Dec 07, 2010

Simplicity of a KPI in Marketing Measurement

There are some concepts that are so simple they become hard for many to grasp. Often, we make things more complex than they are because we believe that makes them more valuable. Key Performance Indicators are one of those concepts. Even the name makes it seem technical — and of course, anything with an acronym (KPIs) must be complicated, right?

The truth is there is nothing complicated about determining your KPIs. Simply put, KPIs are quantifiable metrics that tell you how effective your marketing efforts are. So how do you know what your KPIs are? Two questions will reveal your answer:

+  What do you want to accomplish?
+  What event or action relates to what you are trying to accomplish?

If the goal of your marketing campaign is to increase sales, your KPIs would need to be quantifiable actions that reflect an increase in sales such as, “average revenue per sale” or “average weekly sales.” If your KPIs improve (i.e., 5 average weekly sales goes up to 6 average weekly sales), then you are closer to your goal.

Any measurement that does not directly tie in to your goals is NOT a KPI. It is simply a metric. I don’t mean to suggest that other metrics don’t provide valuable insight, but they should always be used in reference to your KPIs. An increase in site visitors is a wonderful thing, but if it coincides with a decreased rate of purchase then you could be impacting your KPIs in a negative way.

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