Establishing relevant key performance indicators (KPIs) is crucial in helping marketers achieve marketing success. KPIs allow marketers to measure a marketing campaign’s performance and, more importantly, to identify opportunities for improvements. An improvement could be reducing the bidding cost for a search keyword because the cost is relatively too high, or pausing a specific display ad because the ad’s click-through rate is relatively low.
Here are three KPIs that marketers should use to measure their campaigns:
1. Cost Per Conversion or Acquisition
A conversion could be a form submission or a visit to a targeted webpage such as a product page. An acquisition could be a sales call or a transaction.
Cost per conversion or acquisition is often used to measure the cost-effectiveness of paid campaigns such as AdWords or Facebook campaigns. This is done by dividing the ad spend over the number of conversions or acquisitions you’ve gained through each campaign. For example, if you spend $500 on AdWords in a month and acquire 40 form submissions via AdWords, divide $500 by 40 to get a cost of $8 per form submission.
This number allows to determine whether your cost per acquisition is too high or low.
The average cost per conversion or acquisition differs based on the industry, but you can use the stats provided by WordStream to gain a general idea of the average cost per acquisition in different industries (particularly for search campaigns). For example, in the technology sector, the cost per acquisition is roughly $133, and $34 per acquisition in the auto industry.
If you’re running a majority of your paid campaigns through AdWords and want to calculate the cost per conversion or acquisition for your AdWords campaigns, first set up conversion goals in Google Analytics. Then integrate your AdWords account with your Google Analytics account and import the goals into your AdWords account.
2. Industry Benchmarking
In Google Analytics, you can benchmark your website performance against the industry performance of companies within your geographic location.
You can compare your data against benchmarks for the following metrics:
- Sessions (i.e., number of sessions)
- Percentage of new sessions
- New sessions (i.e., number of sessions from new users)
- Average session duration
- Bounce rate
To use the Benchmarking report feature, access your Google Analytics account, go to Audience, click on Benchmarking, and select Channels.
This Benchmarking report gives you insights into the engagement performance of your website. For example, you can use the report to determine whether relatively more users are bouncing your website, compared to your competitors’ websites around your region.
Use this report to make adjustments to your website such as creating stronger calls to action or using a different colour for your calls to action, to make users more likely to navigate to other pages on your website, instead of bouncing your site.
3. Year-Over-Year Performance
Comparing this year’s performance against last year’s results allows you to assess whether the overall performance of your website is improving or worsening.
If your website results – such as increased organic traffic or decreased bounce rate – are improving, great! If the results – such as fewer direct visit or pages per session – are not as good, find out why. Maybe you’re spending more on search ads this year, so your search ads are cannibalizing your direct traffic. Or perhaps you spent more last year on traditional advertising such as event sponsorship or newspapers, so more customers visited your website directly after being exposed to your traditional ads.
Comparing your year-over-year performance allows you to determine whether you need to adjust your current marketing strategy and use previous marketing approaches.
There you have it. Three simple KPIs that allow you to easily measure and analyze your current marketing performance. You should also use the KPIs to find areas to improve your marketing campaigns. Examples include using stronger calls to action to reduce the bounce rate or decreasing the bidding cost of your search ads to minimize the cost per acquisition.
If you have any questions or KPIs you want to share, leave a comment below!
Written by Ray Wang