have Tags that can be added to your website, these track the actions of your customers and can be used when creating a retargeting advert.
If you would like help with your PPC, Social Media or email campaigns, get in touch and book a free consultation!