KPI (Key Performance Indicator)
What is a KPI? Types of KPIs or key performance indicators.
A KPI, an acronym for key performance indicator, is a set of metrics used to determine the effectiveness and quality of various actions carried out within a business. KPIs provide information that allows you to make objective decisions to meet the goals set for a specific process or project.
A KPI is typically known as a key performance indicator or performance metric. While these metrics can be applied to any business area and sector, they’re most commonly used in digital marketing.
The primary goal of a KPI is to help us make the best decisions regarding the current state of a project, strategy, and campaign, allowing us to define a future course of action on a solid foundation.
1. Characteristics of a KPI
For any KPI you want to evaluate to work properly, it must have the following characteristics:
- Attainable. The set goals must be realistic and viable.
- Measurable. It might seem obvious, but you must be able to quantify them.
- Relevant. It must be important and necessary.
- Periodic. It needs to be analyzed periodically (on specific dates).
- Actionable. It must enable decision-making.
- Accurate. It should provide precise and detailed information.
- Aligned. It must be aligned with the company’s overall goals.
2. Most used KPIs in marketing
KPIs are determined by the nature of the business itself and its current situation. However, there are some that are widely used in digital marketing to measure campaign performance. These top KPIs include:
- Sales growth. Used to measure if the campaign, as planned, is successfully increasing the number of sales.
- CTR. Tracks the click-through rate compared to the total impressions of our campaign.
- Sales funnel. Helps you understand how to better convert users into customers.
- Traffic sources. Aimed at identifying the channels through which users arrive at our campaign.
- Success rate measurement. Keeps track of the effectiveness of the actions taken.
- Number of followers. Tracks the volume and way your social media presence grows.
- Keywords. Measures the ranking of our keywords and optimizes the SEO strategy.
- Return on Investment (ROI). Shows the revenue generated by the executed campaigns.
- Open rate. Tracks the percentage of customers who open the emails sent in email marketing campaigns.
There are many KPIs you can use, as many as your measurement needs demand, but these give you a clear idea of the immense value of having KPIs in your business or digital projects.