Key performance indicators (KPIs) serve as invaluable metrics that provide insights into the effectiveness of various campaigns. This helps businesses gauge their performance and make informed decisions.

You can also identify areas that need improvement by applying measurement to your campaigns.

In this article, we’ll demystify the concept of KPIs in marketing, the benefits they bring to a business, and the top KPIs you need to track.

What Are Key Performance Indicators (KPIs)?

Key performance indicators (KPIs) are quantifiable metrics businesses use to assess their performance in specific areas. These marketing KPIs reveal the effectiveness of strategies and initiatives. Fortunately, you can configure the KPIs to your business needs, which helps you adjust accordingly.

According to Think With Google, 95% of leading marketers concur that marketing KPIs should be aligned with the broader business goals. Therefore, you should factor them in.

In addition, KPIs provide valuable insights into campaign success, audience engagement, and overall return on investment. Businesses understand their performance comprehensively by measuring and analyzing these indicators, enabling data-driven decisions and continuous improvement.

How Are KPIs Used in Marketing?

In marketing, KPIs measure and evaluate the success of campaigns and overall strategies. These quantifiable metrics provide insights into various aspects, such as:

• Website traffic
• Conversion rates
• Customer engagement

You can use them in collaboration with digital marketing tools to examine whether your business is meeting its goals.

Marketers leverage KPIs to assess the impact of their efforts, identify areas for improvement, and make data-driven decisions to optimize future initiatives. This ensures a strategic and effective approach to achieving marketing goals.

Why are KPIs Important in Marketing?

According to a survey, 79% of companies create and implement KPIs annually, and 22% do this at the beginning of every quarter. Businesses that prioritize KPIs enjoy multiple benefits. They are crucial in marketing for quantifying success, aligning strategies with business objectives, and enabling data-driven decision-making.

They also serve as vital benchmarks, allowing marketers to measure and optimize campaign performance and allocate resources effectively. KPIs provide a clear, measurable framework that enhances accountability and ensures that marketing efforts contribute to the business’s overall success.

Benefits of KPIs Tracking

Why should you track KPIs? Let’s examine some of the benefits:

• Strategic business focus: KPIs ensure marketing efforts align with overall business goals, maintaining a strategic focus.
• Performance measurement: Tracking KPIs quantifies success, allowing marketers to assess the effectiveness of campaigns and strategies.
• Informed decision-making: With marketing KPIs, you can gain insights to enable data-driven decisions, reducing reliance on intuition and increasing the likelihood of successful outcomes.
• Resource optimization: By identifying high-performing channels or campaigns, marketers can allocate resources more efficiently, maximizing return on investment.
• Continuous improvement: KPIs facilitate ongoing evaluation, fostering a culture of continuous improvement by learning from successes and shortcomings.
• Accountability: Once you have KPIs, you can establish accountability, providing a clear framework for evaluating individual and team contributions to overall marketing objectives.

Top 15 Marketing KPIs Your Company Needs to Track

There are different types of marketing KPIs. A 2022 survey by Statista shows that 88% of marketing managers, CEOs, and directors tracked revenue as the primary KPI. However, you can pick several KPIs for your business depending on your needs.

In this section, we’ll take a closer look at the top marketing KPIs, what they track, why they are important, how to calculate, and how the information is used.

1. Cost per Lead (CPL)

Cost per Lead (CPL) measures the average cost of acquiring a new lead through marketing efforts. This KPI is important because it evaluates lead generation efficiency and aids in budget optimization and strategy refinement.

To calculate the CPL, divide the total campaign costs by the number of leads generated. A low CPL indicates that customers spent more purchasing products than what the business spent getting new customers. Once you have this information, it can be used for budget allocation, ensuring cost-effective lead acquisition.

2. Customer Acquisition Cost (CAC)

Customer acquisition cost (CAC) measures the total expenses associated with gaining a customer, including marketing, sales, and onboarding costs through marketing and sales efforts. This metric is important because it evaluates the efficiency of customer acquisition, guiding budget decisions and ROI assessment.

To calculate CAC, divide the total acquisition costs by the number of new customers.

This information is used for budget optimization, ensuring that the business uses the right resources for customer acquisition.

3. Lifetime Value of a Customer (LTV)

The other key marketing KPI to measure is the lifetime value of a customer (LTV). This metric is the predicted total revenue a business expects from customers throughout their relationship.

The importance of this metric is that it assesses the overall profitability of acquiring and retaining customers over time.

To calculate the LTV, multiply the average purchase value per year by the average customer lifespan. This information guides marketing strategies by highlighting the value of customer retention and informs decisions on customer acquisition.

If your LTV is lower than the CAC, this shows that your business is spending a lot of money to acquire new customers.

4. Marketing Return on Investment (ROI)

ROI measures the financial return generated from a specific marketing campaign or initiative, by comparing the gain or loss to the cost of running the campaign. This is one of the important performance indicators because it evaluates the efficiency and effectiveness of marketing investments.

You can calculate this marketing KPI by subtracting the marketing revenue from the sales revenue and then dividing it by the marketing cost.

As more companies use digital marketing platforms today, it’s also important to calculate the digital marketing ROI, which helps determine whether the strategies are worth it. As one of the important marketing KPIs, it helps businesses allocate resources for maximum impact.

5. Marketing Qualified Leads (MQL)

Marketing qualified leads are KPIs that identify leads that meet predefined criteria, focusing on leads with a higher likelihood of becoming customers. Your marketing team needs to use this KPI to understand the effectiveness of campaigns and the quality of leads generated.

To calculate the MQL, you have to use the qualification criteria and lead scoring. The criteria can be website behaviors, form submissions, or other actions that can be tracked to determine the conversion potential.

These metrics guide sales and marketing alignment, focusing efforts on leads with higher conversion potential.

6. Customer Retention

Customer retention is also among the essential key performance indicators. It’s important to consider this metric because it measures the ability of a business to keep its existing customers over a specific period. The percentage reflects customer satisfaction and loyalty, influencing long-term revenue and brand stability.

To calculate customer retention, follow this formula:[(Customers at End of Period – New Customers Acquired) / Customers at Start of Period] x 100.

With this information, you can develop a better digital marketing strategy to enhance customer experience, reduce churn, and increase customer lifetime value.

7. Return on Ad Spend (ROAS)

ROAS measures the revenue generated for every dollar spent on advertising. This is one of the more specific marketing KPIs because it focuses on ad campaigns. Once you access the profitability of your advertising efforts, you can have better budget allocation.

To calculate ROAS, divide the revenue from ads with the cost of advertising. This metric is in ratio form. For instance, if you made $15 for each $1 spent on the campaign, the ROAS is 15:1.

This information is essential to your marketing strategy because it helps make decisions on ad campaign effectiveness, allowing marketers to optimize strategies for higher returns.

8. Sales Qualified Leads (SQL)

Sales qualified leads are prospects identified by the sales team as having a higher likelihood of becoming customers. These marketing KPIs identify leads that meet sales-specific criteria, indicating a higher potential for conversion into paying customers.

Sales-qualified leads will help the sales and marketing team assess the readiness of leads to make a purchase, streamlining the sales process. The calculation is based on criteria agreed upon by sales and marketing teams.

With this data, your sales team can prioritize efforts on customers most likely to convert, improving conversion rates.

9. Social Media Engagement

Data shows that in 2022, more than 4.59 billion people were using social media globally, and this number is expected to hit almost six billion in 2027. Therefore, social media engagement is an important marketing KPI to consider.

Social media engagement measures the interaction and involvement of users with a brand’s social media content. This can be:

• Likes
• Shares
• Comments
• Clicks on posts across social media platforms

These metrics reflect the brand visibility, audience interest, and the effectiveness of social media content strategy. To calculate this, examine the number of likes, shares, comments, and clicks on social media posts. This information can help you with content strategy and optimizing social media for increased reach.

10. Website Traffic

As a marketing team, you need to pay attention to the website traffic. These marketing metrics measure the volume of visitors who access a website within a specified time frame. This includes the total number of website visits, page views, and user interactions.

Your website might have organic traffic, which represents visitors who arrive at a website through unpaid search results. You could also have paid or referral traffic that comes from other reputable sources. Unlike paid sources, organic traffic relies on the relevance of a website’s content to users’ search queries.

Website monitoring can be done using tools like Google Analytics. With such tools, you can view the effectiveness of your online content and optimize it to achieve your business goals.

11. Net Promoter Score (NPS)

Net Promoter Score (NPS) tracks customer loyalty by measuring their likelihood to recommend a product or service. It’s crucial for assessing overall customer satisfaction and providing valuable insights into brand advocacy.

This KPI is calculated by subtracting the percentage of detractors from promoters, the score ranges from -100 to 100. This metric is essential for identifying areas of improvement, refining customer experience, and fostering long-term relationships. Companies utilize NPS data to implement strategic changes and drive positive word-of-mouth marketing.

12. Referral Traffic

Referral traffic is a key marketing KPI that monitors the visitors driven to a website through external sources, such as backlinks from other websites or social media platforms. It’s crucial for assessing the effectiveness of referral marketing strategies and partnerships.

It’s calculated by analyzing website analytics, referral traffic reveals which channels successfully direct users to the site. This KPI is vital for optimizing marketing efforts, identifying high-performing referral sources, and refining outreach strategies to boost inbound traffic and potentially increase conversions.

13. Conversion Rate

You can also use the conversion rate to measure the percentage of website visitors who take a desired action, such as making a purchase or filling out a form. It serves as a powerful indicator of the effectiveness of a marketing campaign or website in converting visitors into customers.

To measure this metric, divide the number of conversions by the total number of visitors and multiply by 100. A higher conversion rate signifies better campaign performance. Monitoring and optimizing this KPI is essential for refining marketing strategies, and improving user experience.

14. Event Attendance

If you host regular marketing events, you can track this critical marketing KPI that shows the number of individuals participating in a specific event, such as a seminar, webinar, or conference.

This metric is pivotal for assessing the success and impact of the event in engaging the target audience. It’s calculated by counting the number of attendees. With these numbers, you can get insights into the effectiveness of promotional efforts and the resonance of the event content to help you refine event strategies.

15. SERP Rankings

The search engine results page rankings assess a website’s visibility on search engines. This metric tracks a site’s position in search results for specific keywords. The importance of SERP rankings lies in their direct correlation to online visibility and organic traffic.

You can calculate this metric through search engine analytics tools, monitoring these rankings to understand your search performance. Based on this data, you can optimize content, keywords, and backlinks to improve rankings and, subsequently, increase organic traffic.

How to Measure KPIs in Marketing?

To measure KPIs in marketing, employ analytics tools like Google Analytics, social media insights, or CRM systems. You also need to define clear objectives, select relevant KPIs aligned with business goals, and establish benchmark values.

Once you have this, regularly track, analyze, and interpret data, adjusting strategies as needed. Continuous monitoring ensures a data-driven approach, allowing marketers to gauge performance and optimize campaigns for maximum impact.

Tips for Selecting Which Marketing KPIs to Track

So, how do you choose the marketing KPIs to track? Here are tips to guide you:

• Align with business goals: Choose KPIs that directly align with the business objectives to ensure relevance.
• Relevance to audience: Select KPIs that resonate with the target audience, providing insights into their behavior and preferences.
• Measurability: Opt for quantifiable KPIs that can be accurately measured, facilitating meaningful data analysis.
• Focus on key metrics: Prioritize KPIs that directly impact business success, concentrating on key performance drivers.
• Adaptability: Be open to adjusting KPIs based on evolving business needs, industry trends, and the changing marketing landscape.

Best Practices and Tips for Setting Marketing KPIs

Once you are ready to set a key performance indicator, here are the best practices to follow:

• Clarity of objectives: You need to clearly define marketing objectives and ensure KPIs directly align with these goals for precise measurement of success.
• Follow a SMART criteria: Set KPIs that are Specific, Measurable, Achievable, Relevant, and Time-bound to establish realistic benchmarks.
• Prioritize quality over quantity: Focus on a select number of high-impact KPIs rather than overwhelming them with numerous metrics, ensuring a more targeted approach.
• Regular review and adjustment: Periodically assess and adjust KPIs to reflect changing business needs, market dynamics, and campaign performance

• Team alignment: Ensure alignment between marketing teams and key stakeholders to foster a shared understanding of KPIs, promoting collaborative efforts towards common objectives.

How Can KPIs Improve Marketing Performance?

KPIs enhance marketing performance by providing measurable insights into campaign effectiveness. They also facilitate data-driven decision-making, allowing marketers to identify successful strategies, allocate resources efficiently, and optimize efforts for maximum impact.

They are also essential for your marketing campaign because they foster accountability, align teams with business goals, and encourage continuous improvement.

What Are the Challenges of Measuring Marketing KPIs?

While measuring marketing KPIs is important, it comes with some challenges.

• Data accuracy: Ensuring accurate and reliable data collection poses challenges due to various tracking methods and platforms.
• Complexity: It can be challenging to attribute conversions to specific marketing efforts, especially in multi-channel campaigns.
• Changing metrics landscape: The rapid evolution of marketing channels and technologies requires constant adaptation of measurement strategies.
• Setting benchmarks: Establishing relevant benchmarks for comparison demands a complete understanding of industry standards and competitive landscapes.

What’s the Importance of Benchmarking in Marketing KPIs?

Benchmarking in marketing KPIs is crucial for assessing performance against industry standards, competitors, or past performance. It provides a reference point to gauge success, set realistic goals, and identify areas for improvement.

By comparing KPIs to benchmarks, marketers gain valuable insights, enabling informed decision-making, strategy refinement, and stay competitive in a dynamic marketing landscape.

What’s the Difference Between a KPI and a Metric in Marketing?

While both are measures used in marketing, a key performance indicator is a strategic metric chosen for its critical role in assessing overall performance and aligning with business objectives.

On the other hand, marketing metrics are broader data points that provide information about a specific aspect of performance. However, they may not necessarily be directly tied to strategic goals or performance evaluation.

What’s the Best Way to Track Marketing KPIs?

The best way to track marketing KPIs is by leveraging advanced analytics tools such as Google Analytics, marketing automation platforms, and CRM systems. You also need to implement robust tracking mechanisms, regularly monitor KPIs, and utilize customizable dashboards for real-time insights.

Combining technology with strategic goal alignment ensures accurate, timely, and actionable data for optimizing marketing performance.

How Do Digital Marketing KPIs Differ from Traditional Marketing KPIs?

Digital marketing KPIs differ from traditional marketing KPIs in their focus on online channels. Digital KPIs include metrics like:

• Website traffic
• Click-through rates
• Social media engagement

Traditional marketing KPIs often revolve around offline efforts, such as print ads or TV commercials. They may include metrics like brand awareness, reach, and response rates from traditional media sources.

How Often Should Marketing KPIs Be Reviewed or Updated?

Marketing KPIs should be reviewed regularly, with the frequency depending on business goals, campaign timelines, and industry dynamics.

Monthly reviews are common for ongoing campaigns, while quarterly or yearly assessments may suffice for longer-term strategies. Regular updates ensure alignment with evolving business objectives, allowing for timely adjustments and continuous optimization.

Final Word

Marketers need to understand and leverage key performance indicators to gauge the success of the marketing campaigns. Once you develop KPIs, you need to regularly monitor them because this empowers you to make informed decisions and adapt to dynamic landscapes.

Next Steps: What Now?

• Choose the best web hosting plan that powers your digital marketing objectives
• Build your online presence with our recommended website builders

Learn More About Marketing 101

• What Is Marketing: Definition, Purpose, and Best Practices
• What Is a Marketing Funnel in Digital Marketing? Stages, Metrics, and Examples
• Seasonal Marketing: What It Is, Benefits, & Campaign Ideas
• Guide to Outsourced Marketing (with Definition, Benefits, and Tips)
• Word-of-Mouth Marketing: Definition, Strategies, and Examples
• 45 Inexpensive Marketing Ideas Proven to Grow Your Business
• Complete Guide to Generational Marketing (with Tips and How to Use)
• What Is Marketing Automation: A Complete Guide with Tips, Tools, and More
• Branding vs Marketing: What’s the Difference?
• What Is Digital Marketing: Strategies for Business Growth
• Digital Marketing Plan: Achieve Success with the Ultimate Plan
• What Is Digital Marketing Strategy? A Comprehensive Guide