The new year is only a couple weeks away, and if you haven’t already done so, now’s the time to finalize your 2017 marketing plan. While it’s essential you know what marketing channels you’ll be investing in, who your target audience is, and what your messaging will sound like, it’s equally important (dare I say, maybe even more important) to know how you’ll be measuring your success. After all, if you can’t convince yourself that you’re owning it, how are you going to prove it to others in your company? “Take my word for it” doesn’t sound too convincing if there isn’t proof to back it up.
When “measure” and “marketing” appear in the same sentence, they’re typically accompanied by a few other words (and some blank stares): data, conversion rates, cost per lead, click through rates, yadda, yadda, yadda. Measurability has long been one of marketing’s greatest challenges, but with some creativity, most marketing activities are measurable. The question becomes, “But Stratus, how do I know what’s actually important?”
You need to identify your metrics and KPIs.
“But Stratus, aren’t my metrics my KPIs?”
Prepare to have your mind blown.
Just like all squares are rectangles, but not the inverse, all KPIs are metrics, but not all metrics are KPIs. Huh?
What is a metric?
A metric is a measure, or quantification, of an action. In marketing lingo, your metrics are the numerical values associated with your marketing activities. Website traffic, number of clicks, average conversion value - these are all samples of metrics. While free-form customer feedback, such as “Awesome shopping experience,” is not a metric (although it is a qualitative property), the ratio of positive to negative feedback is as it is a numerical value.
A metric can be both a single measure (such as a count) or a calculated value. For example, number of impressions and number of clicks are counts (they show how many times an advertisement appeared, and how many times it was clicked), whereas Click-Through Rate (CTR) is a calculated value,
CTR = Number of Clicks / Number of Impressions x 100
Why are metrics important?
Metrics are important for measuring the health of your marketing activities. For instance, by measuring how many site visitors you receive per day, you’ll quickly identify any unexpected fluctuations (such as a sudden increase or drop in traffic), and deduce the respective cause. If your website has a chat platform, your metrics may be the number of chats per day (or hour) and average chat length. If you’re a SaaS platform provider and suddenly receive an influx of chat requests, there’s a high chance your customers are experiencing some type of technical issue that needs immediate correction.
Maintain metrics to answer the common questions (i.e. “How is our website doing?”), raise red flags (i.e. “Our web traffic suddenly stopped reporting!”), and to enable deep-dive analysis (i.e. “How has our website improved over the past 5 years?”).
What are KPIs?
Key Performance Indicators, or KPIs, are metrics (Indicators) that are directly aligned with your business goals (Key), and measure how successful (Performance) you are at achieving your objectives. IKP! Or… KPI. Your KPIs answer the questions generated by your business objective.
What does this mean!?
Let’s run through some examples of KPIs.
Business objective: Improve customer retention by 15% over the next 24 months.
Question: How many customers renewed their annual contract at expiration?
KPI: Customer retention rate (number of contracts renewed at expiration / total number of contracts at expiration x 100)
Business objective: Achieve $10 million in Q1 web sales.
Question: How much we have sold over the web in Q1?
KPI: Value of web sales
Business objective: Increase awesomeness by 48% by 2017.
Question: How many unprompted high fives have we received this month?
KPI: Number of unprompted high fives
Why are KPIs important?
Your KPIs are measuring your progress to what matters most: your business objectives. Without KPIs, you’ll be flying blind (and without autopilot), and unable to make calculated business decisions. For every business objective, you should have at least one KPI. Use your KPIs as listening posts and monitor them frequently to ensure you’re where you want to be.
Marketing Plan: More Than Meets the Eye
A successful marketing plan needs planning, action, and maintenance, and knowing your metrics and KPIs is only a small (but crucial) component of success. To help you reach your business objectives, we’ve put together a 20-tip checklist for building a successful marketing plan (sneak peak: reviewing your metrics and KPIs is Tip #4).
Start incorporating the other 19 tips today by downloading your free copy of our checklist.