Key performance indicators (KPIs) are what marketers use to gauge their success. A key performance indicator, or KPI, gauges how well your business is doing in reaching a particular aim or target. Every facet of business, including financial, marketing, sales, and operations, has its own set of key performance indicators.
KPIs are quantifiable measures that assess overall performance over a period of time. Using your automation software to create bespoke dashboards is a terrific method to examine and report on your KPIs.
Now that we know what a KPI is, let’s examine a few instances:
Customer Acquisition Cost (CAC):
A potential lead’s cost of acquisition (CAC) is the amount of money needed to turn them into a paying customer. This indicator aids in crucial budgetary decision-making, which can help you enhance your marketing. For instance, if obtaining a customer won’t turn a profit, you don’t want to spend excessive amounts of money on it. In essence, this aids companies in determining how much to invest in client acquisition.
Lifetime Value of a Customer (LTV):
The customer’s lifetime value is another indicator that may be used to calculate the appropriate amount of money to spend on marketing. This measure shows how much money a company may expect to make overall from a single client. Comparing this statistic to CAC is a useful exercise. For instance, you’re most likely overspending on customer acquisition if your CAC exceeds your LTV.
Return on Investment (ROI):
The amount of money you make in relation to the cost of marketing is known as the return on investment (ROI). The return on your investment can be computed by deducting marketing costs from sales growth and dividing the result by marketing costs. Remember that it can be challenging to link a marketing campaign’s increase in sales. If so, you can split your sales growth by your marketing cost after deducting your average organic sales growth and marketing cost from your sales growth.
Return on Ad Spend (ROAS):
One more specialized KPI you can use to assess the performance of your advertising efforts is return on ad spend. This statistic compares the amount of money made for each dollar spent on an advertising campaign.
Usually, it’s a ratio. Let’s take an example where you made $10 for every $1 invested in a marketing effort. Thus, your campaign’s return on assets (ROAS) is 10:1.
Marketing Qualified Leads (MQL):
An MQL is a lead that has expressed interest in your business and, with further nurturing, has the potential to develop into a more serious prospect. Measuring this KPI is an excellent way to help your marketing team determine how many leads they are generating. Additionally, your marketing team may track the number of MQLs that convert to SQLs and ultimately customers by comparing them to sales-qualified leads.
Sales Qualified Leads (SQL):
A well-nourished MQL will eventually develop into a sales-qualified lead. A SQL is a potential client who is prepared to speak with a member of your sales team. Typically, your marketing department has done its due diligence and screening on these leads. Once more, your marketing team can utilize this KPI to learn how many of their leads are interacting with your sales staff.
One of your responsibilities as a marketer may be to oversee the social media accounts for your business. A useful KPI to monitor if you are on the social team is the growth in the number of your followers. Your social media team’s main objective is probably to engage your audience and raise brand awareness. Gaining more followers is a terrific way to gauge how well those goals are going. You may want to think about doing sponsored campaigns in order to increase your following.