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Forget the Rest: There Are Only 7 Digital Marketing KPIs You Need to Care About

One of the greatest things about SEO and digital marketing at large?

The results of our work can be easily measured.

The only catch? You need to know which KPIs (Key Performance Indicators) to track.

We’re spoiled for choice.

There are too many digital marketing KPIs out there to work with. To be effective in measuring your results, you have to choose just a few.

The digital marketing industry is growing at an astonishing pace, and there are more and more ways to play (and win) the game.

There are hundreds of KPIs we can track. However, not all of them are equally important.

For example, your traffic is growing and that’s amazing, but what’s next? Do all these new site visitors boost your profit?

Not necessarily. So, you’ll also want to focus on measuring just the traffic that boosts profit.

The same goes for your followers on social media or the number of your likes, shares and comments. Measuring these social engagement metrics isn’t enough to know what’s going on with your digital marketing performance.

Sure, these numbers make you feel great. Unfortunately, they’re pointless—they’re even called vanity metrics by some. Getting hung up on them may cost your business a lot.

So, which digital marketing KPIs should you track?

First, let’s talk about the tools you’ll need to identify and track those KPIs.

Which Tools Do You Need to Track Digital Marketing KPI?

To keep track of your metrics and analyze them effectively, you need to invest in the right set of tools.

For example, Google Analytics and Google Webmaster Tools are free, accurate, must-have tools for recording and analyzing your SEO and other digital marketing campaigns. Monitor Backlinks gives you all of your key organic traffic, keyword ranking and backlink information on a silver platter (try the 30-day free trial and get a taste, here). Hootsuite shows your performance on social media.

You can even consider combining these tools and observing all your metrics from a single KPI dashboard like Reportz. This way, your team will get a real-time insight into the performance of your digital marketing campaigns, make data-driven decisions and solve problems instantly.

By choosing tools that cover all the segments of your digital marketing campaign, you’ll be able to see which KPIs are most critical to your business. You might find that one is a huge indicator of your performance and revenue, while others just don’t matter too much.

Now that you’ve given a little thought to tools for KPI tracking, we can move on to your major digital marketing KPIs.

This is what we recommend for every digital marketer worth his salt.

The Only Digital Marketing KPI You Need to Care About

1. The Click-Through Rate (CTR)

Your click-through rate shows how many people clicked on a page result, as opposed to the number of people viewing it.

Once you’ve gotten to the top of the SERP and achieve solid keyword rankings, the CTR indicates how effective and engaging your site content, paid ads, meta data and CTAs are. This is why it’s extremely important. Even more important than the keyword rankings themselves, one might say.

If people see your pages in search results but avoid entering them altogether, this means that something’s wrong with your approach and you need to rethink it. They’re looking at your SERP result and not seeing what they want. Your meta titles, meta descriptions or content may need adjustment to encourage more clicks.

To calculate your CTR, you need to divide the total number of clicks on your page by the total number of impressions and multiply this by 100:

(clicks on page ÷ number of impressions) × 100

If your content gets 1,000 impressions in Google search results one day, and only 10 people click, the CTR for that day is 1%:

(10 ÷ 1,000) × 100 = 1%

2. The Percentage of Leads Acquired

You already know that SEO is the backbone of virtually every digital marketing strategy these days.

You target the keywords people use when conducting searches and optimize your site for them, so your content appears in search results. This is how you boost your visibility and drive organic traffic to your site.

And, if your visitors like what they see, they may decide to sign up and become your leads. Over time, by boosting their engagement with your brand and bringing value to them, you may inspire them to make a purchase.

This is exactly what your sales funnel represents, and it consists of four basic stages:

  • Awareness — This is the very beginning of your relationship with your customers, a point at which your customers are barely familiar with your brand.
  • Interest — This is when your customers will start evaluating your site to see if it’s relevant enough for them. You do all in your power to spark their interest in your brand, boost brand awareness, and collect precious customer information.
  • Decision — At this stage, your potential customers assess different features of your product to see whether it really solves their problems and meets their needs. If it does, then it leads us to the final stage: action.
  • Action — This is when a customer converts and makes a purchase.

Your leads are all a little different, based on their current position in the sales funnel.

They could be subscribers that have read a couple of your blog posts and signed up for your mailing list, marketing-qualified leads, sales-qualified leads, customers or even evangelists that buy from you regularly and mention your brand in their content.

So, for starters, you need to see how many leads of each type you have. Then, you can move forward with some other lead tracking strategies, such as:

  • Source and cost attribution — You need to check which channel your leads came from and see how much was spent on each of these channels.
  • Comparing sales-qualified leads you generated with your estimations. You could use the following formula:

(actual goals – goal) ÷ goal

  • Estimating monthly recurring revenue per sales-qualified lead. The way you calculate it is simple:

your monthly recurring revenue ÷ total sales-qualified leads

When tracking your leads, there are a few things you need to know.

First, the quantity of your leads varies, according to your niche and your product/service demand.

Second, the quantity of your leads isn’t the most important metric you should focus on. On the contrary, you need to mind their quality. After all, what’s the point in generating 500 leads if only few of them are willing to convert?

Focus on driving relevant traffic—people who are really interested in your products, who can afford them, who are decision makers and who belong to the industry you’re targeting.

3. The Conversion Rate

Once you calculate the number of your leads acquired on a monthly basis, you need to measure your conversion rate.

This is one of the most significant metrics in the digital marketing industry and it indicates how many of the leads you’ve generated have actually completed the desired action. The reason why it’s so important is that it tells you:

  • whether you’re segmenting your target audience well
  • whether you’re engaging them with your brand properly
  • whether you’re using the right platforms
  • whether the prospects you generate are really valuable to you

If you see that your conversion rate is poor, then you need to find a way to optimize for it. For example, you could eliminate those sources of traffic that don’t bring profit and allocate more resources to those channels that bring in quality leads that convert later on.

The conversion rate is calculated by dividing the number of the leads generated by the number of clients/customers you’ve obtained and multiplying this number by 100:

(total number of paying customers ÷ leads ) × 100

Obviously, the conversion rate varies, based on your goals and niche. Calculating it won’t be the same for an affiliate blogger and an e-commerce site.

4. Return on Marketing Investment

Digital marketing should be a long-term investment and not an expense. This is why it needs to be implemented properly. And, to make sure that your effort really pays off, you need to measure your return on investment. Your ROI tells you whether your strategies are profitable.

To calculate your return on investment, you need to use this formula:

(Profits – Costs) ÷ Costs

For example, you’ve invested $200 in your digital marketing campaign and generated profits of over $800. In this case, here’s how you could calculate your ROI:

(800 – 200) ÷ 200 = 3

So, your ROI is 3, meaning that, for every dollar you invested, you’ve gotten $3 back. And, if you prefer percentages, all you need to do is multiply this number by 100.

If your ROI is positive, like in this example, you’re golden. On the other hand, if it’s negative, then this means that you’re either not targeting the right people or that your marketing campaigns don’t resonate with your target audience.

5. The Customer Lifetime Value

Did you know that the probability of selling to a new customer is lower than 20% while, with existing customers, this likelihood increases up to 70%?

So, what do these statistics tell you? Retaining customers is as important as attracting new customers.

And, this is why measuring your customer lifetime value can make or break your business. Obviously, this metric shows the total number of value a customer/client brings to your business over a certain period of time. By knowing what the profit a customer generates, you’ll be able to figure out how valuable they are to you.

Of course, you can’t observe this metric in a vacuum. It depends on numerous variables, including the average amount of money one pays per purchase, for how long someone buys from you, as well as how many purchases one makes per year.

So, to get more precise results, you can always create a more complex formula and add these parameters to it.

6. The Customer Acquisition Cost

Like its name says, the customer acquisition cost indicates how much of your money goes to acquiring a new customer. Unsurprisingly, the CAC should be lower than the aforementioned customer lifetime value.

It’s measured by dividing the total investment in your digital campaigns over a certain period by the number of clients you’ve attracted during that period.

For example, if you invested $20,000 in marketing during the first quarter of 2018 and generated 200 clients, your CAC is $100. So, to recover your investment and boost revenue, your customer lifetime value needs to be over $100.

7. The Churn Rate

You’ve invested a lot in a responsive and user-friendly design to make user experience spotless and yet, the number of people not wanting to renew their subscriptions or canceling their payments is rising. So, to know what’s wrong, you need to know how many people ditch your shopping cart and why.

And, this is where the churn rate shines.

Namely, it’s calculated by dividing the number of lost customers over a certain period by the total number of your customers:

(lost customers ÷ total customers) × 100

For example, if you have 200 customers and 7 of them abandoned the shopping cart before completing the purchase, your churn rate would be 3.5%.

Back to You

Measuring the right KPIs is bread and butter for digital marketers.

They tell you how powerful your digital marketing efforts are, show what works and what not, and help you tailor your approach to your customers’ expectations.

Most importantly, tracking these metrics can skyrocket your ROI and make your digital marketing strategy an incredible investment in the long-run.

Now, start measuring and assessing to get your strategies on track!

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