Key performance indicators (KPIs) test your digital marketing performance with a balance of subjectivity and objectivity. With marketing KPIs, you measure how effectively you have achieved business or departmental goals over a given period. Of course, revenue is the primary KPI for any marketing department. Take a deep dive into the five revenue-based KPIs and why you need a KPI tracker.
Below are five revenue-based KPIs that you can measure for your digital marketing campaign.
Customer Lifetime Value (CLV)
CLV quantifies the total revenue expected from a single customer account. The metric makes you understand the customer segment that is most valuable to your business. To calculate CLV, take the revenue generated by a customer and divide it by the number of purchases for the period that they have been your customer.
Your business has sectors other than marketing from which you generate revenue. Gross profitability compares the total cost and revenue generated. The difference in amount reflects your business’s ability to balance costs and delivery. Higher gross profitability means a better ability to balance expenditures and revenue.
Cost per Acquisition (CPA)
When you carry out a marketing campaign, your goal is to get new customers or convert prospectives to customers. CPA measures the total sum of all costs required to get a new customer during the campaign. Information about how much you need to spend to get a new customer gives you insight into your efforts’ success.
Return on Investment (ROI)
ROI describes how much money you invested and the profit made from that investment. If the investment cost is lower than the profit gained, your marketing efforts have achieved a positive ROI. So, you better determine which marketing channels deserve less and more budget. For instance, if Google ads generate more positive ROI than Facebook ads, you should assign more budget to Google ads.
Why Should You Track KPIs?
Why should you implement a mechanism to measure your marketing campaign KPIs? Read on to find out.
Set Accurate Strategies
When you track KPIs, you monitor vital business metrics to tell the impact of a strategy. If a set strategy benefits your business, you keep it and find room for improvement. On the flip side, you refine or discard a strategy that does not profit your business.
KPI tracking software uncovers hidden patterns that you would not otherwise notice. Some of these patterns are a leeway to unique ideas that keep you ahead of the competition. Also, you may identify setbacks that need creativity to be solved, further boosting your inventiveness.
Boost Employee Morale
KPIs track your employees’ level of performance. You can easily tell which of your employees makes a consistent effort to be excellent. Then, you could give a reward in public to acknowledge their effort. The rewarded employee appreciates when you recognize their efforts and remain competent. At the same time, other employees strive to perform better.
Provide Employee Training
With KPIs in place, you can tell the areas of struggle for different employees and find trainers to provide guidance. For example, if you notice that an employee has a strength that needs to be nurtured, find a coach to train them. Also, you could create different teams with differently abled employees. Then, ask the top performers to share incentives with the team members.
Enhance Communication Quality
Effective communication is a crucial aspect of smooth business operations. KPI trackers provide insights in an easy-to-understand language for employees at all levels. As a result, you get a consistent flow of information that fosters good relations among people and departments.
Whereas many KPIs are available for your business, the right option makes you achieve your set targets. If you are not sure what works best for you, guidance from Grow Team will come in handy for your business. Book your session today to get excellent services that suit your business needs.