KPI is a term that is often heard and used in business meetings or conversations. But, how can you define KPI in marketing? A key performance indicator (KPI) is a measurable characteristic that shows how well any company is achieving its key business goals. To put it simply, a KPI is an objective you are hoping to achieve. By assessing business performance using KPIs, you will be able to know if you have reached your targets.
In this post, we’ll dive into an in-depth introduction to key performance indicators.
What Are Key Performance Indicators (KPIs)
Key Performance Indicators (KPIs) refer to the important quantifiable measures of progress towards a particular outcome. These indicators provide insights to enhance teams’ performances and track their progress. KPIs also help in the decision making process of teams by enabling people to focus on the essentials. Commonly used in many different business units, KPIs are critical in moving any business forward strategically.
From a business perspective, there are two main categories of KPIs: high-level or low-level. High-level KPIs focus on the overall performance of the company. Some examples include relative market share and annual growth. They are typically an outcome of the efforts and work across several departments. On the other hand, low-level KPIs look at the performance of individuals and specific teams. They are closely related to the people and the impact of their actions.
Why Are KPIs Important
Now that you have a better understanding of what KPIs are, you may be wondering how important they are and what is the purpose of KPIs. Setting KPIs help teams strive towards common goals together and set businesses on a long-term path of success and growth. They provide valuable insights on the performance of a business, enabling leaders to implement operational changes in a relevant way to solve performance problems. In addition, KPIs can predict potential results which allow leaders to have sufficient time to take necessary actions so as to maximise the return on investment.
What Are The Types of KPIs
There are a myriad of ways one can classify Key Performance Indicators, but overall, KPIs can be sorted into two types: Quantitative and Qualitative.
Quantitative KPI is a measurable characteristic that makes use of numbers to track progress. This is the most common type of KPI and it includes many indicators such as the number of sales, annual revenue, calls handled and much more.
Qualitative KPI tracks data of a descriptive nature, such as an opinion, customer surveys or product reviews. These indicators only look at non-numerical and qualitative data. It is also important to note that for such reviews and surveys, the results obtained are reflective of an individual’s viewpoint. This can hence be subjective to some extent.
There exist many other characteristics businesses use to measure their performance and achieve their business goals. More often than not, several measures are utilised in the progression of striving towards a target.
What Are Examples of Key Performance Indicators
How will you know which of your strategies are working and which aren’t delivering good results? Here, we’ll walk you through some examples of the key KPIs you can track in the context of search engine optimisation (SEO).
Search Visibility
Search visibility is an indicator of how much traffic a website gets from its rankings in the organic search results. It reflects how visible a website is when users enter queries into search engines. It is expressed as a percentage of the total possible organic clicks from search results a website receives for a specific keyword. This percentage is dependent on which position your website is ranked with respect to competitors.
Click-Through Rate
Click-Through Rate (CTR) is a performance metric that tracks the ratio of clicks on your link to the total number of people who viewed the search results. In other words, it is the percentage of the number of users who click on the ad over the number of impressions made. Hence, a high CTR will mean a high traffic.
Bounce Rate
Bounce rate is a metric that measures the percentage of visitors who left or bounced from your website without performing any action. These actions can include signing up for a course, making a purchase, or entering one’s email address and contact information. This value usually varies with industries and tends to lie around 50%. A high bounce rate is not desirable as it shows that your webpage is not useful or relevant to the users’ search queries.
Cost Per Click
Cost Per Click (CPC) refers to an advertising model where an advertiser pays a cost to a publisher based on how many times an ad is clicked. CPC is also known as pay per click (PPC). Such ads typically include display ads shown on the publisher’s sites. It is a metric used to evaluate the cost of showing ads to users online.
How to Set Key Performance Indicators
In setting and planning Key Performance Indicators, it is critical to only measure those relevant in achieving your business objectives. A common question will be “how to evaluate KPI?”. Start by determining the goals your business hopes to achieve and develop several KPIs helpful for your team. Is your team looking to set KPIs to measure brand awareness? Whichever purpose they are for, it is highly recommended to set clear KPIs according to the SMART formula (Specific, Measurable, Attainable, Realistic and Time-Bound). Over time, you may review these KPIs to ensure that they are in line with your business performance and goals. To learn more about the performance of your business, you can choose to create or write a KPI report. You can include interactive dashboards for your team to effortlessly evaluate the findings.
Learn to Track your Marketing Performance Today
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