Utilizing the appropriate KPIs (Key Performance Indicators) increases productivity, sales and business intelligence generally. Several types of usable KPI examples are available to analyze a company’s marketing effectiveness, but not all are appropriate measures. KPIs should be researched to ensure the information being identified is important to the growth of a company. According to the KPI Examples Review edition of the List of Top 20 Marketing KPI, the following KPI examples are most useful in tracking a company’s marketing efficacy.
- Market Share
- Profit Margin
- Growth Margin
- Brand Equity
- Brand Value
- Bounce Rate
- Click Through Rate
- Customer Lifetime Value
- Revenue Growth Rate
- Customer Loyalty Index
Importance of Effective KPIs
According to Data-Driven Marketing: The 15 Metrics Everyone in Marketing Should Know, author Mark Jeffrey, the Director of Technology Initiatives at the Kellogg School of Management, KPIs are indispensable in showing how a company moves toward its business and marketing goals. The type of company, whether large, for-profit, small business enterprise or non-profit foundation, is irrelevant. KPIs are important to every business type. KPIs must be effective to be useful. To be effective they must quantifiable, practical and actionable. Metrics that are not quantifiable have no use; the KPI example information must presented numerical. Additionally, useful KPIs cannot be theoretical, and there must be some actual changes that can be made from analyizing the information.
Jeffrey also states that consistent, time-managed analysis of the listed KPI examples will offer the intrinsic knowledge needed for businesses to identify its strengths and weaknesses. Businesses will also be able to implement strategies to maximize success, with the ultimate outcome being customer attainment, retention and expenditures is high, while customer attrition is controlled.
Market Share and Revenue Growth Rate
Market Share and Sales Growth are sales efficiency KPI examples. Market share is the share a company generates in relation to the total revenues for the specific market. Determining market share can be done by looking at total sales compared to competitors or by reviewing shares of use by consumers. This KPI example is important to show success of revenue generating activities, and is considered by some the most important KPI example for marketing analytics. Buxton, a leader in marketing analytics, states market shares show you how you are doing compared to your competition, allows you to quantify the impact your strategies and tactical execution have had on business results, and ask questions of your performance that were previously unapparent to ask.
Revenue Growth Rate is measuring sales growth or decline over time. Understanding how marketing affects revenue growth rate is important to determining what promotion techniques need to be reworked. It is important to be ready to make drastic changes if Revenue Growth Rate indicates that publicizing changes are needed.
Profit Margin and Growth Margin
Profit Margin and Growth Margin are product pricing indicators KPI examples. Profit Margin KPI included net and gross. Gross Profit Margin is determined by dividing growth profit by revenue. The results are expressed in a percentage that represents the amount of each revenue dollar that resulted in a gross profit. Net Profit Margin is determines the effectiveness of a business at generating a profit on each revenue dollar. Net Profit Margin allows you to estimate future profits, as well as set goals and milestones for business growth and profitability.
Growth Margin is slightly different from profit margins because it identifies the total growth of the company. Calculating this KPI is typically business specific as it takes into account a variety of metrics to determine progression. For all companies, net profit margin will be taken into consideration. Businesses may or may not choose to utilize other metrics like customer base growth and expense reduction.
Brand Value and Brand Equity
Brand Equity and Brand Value are brand metrics KPI examples. Brand value is how much earnings a particular brand generates during a certain period of time. Brand Equity differs from brand value because it measures more than financial metrics. Additionally, Brand Equity is the value, whether it has increased or decreased, that a particular brand adds to a company. Some measures of Brand Equity include popularity of brand with public as a whole or certain sectors, perceived quality, value to consumer and satisfaction with brand or company in general.
Bounce Rate and Click-Through Rate
Bounce Rate and Click-Through Rate (CTR) are promotion efficiency measures KPI examples. According to Google Analytics, bounce rate is the percentage of singe, webpage sessions, or the sessions where the person left the site without interaction with the page. Utilizing Bounce Rate analytics assists in determining several factors, the most important of which is webpage design and ease of use. A high Bounce Rate is not preferred. Click-Through Rate KPI measures the success of online marketing, like AdWords. Click-Through Rate is calculated by determining the number of times a user clicks on an advertisement divided by the total number of impressions. Unlike Bounce Rate, you should strive for a high Click-Through-Rate. Some ways to boost Click-Through Rate is understanding the Google Algorithm to increase rank, being aware of snippets and avoiding myopia.
Customer Lifetime Value and Customer Loyalty Index
Customer Lifetime Value and Customer Loyalty Index are customer metrics KPI examples. Customer Lifetime Value KPI is the estimated value of a customer over their lifetime consumer relationship with a company. This KPI example is meant to be a prediction, and can be customer specific on an individual level or common group member. The importance of the Customer Lifetime Value is to identify and invest in those common customer types that are more likely to become long-term.
Customer Loyalty Index KPI measures customer… The benefits of measuring customer loyalty are evaluating the number of new v. current customers to determine where marketing resources should be funneled. This will assist in evaluating expenses in relation to the acquisition of new customers in relation to total revenue from new customers. Customer Loyalty KPI also provides insight into what staff training may be needed to ensure customer retention.