This article covers basics on KPIs, what are they and why we need them.
Let's first define what is KPI?
Shortly, KPI's or Key Performance Indicators are a set of performance statistics specific to your business.
They offer an overview about how you are performing against goals of your company.
What is their biggest value?
Key Performance Indicators help companies to define and measure progress about their business goals. Key Performance Indicators (KPIs) help to companies to understand how good or bad they are performing in about their strategic goals and objectives.
Generaly speaking, a KPI can be defined as measure with the most important performance information, which enables companies to understand is their business or the right way or not.
No matter which Key Performance Indicators are selected, they must reflect the goals of a company, they must be key to its success. Of course, KPIs must be measurable. And, in order to really get awareness or how your business is going, Key Performance Indicators should give you long term insights.
So, what KPI is and how it is measured something that is obviously to see. And this doesn't change. But the goals for a particular Key Performance Indicator can change as goals of a company changes, or as company gets closer to achieving a goal.
Why do you need KPI’s?
As soon as you try understand the success of your marketing campaigns, or progress of your business toward your goals, you will realize that it's not simple thing to do.
That's why, KPI makes this easier.
When you already decide that you need KPI, you get to a question, which KPI’s should I use?
This is not simple to answer, because every company has its own set of objectives and goals. That's why the KPI’s will be different. For example, a company can have the percentage of its income that comes from return customers as one of its Key Performance Indicators.
The most important is that they should be is useful. No matter what do you measure, they should highlight a success or failure against your business objectives.
Also, they should give you information which can help to identify possible opportunities.
So, depending on your business, KPI will be different.
Some of the KPIs you can consider can be based on:
Conversion rate – no matter is it about goals conversion or sales conversion, this KPI focuses on outcomes.
Return on Investment (ROI) – This should be measured several times during campaign, as sales can be generated weeks after a campaign has finished.
Average Order Value (AOV) – If you have an ecommerce website, this is a key KPI because there is a lot of marketing strategies you can use to improve your business.
Visitor Loyalty – an excellent metric for content websites where you need to measure engagement. For example, how often do people visit your website and in which period.
Of course, these are just a few examples, in order to give you some clear picture about all this.
If your company is actively using social media, there is a whole other set of KPI’s you should be using to measure the your effectiveness.
If you would like more information on KPIs, and how your business can benefit from them, feel free to contact us.