Marketing is a combination of art and science. And part of the scientific aspect involves tracking your marketing’s results and tweaking your approach based on what you learn from the data. Marketing key performance indicators (KPIs) are quantifiable metrics that measure whether you’re hitting certain goals with your brand’s promotional efforts. They’re important for making sure that your marketing is generating a return on investment, and not just wasting your money.
If you’re not sure which KPIs you should be calculating and tracking, below are some of the most telling and consequential high-level marketing key performance indicators.
Important Marketing Key Performance Indicators
- Customer acquisition cost (CAC) – This KPI tells you how much you spend to convert a lead into a new customer. It’s calculated by dividing your total marketing spend by the number of new customers you earn in a specific time period. Obviously, the idea is to make more money from a new customer than you spend acquiring them.
- Customer lifetime value (CLV) – This marketing key performance indicator represents the average amount of revenue a brand makes from one customer. This is calculated by multiplying the average purchase amount by the average number of purchases in a year by the average number of years in your customers’ lifetime. This is the KPI to compare to your CAC.
- Return on investment (ROI) – This KPI tells you whether—and by how much—you’re profiting from a marketing campaign. Subtract your marketing expenditure from your sales growth, then divide that by your total marketing cost. If you can’t attribute all your sales growth to the marketing campaign you’re evaluating, also subtract your average organic sales growth along with your marketing expenses from your total sales growth.
- Return on ad spend (ROAS) – This KPI is expressed as a ratio that indicates how much revenue you generated for every dollar spent on an ad campaign. To calculate it, divide the total revenue generated by the campaign by the total amount spent on it. For example, if an ad generated $4,000 in revenue, and you spent $200 on it, you made $20 for every dollar spent. So your ROAS would be 20:1.
- Follower growth – Tracking growth in the number of followers you have on social media offers a fairly good picture of whether your social media marketing is building brand awareness and providing you with social proof. Of course, this is a high-level look; ultimately, what matters more than the number of followers you have is that they value this connection with your brand and that they’re engaging with you.
- Website visitors – Getting more potential customers or clients to your website is a standard marketing goal. As with follower growth, this is a high-level metric that doesn’t take into account other important factors like how long people stay on your site and whether they convert at your calls to action. But by tracking visitors and where they come from, you get a picture of how different marketing efforts are working (e.g., your SEO when measuring organic traffic, or your SMM when measuring traffic coming from your social media pages).
- Conversion rate – This marketing key performance indicator tells you what percentage of your users take a desired action. Often, it measures conversions on your website, but it can also be calculated for ads, sale and marketing emails, and other marketing efforts. It’s found by dividing the number of people who complete a goal by the total number of people exposed to it. For example, if 1,000 people visit a landing page in a month, and 100 people fill out the form on it for a free consultation, there’s a 10% conversion rate (100/1000 = 0.1).
