How to Establish your Marketing Strategy and KPI's
As you surely know by now, goal-setting is a critical process in every business. You can’t hit goals that you don’t have, after all. And if you have a plan to reach your goals, getting there will become a much more straightforward process than you’d otherwise face without the plan.
It’s time to set up your marketing plan for your business, establish the KPIs you want to measure, and then develop the strategy to support it.
To help you establish your marketing strategy, I’ll talk about:
How to establish marketing goals
What KPI stands for
Common marketing KPIs
Other valuable metrics to measure
Who’s ready to talk strategy?!
Establish your goals
The first step to any marketing plan (or any business strategy plan at all) is to decide your goals and figure out how you’ll measure your progress toward them. For a marketing plan, your goals might include any of the following:
Enter new markets
Raise brand awareness in existing markets
Launch a new product or service
And, of course, increase sales and revenue
That list is by no means exhaustive, though! Every business and every agency will have their own goals. You might even need to consider a goal that’s client-facing (improving the customer journey, for example) or even internal (like establishing systems, processes, and communication channels within the marketing department).
Next, it’s time to figure out your KPIs.
What does KPI stand for?
Once you know where you want to go (in other words, your goals), you need to decide how you’re going to measure your progress. Frequently what’s used to measure progress is a metric called the KPI, or key performance indicator.
There are all kinds of KPIs you can use to measure your goals, some of which are accepted industry-wide and others of which are sometimes overlooked but incredibly valuable.
The primary thing to consider as you select the KPIs you want to track is what the results are that you’re driving everything toward. You can collect all the data you want, but if all you’re doing is putting stuff in motion so that it can spit out numbers on the other side — rather than defining The Prize and then keeping your eye on it — your KPIs won’t do you any good.
With that in mind, let’s take a deep dive into some of the most common — and most commonly overlooked — KPIs for your marketing plan.
Marketing KPIs about money
The purpose of a business is to make money, plain and simple. If a business isn’t primarily concerned with making money, it’s not a business (and it won’t be in business for long).
So for that reason, you’ll want to keep an eye on some performance indicators around your revenue and sales. These are the main ones:
Revenue is the amount of money that comes in the door. Many marketers and business owners see that number and stop there, but revenue is hardly the only money number you need to know. It’s sometimes called gross profit, and it’s the money you make before the expenses come out. You could be making a 7-figure revenue, but if your expenses eat up the majority of your revenue, the business might still be in jeopardy. That’s why you also need to look at …
Net profit is how much money is left over after your expenses are paid out. Net profit and revenue work closely together, and ideally you’re making the space between your revenue and your profits as big as possible. (This is called your margin, and the fatter your margin is, the more money the business is actually making.)
Sales growth marks the increase or decrease in sales between two points of time. You might want to measure a few different time periods, such as total sales growth this year vs. last year; this quarter and last quarter; this month and last month; this month and the same month last year, and more. You measure growth by using the “percent change” calculation — (new – old) / old x100 (and that final number is the percent change, or sales growth).
Revenue per client (a.k.a. lifetime customer value)
LCV is the total number of dollars a customer spends with your business over the entire course of your relationship with them. Most marketers will have a goal to raise this number over time.
Revenue per employee
This is fairly straightforward in theory but can get a little muddy in practice, depending on how your agency is set up. You can calculate the total revenue and compare it to the total number of employees regardless of their role in bringing in that revenue, and/or calculate how much revenue any given employee is responsible for bringing in.
Average contract value
In eCommerce language, this is equal to average cart value — the average value of the transactions in a given period.)
Marketing KPIs about clients, customers, and leads
A lot of the lead and client acquisition numbers play into the advertising puzzle. The idea is to figure out how many customers you need to find in a certain timeframe (the year, for example), and then work backward to determine how much traffic you need to be driving based on previous experience. These are the KPIs to measure (and thankfully, many ad platforms help you track and export them fairly easily).
How many leads did you generate in a given timeframe, whether or not they became clients?
Cost per customer acquisition
Once you know the cost of customer acquisition, you can set targets and budget accordingly.
Cost per lead
Measuring your cost per lead will show you what’s working and what’s not in your ads. Cost per lead, combined with other critical data, all play a part in advertising decisions to keep you profitable and scale.
Lead to customer ratio
Knowing how many leads become customers will let you figure out how many leads you need to get to hit your customer acquisition targets. It’s one of the string of numbers that goes into lead generation advertising decisions.
Traffic to lead ratio
Traffic to lead ratio is another piece of the advertising puzzle. It tells you how many views/clicks/hits you need before someone becomes a lead. When you know how much each lead costs, how many leads become customers, and how many customers you need, you can use the traffic-to-lead ratio to figure out how much traffic you should drive to hit your customer goals.
Number and source of client referrals
Who’s referring clients to you? What can you do to improve this?
Marketing KPIs about conversions, content, and social media
Conversions and leads go hand in hand. Ultimately you want all your conversion statistics to be a high as possible, but it’s a lot to track! The more you know, however, the more you’re able to make adjustments at any stage of the funnel.
Inbound marketing ROI
ROI is the holy grail of KPIs, right? Well…maybe. You have to make sure what you’re putting into marketing is coming out the other end with positive results. Sometimes ROI can be tricky to nail down and identifying the specific marketing efforts that are bringing in positive returns can take some time, but always keep an eye on ROI as you make adjustments.
Landing page conversion rates
Generally speaking, landing pages should have at least a 20% conversion rate, though many times they’ll convert at 50% or higher. If your landing pages aren’t converting at 20%, the page needs to be examined and adjusted.
Email open rates
There’s no one universal email open rate, but generally speaking you’ll want your open rates to be hanging out around 30% at least. Larger lists tend to veer lower in open rates.
Email conversion rates
What percentage of the people who open your emails become leads or clients? There’s no standard benchmark for this figure, but keeping track of your internal conversion rates can inform policy and give you something to target in your marketing strategy.
Social media traffic stats
These numbers can help you pinpoint where your ideal leads and clients are hanging out online, which means you can target your advertising more finely. It might also show you which platforms are under-performing over the long haul, so you can consider revamping or eliminating your company presence there.
Mobile vs. desktop leads and conversion rates
While this seems a bit like splitting hairs and getting too far into the nitty-gritty, it’s actually very helpful to know whether your leads and conversions are coming from desktop or mobile. This gives you some good insights into the behavior and preferences of your clients, as well as some demographic suggestions (younger buyers tend to buy on mobile more frequently). But more importantly, it gives you an idea of how well your mobile site is doing. Many websites aren’t optimized for mobile, and they’re leaving lots of potential leads and conversions on the table as a result. If your mobile conversions are flagging, the first thing you can do is work on the user experience of your website on mobile. Whats user experience right?
Valuable customer service KPIs you might be overlooking
There’s seriously no end to the number of KPIs you could track. These are some of the most frequently overlooked ones, but I wanted to include them because they do offer some key insights and some low-hanging fruit as far as things like customer retention and profitability go.
These aren’t necessarily directly marketing-related, but happy customers are the best social proof you can ever ask for, and social proof is a massive part of the marketing picture. Once you can be assured you’ve got happy clients and customers, you can begin to think of ways to include them in your marketing efforts.
Sales team response time
How long does it take you to respond to a potential customer? This could mean email reply time, social media dm’s return time, or even how many times the phone rings before you pick up.
This metric measures overall satisfaction a client or customer has. You can target specific areas satisfaction after a specific customer service interaction or just ask for overall satisfaction periodically.
Net promoter score
This is when you follow up after a customer service interaction and ask how likely that customer or client is to recommend your business to someone they know, based on the interaction they just had. This is a great customer service metric to measure, as it gives you information “straight from the horse’s mouth” about how highly your clients perceive your company.
They say knowledge is power, and they’re right. Once you’re measuring your KPIs and comparing them to the goals you’d like to hit, you can start making adjustments. One of the most expensive parts of marketing is the advertising, so it might make sense to nail down your customer targets, your customer journey conversion rates (traffic to lead, lead to customer, etc.), and then allocate your resources in support of that customer journey. The other pieces of the marketing puzzle will start to fit together more easily once you’re clear on that customer journey and the numbers associated with it.
If you’re new to the KPI arena, this list might be overwhelming. If that’s you, don’t panic. Do the best you can, take a look at the business, and see where you need to start bulking up your measuring habits.
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