Net Promoter Score is a vanity metric

7 Marketing KPIs That Are Really Worth Measuring

Marketing Key Performance Indicators (KPIs) are key figures with which you can measure the progress or degree of fulfillment with regard to important strategic marketing objectives. Focusing on the right metrics and choosing the marketing KPIs that best fit your business are critical to the success of your marketing strategy.

Good marketing KPIs are directly related to business growth. What you can safely forget are “vanity metrics” and the senseless urge to want to measure everything that can be measured. Because something like that is counterproductive. Instead, you should know your metrics well, measure them correctly and rely on the principle “less is more” - with that you are on the right track.

Let us now come to specific examples. Here are seven marketing KPIs you should definitely know:

  1. Sales metrics
  2. User and customer acquisition
  3. Quantity and quality of leads
  4. Customer Lifetime Value (CLV)
  5. Share of Voice (SOV)
  6. Brand awareness metrics
  7. Net Promoter Score (NPS)

Sales metrics directly reflect the growth of your business, making them the clearest and simplest KPIs. However, you should know which financial metrics make the most sense for a measurement, given your business model and planning.

For example, Ahrefs and other SaaS products can easily use Monthly Recurring Revenue (MRR) or Annual Recurring Revenue (ARR) as KPIs. VC-funded companies can even take a “grow at any cost” approach and be successful with it - even when sales are lower than costs.

But that is seldom the case. Most companies are better off considering both revenue and cost. In other words: As a KPI, profit is usually more important than sales.

How do you measure these metrics

Sales metrics are easy to measure because you know their exact values. If it weren't for that, you would probably have had problems with your accountant or the tax office by now. These numbers need to be in your Customer Relationship Management (CRM) system, checkout systems, or the financial dashboard you are using.

For marketing analyzes you can use the Enhanced Ecommerce Tracking in Google Analytics or its alternatives, which can assign the sales to your marketing activities. Keep in mind, however, that any web analytics tool is inherently skewed and may not get everything right. So don't use these numbers as KPIs.

2. User and customer acquisition

A faster growth of your user base doesn't necessarily lead to more profit, but it still has effects that go well beyond economic metrics.

For example, in September 2020 we launched a free version of our SEO toolset, the Ahrefs Webmaster Tools. Because if we strengthen word-of-mouth marketing, expand our user base and familiarize a greater number of people with our product, that will lead to long-term growth.

How do you measure these metrics

Use the numbers from your CRM system for this. Of course, your customers have to be registered so that you can record all relevant numbers.

3. Quantity and quality of leads

Is your business based on subscriptions? Then this could be the right KPI for you. It indicates how successful you are with your marketing communication in attracting users who are very likely to buy something from you. The quantity and quality of your leads are very important because they form the foundation for a growing customer base and increasing sales.

How do you measure these metrics

The lead quantity is easy to determine as this information should come from your CRM system. However, capturing lead quality requires more work and planning. At this point we come to the topic of lead scoring: Develop an automated system that will rate all of your leads based on the data they provide.

Here are some data points that you should evaluate:

  • Estimated purchasing power of the company
  • User behavior and actions taken in your app or on your website
  • Test phase and set-up
  • Everything the user has shared with your customer or sales team
  • All other data collected during the user registration process

For this it is definitely worth consulting an analytics expert. Some CRM platforms like Hubspot have a lead scoring feature built in, but it may not be the best solution for your use case.

4. Customer Lifetime Value (CLV)

The Customer Lifetime Value (CLV) is a key figure that estimates how much money a single customer will spend on your products or services. Increasing the average customer earnings value not only improves your financial metrics, it also allows you to spend more money on acquiring new customers.

How do you measure this metric

The basic formula for calculating the CLV:

average Order value x average annual purchase frequency x avg. Customer lifetime

If the average order value (AOV) is $ 100, customers buy the product four times a year, and they stay with your company for an average of three years, the CLV would be 100 * 4 * 3 = $ 1,200.

Of course, you need at least a few years of sales history in order to have the metrics necessary for the CLV calculation. But if you already have these, you can also make an assumption as to which of these three metrics is most in need of improvement. If you increase either of them, the overall CLV also increases.

The Share of Voice (SOV) is traditionally a measure of your advertising share compared to the competition. However, as most brands today struggle for visibility on organic channels such as social networks and search, we can expand this definition to include how visible your brand is in the market.

This is an excellent marketing KPI as there is a strong correlation between SOV and market share. As soon as your SOV is higher than your market share, you create an excess share of voice (eSOV). Your market share should develop in the same direction over the long term.

Of course, it's undeniably difficult to get a comprehensive SOV number that encompasses all of your marketing channels. The solution? Select a metric for each channel that reflects the principle of the SOV.

How do you measure this metric

Here are some marketing channels and their respective metrics that can represent the SOV:

Organic search: Visibility in the SERPs

Paid search: Impression Share

Organic Social Media: Mentions of your own brand compared to the competition

TV advertising: Gross Rating Points (GRP)

For example, with organic search, the simplest method is to track your main keywords in the Rank Tracker, add your competitor's domains and the visibility metric in the tab Competitor overview (competitors overview) to check.

The visibility metric shows the percentage of all clicks from tracked keywords that land on your and your competitors' websites.

Recommended Article:What is Share of Voice? How to Measure It Across Channels

6. Brand awareness metrics

Brand awareness represents the level of awareness of your brand among your target audience. For example, when you think of electric cars, the first thing that comes to mind is probably Tesla, and not Rivian. That's because Tesla has a higher level of brand awareness among consumers.

Here are two factors that can be measured in terms of your brand awareness.

  1. Notoriety. Is your brand known to people in your industry? In other words, what percentage of the market know your brand?
  2. Positioning. Do people find your positioning appealing? Is your marketing communication creating the right associations around your brand?

How do you measure this metric

Measuring brand awareness requires market research as you need answers from a representative sample of your market. Market research agencies specialize in this and are the only way to get comprehensive data.

7. Net Promoter Score (NPS)

The Net Promoter Score (NPS) represents the satisfaction and loyalty of customers based on how likely it is that they will recommend your product or service to others.

You have probably seen something like this before:

The number of points that the participant selects indicates whether they are a detractor, a passive or a promoter.

The NPS score is calculated by subtracting the proportion of critics from the proportion of promoters. It can range from -100 to 100, and anything above zero means you have more promoters than critics.

In general, values ​​above 70 are considered exceptional, but the threshold can be lower depending on the industry. Just think of telecommunications companies, which we all need but also disapprove of. You'd be happy with values ​​above zero, as you can see in these industry benchmarks.

By and large, the NPS is an easy to measure metric that reflects your customer loyalty, satisfaction, and brand strength.

How do you measure this metric

There are many ways to distribute NPS surveys - physically, online, by email, or simply through a browser pop-up.

The calculation is easy - and some software programs already do this for you. Note, however, that it's still just a number with no context. If you choose to measure NPS, you should also explore the motivation behind user reviews. You can ask follow-up questions as part of the survey in order to receive this qualitative data.

Conclusion

You might be wondering why I left out metrics like Return on Investment (ROI) and Customer Acquisition Cost (CAC). The short answer is that while they are good metrics, they need to be handled carefully. Because they focus on short-term effectiveness in decision-making.

Of course, you can use these metrics as KPIs for channels where they make sense, such as PPC ads. But when we move on to display advertising - something that is also more likely to be covered by PPC specialists - it doesn't make sense to look at ROI or CAC.

The long-term benefits you get when your brand appears as display advertising can be greater than when users actually click through. And it makes even less sense to use these metrics to evaluate purely brand-related channels such as TV or posters.

The most important thing, however, is that you don't measure any metric for its own sake. Make sure you set strategic marketing goals that leverage these KPIs.

Do you still have questions? Write to me on Twitter.