Marketing Research > Key Performance Indicator (KPI)
A key performance indicator (KPI) is a metric that demonstrates how effectively you are achieving a key business objective. You use KPIs to evaluate your progress toward reaching targeted goals. For example, you might set a goal to improve your marketing effectiveness and you might use marketing ROI (MROI) as the KPI to measure progress toward that goal. As another example, if you want to improve brand awareness, you could measure progress using KPIs like share of voice, direct traffic, branded search traffic, and more. Alexa rank is another good KPI for benchmarking and tracking changes in your performance relative to your competitors.
What is a marketing KPI?
A marketing key performance indicator is a KPI employed by marketing teams to measure effectiveness of their campaign efforts in relation to the goals of the business.
Here are 7 examples of KPIs used to measure marketing effectiveness:
- Customer Acquisition Cost (CAC): generally calculated by dividing the total marketing expenses for a period by the customers acquired in that same period.
- Customer lifetime value (LTV): the amount you expect a customer to spend over the lifetime of the customer’s relationship with your business.
- Qualified leads (MQL): leads that are more likely than other site visitors to become a customer based on factors like interests, demographics, or how closely the fit your buyer personas.
- Conversion rates: how often a user visits a landing page on your site and completes the intended action.
- Organic traffic: traffic that comes to your site via an unpaid channel, like an organic search result. This is thought of as a scalable way to drive more traffic to your site over time.
- Share of voice: use this to benchmark your company against competitors. It could apply to different marketing channels, including paid, organic, and social media.
- On-site engagement: includes metrics like bounce rate, session duration, pages per session, and more.
Marketing KPIs for your team will vary based on the nature of your company and its goals.
Related: Why Keyword Rankings Are a Terrible SEO KPI (and What You Should Track Instead)
How do you measure KPIs?
Each KPI is its own metric—not all of your business or marketing metrics are important enough to be KPIs, but they may play a role in calculating the KPI.
For example, you may use a tool like Google Analytics to look at marketing metrics, including the overall conversion rate for your website, and use this as one of your main marketing KPIs. In order to do this, you’ll have to know what conversions you’re measuring, and to improve your conversion rate you’ll want to know the conversion rate on a per-page basis in order to know what’s working and what’s not.
As another example, if you are trying to measure share of voice as one of your marketing KPIs, you can use a tool like Alexa to see the amount of organic or paid traffic you are capturing compared to a list of other competitor sites.