KPIs or Key Performance Indicators are quantifiable goals that help you measure and track your success. KPIs help you and your team set exceptions and prove the effectiveness of your work. In this video, I’ll share the role of KPIs in digital marketing and the key characteristics of good KPIs.
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Video Transcript:
As I said in the opener, we’re going to be discussing KPIs, what they are and how we can apply them to our digital marketing strategies.
What is a KPI?
What is a KPI? KPI stands for key performance indicator, and this is a quantifiable measurement that helps us know whether or not we’re hitting our goals. It helps us track the effectiveness of our campaigns. There are a few things that we can keep in mind, especially when we’re tracking our digital marketing strategies, to make sure that we’re actually getting the results we want instead of just looking at vanity metrics.
What’s the difference between a KPI and a vanity metric?
What’s the difference between a KPI and a vanity metric? Well, a vanity metric is something that we track that sometimes makes us feel good, but it isn’t delivering the results that we want. Vanity metrics can be anything that is just an indicator, but it maybe is not tied to our ultimate goal. One of these things you can get wrapped up in, especially in SEO, is obsessing about rank tracking. Ranks move up and down, they fluctuate more frequently than ever before. That’s just the way search engines work.
And if you obsessively track them and you’re only looking at ranking as an idea of whether you’re doing well or not, you’re going to be tracking the wrong things and you’re going to be really frustrated. And when you see good numbers, it’s not always an indication that your strategy is working. You want to make sure that you’re tying your metrics back to a main goal. That’s what gives them weight. Ranking can be a leading indicator, but it has to be measured in the right way. Otherwise we’re tracking for tracking sake and that’s a vanity metric.
3 Key Characteristics of KPIs
1. Make them S.M.A.R.T
The one thing is they need to be smart. They need to be specific, measurable, attainable, relevant, and time-bound.
You need to know specifically what you’re looking at.
You need to know the exact measurements that you want to track. It needs to be quantifiable, which means you need to be able to measure it. It can’t be measured in feeling, we have to use data.
Attainable means we need to make sure that we can actually achieve the goals that we’re setting out for ourselves. Stretch goals are good, but you also want to make sure that it is attainable.
Relevant. It needs to be relevant to the overall business goals. If it’s not relevant to the overall business goals, it shouldn’t be considered a KPI.
And then time-bound. We need to have a time boundary around it and parameters that we can look at to know that the changes we made within a specific period actually resulted in the results we were looking for.
2. Have Only 5 to 7 KPIs
Another key characteristic of KPIs is that they should be limited. You should only be tracking about five to seven KPIs. Now, this doesn’t mean you can’t have other leading indicators or you can’t be looking at other pieces of data that apply to your KPIs. But when it comes to having those key performance indicators, you should limit yourself, again, to five or seven. Anything more than that and you just start getting in the weeds and you don’t really have direction. Make sure that you’re limiting your KPIs and you’re not stretching yourself too thin. You really don’t want to drown yourself with too much data. We can get into the weeds very quickly, and it’s harder to make decisions when we’re surrounded by so much information. You need to make sure you’re only focusing on the things that matter to your overall business goals.
3. Make Sure You Can Influence your KPIs
The final attribute of a good KPI is it needs to be something that you can influence. You want to make sure that these are numbers that you have direct impact on, and that you can do something about. When you’re making lists of your KPIs, it has to be something that lives within your department and that you can influence. You don’t want to be tracking the results of somebody else’s department or the work they’re doing, because you have no influence over that. This is really important when developing your KPIs to make sure that you are being held accountable for things that you can change and make an impact on.
Conclusion
Key performance indicators are extremely important to help make sure that we are doing what we can do to move the company in the right direction. When it comes to our digital strategy, those are the quantifiable numbers that are saying, yes, we’re heading in the right direction or no, we need to make some changes. Now we have to remember again, that our KPIs have to be attached to the overall core mission and goal of the business. That can be known as the North Star Metric. That’s something that we talk about in growth hacking. A North Star Metric is the one metric that means the most. It’s the one metric that tells us whether or not our business is succeeding or whether our business is failing. You need to understand that metric first, before you can start to develop your KPIs. Whether you’re an agency, whether you’re an in-house marketing manager, it’s still important to understand what’s going on with the business as a whole, that way you can develop a strategy that moves you in the right direction.
I hope you learned a little more about key performance indicators, how they apply to digital marketing, and marketing in general. If you have any other questions, please comment below. Want to add any value to this video? We would love to continue the conversation with you. And until next time, Happy Marketing.
