Key performance indicators (KPIs) are paramount to every company's goals, as they keep these objectives at the forefront of decision making. This is especially important in the media/marketing sector, where the complexity and diversity of available data increases daily. Performance assessment calls for compiling tremendous amount of data if you want to make data-driven decisions.
When your employees are aware of and are accountable for their own KPIs, the growth and ultimate success of your business will become measurable and manageable. So, let's take a look at how KPIs are defined and how they can be used.
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KPIs are measurable values that show how effectively you are achieving your business objectives. In contrast, metrics only track the status of a specific business process. That basically means that even though all KPIs are metrics, not all metrics are KPIs, as not every metric can be “key.” If all of them are special, none of them are.
The main requirement for measuring metrics and KPIs is having access to current and reliable data. That means having access to all of the data sources related to your business activities. A dashboard can be a powerful tool that gives everyone involved access to a single source of truth regarding the data as well as allowing them to display and assess KPIs and their performance.
The purpose of measuring KPIs is to help companies, departments or individuals understand how they are performing in terms of strategic goals and objectives. You can use the SMART rule to figure out which metrics to use as KPIs:
Specific: You need to be clear on what exactly the KPI should measure. Its definition should be transparent and accepted by everyone involved in order to ensure that everyone can come to the same conclusion when interpreting the numbers.
Measurable: KPIs have to be measurable. Only then can actual values be compared to target values or benchmarks in a quantifiable way.
Achievable: KPIs need to be realistic. Nobody will be able or willing to work to achieve goals that are not attainable.
Relevant: The KPI needs to be derived from an overall strategy that relates to the company's goals - otherwise it’s irrelevant.
Timely: Similar to a strategy, a KPI only makes sense within a specified timeframe in which a specific goal needs to be achieved.
Choosing the right KPIs strongly depends on your business and its position in a given market. For example, a start-up will often focus on getting as many new customers as quickly as possible, while an established business will have a stronger focus on their cost structure. One way that KPIs can put business performance into perspective is by measuring trends in the customer lifecycle: reach, activation, active usage and retention.
In marketing, KPIs are behavioral proxy to customer reality. It is clear that business objectives can often be summarized as ‘SELL MORE’, and this has to translate into the right marketing KPIs. But choosing the wrong ones can also be detrimental.
For instance, if a candy brand translates its business objective into ‘increase in volume sold,’ the results will be positive as soon as a ‘buy-one-get-one-fre’e campaign is launched, even if the campaign only brings in half of the standard margin on the product.
Business: market share, market penetration, market volume (and its evolution over time)
Brand strength: unaided and aided awareness, top of mind, usage in the past, last buy
Life cycle - awareness: reach/visible impressions
Life cycle - interest / consideration: visit to website/social media page/information requests, search, reviews
Life cycle - purchase: purchase in volume, in value, average price paid
Life cycle - loyalty: product review, ratings, comments (in volume and quality)
Media has its own set of KPIs that help technically transcript business & marketing KPIs. Here’s a simplified example for website KPI measurement:
Awareness: users need to first be able to find your website (Google Search ranking), Interest bounce rate (% of people that leave the page without clicking), time spent (active time spent on the website) including number of page views
Consideration: visit store locator, visit contact page, go to online shopping, put article in basket, reviews read
Purchase: finalize the purchase online or click and collect (physical purchase can be measured in other ways)
Loyalty: returning visitors/clients, positive comments, reviews, rating
Again, it’s crucial to identify relevant KPIs based on your actual business, as no KPI list fits every purpose. Going through this process will help you focus your efforts on the key areas of your company, and using the right KPIs to measure progress in these areas with will help put you in charge of any developments going forward.
MMT offers a data-driven transition service based on a combination of data and media expertise to provide both the data infrastructure and the adapted consulting support you need to build your KPI structure. Our core MMT suites provide easy connectors with MMT Bridge and with MMT Scout a web-based visualization platform so that you can have all of your marketing KPIs in one place and have them updated as regularly as you wish.