Marketing Foundations: Key Performance Indicators 101
Everybody wants data-driven marketing and sales KPIs to inform reporting, assessments, and decisions, but defining them can be complicated. Effective KPIs are linked to broader objectives and outcomes to support the strategic direction of the business. With the desired outcomes in mind, it’s significantly easier to build relevant marketing KPIs that capture critical data from your RevOps platforms.
Ideally, these outcomes are defined during the business planning process and can be found in such documents as the business plan, the revenue production plan, or the marketing functional plan. These documents should drive the marketing plan and its associated campaigns and KPIs.
This can be done easily by working through a series of four questions.
1. Where am I trying to go?
The first step in setting up meaningful KPIs is understanding the objective you are moving towards. This objective should be broad and aspirational in nature because objectives are a focus point for measurable activity but are not necessarily measurable themselves.
A good example of a marketing-centric objective is “Become one of the top social media content creators in our industry.” This is inherently aspirational and is broad enough to allow for a lot of supporting activities beneath it. Its broad nature also allows it to be reevaluated on a recurring basis and easily transitioned to another aspirational goal once you asses that the goal has been reached (i.e., “become one” changes to “remain one” and the overall objective remains otherwise intact).
The other advantage to remaining broad is that you can change the approach to achieving the goal if it doesn’t seem to be working without changing the broad objectives that are important to the long-term health of the business (i.e., you could change your primary social media platform without abandoning the goal of being a top creator within the industry).
2. How would I know I’m achieving my objective?
Once you are clear on the objective, the next step is to decide what outcomes you’d expect to see if you are achieving your objective. These outcomes can remain broad for the moment as it’s more important to visualize what success looks like at this point.
Building on the previous example, one of the top social media content creators would expect to see increased leads coming from their social media platforms, with the plurality of those new leads coming from the primary social media platform. Since leads come from engagement, you’d also expect to see increased engagement with posts as you focus on becoming one of the top creators and you’d want to see the majority of that increased engagement on your primary platform.
The objective map at this point would look something like this:
Objective: Become one of the top social media content creators in our industry
Outcome 1: Generate more leads
Outcome 2: Generate more engagement
3. How do I turn my desired outcomes into goals?
Once you have visualized the desired outcomes, you can start assigning goals to them using the S.M.A.R.T. methodology (specific, measurable, attainable, realistic, and timely). This lets you develop the baseline approach that will quantitatively define how successful you are in achieving the desired outcomes and objectives.
It is critical to remember that leads do not generate immediate revenue: the results of your marketing efforts won’t be quantifiable in dollars for at least one average sales cycle (normally 4-8 months depending on the company). This means you must bound goals appropriately to make sure your data can support making assessments on progress and decisions on whether to change the approach.
Continuing to build on the previous example, the objective map might now look like this:
Objective: Become one of the top social media content creators in our industry
Outcome 1: Generate more leads
Goal A: Increase leads from primary platform (LinkedIn) by 20% by the end of Quarter 1
Goal B: Increase leads from secondary platforms (Twitter, Instagram) by 10% of Quarter 1
Goal C: Increase revenue generated from social media by 15% by the end of Quarter 3
Outcome 2: Generate more engagement
Goal A: Increase the average number of “Likes” per post on each platform by 10% per month for the next three months.
Goal B: Increase the average number of “Shared” posts on each platform by 5% per month for the next three months.
Goal C: Increase the average number of posts per week by 1 until we average 10 posts per week on each platform.
4. How do I convert my goals into marketing KPIs?
Once you have quantified goals, you need to convert them into KPIs that can be built and measured in your RevOps platforms.
The first step to this is defining HOW you want to measure the metric you’ve defined in each goal. The “how” is important because it determines the data rules that need to be set in your RevOps platforms to accurately measure and capture the data. This also lets you critically set the rules correctly to capture the data you’ll need for future reporting and assessments.
Diving into our example - a single goal, once converted to a marketing KPI, might have several rules associated to it like this:
Objective: Become one of the top social media content creators in our industry
Outcome 1: Generate more leads
Marketing KPI A: Increase leads from primary platform (LinkedIn) by 20% by the end of Quarter 1
Rule: Capture the baseline number of LinkedIn leads at the end of Quarter 4 to see the historical average (note: if you don’t have pre-existing timestamps, you might need to use a baseline mean instead of precise monthly figures)
Rule: Add timestamp for new leads from LinkedIn beginning on Day 1 of Quarter 1 based on UTM parameters
Rule: Use time stamps to group new leads into cohorts to track through the sales cycle. This rule will allow you to assess the quality of leads generated (i.e. how many MQL, how many become recycled/disqualified, how many become customers, etc.) and will also allow you to capture the data necessary to accurately see if the social media generated leads increased revenue as well 6 months down the road.
The difference between a goal and a marketing KPI is the definition of the metric. Once you define how to measure something and build out the appropriate data framework, you can convert any goal into a meaningful KPI that can be tracked over time. By defining how you want to measure the KPI up front, you can also ensure that the correct data is available for reporting and that data integrity is maintained throughout your RevOps platforms.
The Bottom Line
By working through these four simple questions, you can consistently build effective marketing KPIs that are linked to the business’s strategic direction and provide good data for reporting, assessments, and decision-making.
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