In marketing, KPI stands for “Key Performance Indicator”, an index that measures and evaluates the performance of a department or the operation of the whole company. KPIs can be applied to every aspect of a business, from finance, sales to investment activities, …
Some of the popular KPIs
1.Cost of converting customers (CAC):
CAC is the total cost of convincing a potential customer to buy a product or service over a specific period of time. This metric is directly related to your budget, helping you to see if your current marketing activities are working or not. From there you can improve your marketing to optimize costs. CAC calculation: CAC = Total sales and marketing expenses / number of new customers from the above activities.
2.Customer Lifecycle Value (LTV):
The customer lifecycle value represents the total expected value that a customer contributes to the business profitability over their lifetime. Loyal customers that bring stable and long-term value to the business are those with high LTV. This metric, combined with the CAC, helps you determine how much money you should spend on marketing. In case your LTV is lower than the CAC, you may be spending too much money on acquiring a new customer and should reduce the budget for this activity. LTV calculation method: LTV = (Transaction 1 + Transaction 2 + Transaction 3 +… Transaction n) x Average Profit Rate
3.Return rate (ROI):
ROI is the ratio of net return to total investment costs, showing the performance of the investments from the business. The larger the ROI, the more effective the investment activities of the business are. You should focus on investments with high ROI, and for those with low ROI, you should either try a new strategy or consider diversifying. How to calculate ROI: ROI = (Revenue – Cost) / Cost
4.Return on advertising cost (ROAS):
In marketing, ROAS is used to measure the profit generated from advertising activity. ROAS allows you to see how much revenue for every penny you spend on advertising.
Compared with ROI, ROAS allows businesses to determine advertising effectiveness in more detail when calculating the profitability of each campaign, each ad group, and even each keyword. How to calculate ROAS: ROAS = Advertising revenue / Cost of ad source
5.Potential customers qualified for marketing (MQL):
MQLs refer to those who have more potential to become real customers of the business than other potential customers. An MQL is defined based on information and consumer behavior and analyzed with a closed business process. Defining an MQL file helps you quickly see which audiences are more likely to buy, from there to focus on those audiences and optimize your marketing.
6.Leads qualifying for sales (SQL):
If an MQL is properly cared for and develops relationships, they will more likely become an SQL. Now, after being carefully evaluated by the marketing and sales teams, SQL is ready to move on to the next stage of the sales process. Tracking SQL helps businesses carefully screen those who promise the highest conversion rates and build strategies that are right for them, driving them to buy.
7.The growth of Followers:
Managing corporate social media accounts is an important job for most marketers. Tracking the growth of followers on these accounts is 1 KPI that cannot be ignored when evaluating marketing effectiveness in the digital environment. Increasing the followers is a way for you to know that your business’s level of recognition and engagement with consumers is also gradually increasing. To grow your follower platform, you might consider running sponsored campaigns. A brand increased by 36 times its number of followers per day during the 4 days running a series of Instagram posts, increasing the number of followers by 18.15%.
8.Conversion Rate (CR):
The CR indicates what percentage of the total conversion attempts. These conversion behaviors are not required to be “purchase” but can also be diversified into “registration”, “provide information”, … depending on the purpose of the business. CR is an extremely important indicator when evaluating marketing effectiveness. CR optimization helps you to reduce costs per customer and bring higher profits. CR calculation: CR = Number of conversions / Total visitors x 100
9.Website traffic volume:
Website is an important communication channel for businesses. A website that attracts a lot of traffic plays a big part in the success of attracting customers to the business. Website traffic tracking allows you to evaluate the effectiveness of multiple marketing campaigns. For example, organic traffic shows the effectiveness of the SEO team or determines whether social media advertising is bringing in the website traffic you want, …
10.Number of interactions on social networks:
Any action a user takes on a particular post or fanpage is counted as an interaction for that post and fanpage. The number of interactions is a KPI that cannot be ignored when evaluating the effectiveness of social media marketing. After determining the number of people reaching the article (reach), marketers need to pay attention to the amount of interactions – an important indicator of showing the attractiveness of the article to the target audience.
In addition to Direct traffic and Organic traffic, Referral traffic helps you determine where your business’s website visitors come from. All visits without going through any search engine are considered Referrals. Referral traffic is stored using the HTTP protocol in the browser. Tracking this KPI helps you evaluate the effectiveness of advertising from platforms other than major search engines and websites.
12.Customer sympathy index (NPS):
This is a KPI that indicates customer satisfaction. The index ranges from -100 to 100, measuring how willing customers are to recommend a company’s products or services to others. NPS is a measure of efficiency for forecasting the growth of the business in the future. NPS helps you to listen to and understand your customers from their satisfaction and brand loyalty.
This KPI is used to measure the effectiveness of your SEO efforts. Good SEO results in high search rankings, increases organic traffic and leads to lower advertising costs.
14.Attendance to events:
It is difficult for a marketer to avoid organizing events when doing marketing activities. For this activity, number of participants becomes an important KPI for performance evaluation. Tracking this metric helps you see if your marketing team is getting consumers interested and willing to attend your event. The more people join the event, the more successful your organization will be.
15.Customer retention rate (CRR):
Businesses always want customers to come back and continue to buy from them. This is reflected in efforts to increase customer retention rates. Measuring this KPI helps administrators to know the level of customers’ willingness to maintain relationships with the business and thereby shows the ability of the business to develop sustainably in the future. How to calculate CRR: CRR = [Number of customers at the beginning of the period / (Number of customers at the end of the period – Number of new customers in the period)] * 100 There are many KPIs depending on the operation and measurement purpose of the business. Karma. Building the right KPIs play a crucial role in your marketing and other activities as well.
Translated by Hoai Thi
Source from: advertisingvietnam.com