KPI stands for key performance indicator, and Qlik defines it as a quantitative measure of performance over time for a specified goal. Marketing KPIs measure the effectiveness of your marketing initiatives. In an era of data-driven decision-making, KPIs are critical tools for assessing the performance of marketing efforts. This detailed article will look into the vital marketing KPIs critical for organizations to track in 2024.
1. Customer Lifetime Value (CLV)
Customer lifetime value (CLV) shows the amount of money a given organization can expect from an average customer during their relationship with the firm. Rather than focusing on individual transactions’ worth, this considers every possible transaction between clients and computes how much revenue will be realized. Recent research has shown that even in areas with theoretically more accessible customer acquisition, such as e-commerce, costs for new consumers have increased by 222% over the last eight years. Customer lifetime value is an excellent indicator for identifying and addressing early signs of attrition.
2. Customer Acquisition Cost (CAC)
According to the Corporate Finance Institute, customer acquisition cost is the cost of convincing a consumer to buy your product or service. CAC is what it costs to persuade one potential buyer to purchase your product or services. This encompasses everything that you do anytime you acquire new customers. Customer acquisition cost is a crucial business indicator frequently used with customer lifetime value (LTV) to assess the value created by a new customer. CAC is a crucial business statistic that many organizations and investors consider. Many businesses fail because they do not adequately comprehend their customer acquisition costs.
3. Customer Retention Rate
Customer retention rate means the percentage of customers who continue to use a company’s products or services over time. It shows how well a business can create genuine relationships, build trust, and deliver superior value propositions. Research conducted by Bain & Company shows that a 5% increase in customer retention boosts corporate revenues by 25-95%. Various industries have different average customer retention rates.
This 2020 summary of Statista’s industry retention rates shows that the average customer retention rate differs by industry. The typical rates are:
- Retail: 63%
- Banking: 75%
- Telecom: 78%
- Insurance: 83%
- Professional services: 84%
You can use the industry retention benchmarks listed above to determine whether or not you are meeting client expectations.
Customer retention rate is calculated using the formula: (Number of Customers at End of Period – Number of Customers Acquired During Period) / (Number Customers at Start of Period) x 100.
4. Net Promoter Score (NPS)
Net Promoter Score is the most widely used marketing KPI in measuring consumer satisfaction and loyalty worldwide. The Net Promoter Score system aims to test whether customers are satisfied with their level of service and whether they would be willing to recommend it to others.
When calculating NPS, you take responses to the question “How likely are you to recommend us to a friend or colleague?” on a scale from 0-10 where ten represents the highest affectionate response possible. Customers are then divided into three main categories:
- Promoters (scoring 9-10) are the most loyal clients and will likely promote others to the organization or service.
- Passives (scoring 7-8) are satisfied but unenthusiastic and can be swayed by more competitive alternatives.
- Detractors (scores 0–6) are dissatisfied and can harm a brand through unfavorable word of mouth.
5. Customer Satisfaction Score (CSAT)
The Customer Satisfaction Score or CSAT, is a standard metric for assessing your customers’ happiness with what your business offers. It involves using feedback surveys to give CSAT scores ranging from 0%-100%. To calculate CSAT, subtract the positive answers (those who gave the top two marks) from all those who answered. Then, multiply by 100 to show the happy customer percentage. According to one study, about eighty-six percent of purchasers would pay more for a positive consumer experience, which means you should frequently check on
6. Lead Conversion Rate
A lead represents a potential customer who has shown interest in your organization and its products or services. The Lead Conversion Rate measures how effectively a company’s marketing and sales efforts translate leads into actual customers. To determine your lead conversion rate, you divide the number of paying clients by the total number of leads received. Understanding your lead conversion rate is crucial as it indicates how much investment you can allocate toward acquiring leads.
7. Marketing-Qualified Leads (MQLs)
Tableau defines a Marketing Qualified Lead (MQL) as a lead who has expressed interest in what a brand offers through marketing activities or is otherwise more likely to become a customer than other leads. It is a lead that the marketing team has identified as having the highest likelihood of becoming a customer compared to others. This categorization is usually decided by the CTAs the lead clicked on, the visited pages, the offers they downloaded, their interactions with social postings, and other factors.
8. Sales-Qualified Leads (SQLs)
A Sales Qualified Lead (SQL) is a prospective customer prepared to interact with the sales team. Typically, this individual has demonstrated sufficient interest in your product or service to advance through sales. Before being handed over to the sales team, the marketing department carefully examines and validates these leads. When a Marketing Qualified Lead is ready for engagement with the sales team, it transitions into an SQL.
9. Cost per Lead (CPL)
The cost per lead represents the average expense of acquiring a new lead through your advertising campaign. This metric evaluates the efficiency of your marketing efforts, ensuring that generating leads is a worthwhile investment. The Cost per Lead (CPL) indicator is vital for gauging the cost-effectiveness of your marketing strategies in generating new leads for your sales team. Its purpose is to give your marketing team a precise dollar amount, enabling them to make informed decisions regarding allocating funds for lead generation activities.
10. Return on Marketing Investment (ROMI)
The Economic Times defines the return on marketing investment (ROMI) as a marketing KPI used in online marketing to determine the effectiveness of a marketing campaign. It’s crucial to know where to start. When creating marketing budgets, it is equally, if not more vital, to calculate the return on your marketing spend. It’s an excellent standard for marketing performance, and it’s also used to justify overall marketing operations, better allocate marketing expenditures, and calculate return on advertising spending. To calculate ROMI, deduct the campaign’s cost from its income. You then reduce this value by the campaign’s cost and multiply by 100 to obtain a percentage. For example, if you invested $25,000 in a campaign and earned $75,000 in revenue, your ROMI would be 200%. This means that for every dollar spent on the campaign, you received $2 in revenue.
11. Bounce Rate
Bounce rate is an internet marketing KPI that relates to web traffic analysis. Bounce Rate is the percentage of visitors who leave a website without taking any action, such as clicking a link, filling out a form, or making a purchase. While some bounces are unavoidable, a high bounce rate may suggest that your content is undesirable or not optimized. While you want to keep your bounce rate as low as possible, it might vary depending on industry, page type, and seasonality. According to SiegeMedia’s analysis of over a billion sessions, a desirable bounce rate is less than or equal to 50%, although this varies by industry.
12. Average Order Value (AOV)
Average order value (AOV) is a marketing KPI that is used to track the average dollar amount spent whenever a customer places an order on a website or application. AOV is considered one of the most critical metrics in the e-commerce industry. For example, if your total revenue this week is $20000 from 250 orders, your AOV would be $80. This metric helps calculate your customer lifetime value (LTV) and determine the best marketing and pricing strategy.
13. Customer Churn Rate
The customer churn rate is defined by Investopedia as the rate at which customers discontinue doing business with a firm. Customer turnover rate is a critical marketing KPI to grasp because lost customers result in lost income, and the higher the churn rate, the more your bottom line suffers. According to Harvest Business Review, attracting a new consumer could cost up to 25 times more. By understanding consumer churn, you can determine the impact of your marketing activities and clients’ overall satisfaction. It is also easier and cheaper to keep your existing consumers than to acquire new ones. Businesses do not want to invest substantial expenditures in attracting clients to lose them for reasons that may have been avoided.
14. Average Session Duration
Average session duration marketing KPI is the time visitors spend on a particular website, app, or platform during a single session on average. This marketing metric provides insight into the devotion of their intended customers to their products or services. It is also a direct indication of how prospective clients are responding to marketing efforts. Marketers can benchmark their internal average session duration to industry standards and better efforts or maintain current efforts depending on the result.
15. Pages per Session
The pages per session marketing KPI measures the number of website pages visitors visit in a single session. Pages per session are calculated by dividing the total number of page views on a website by the total number of sessions within a specified time frame.
16. Search Engine Optimization (SEO) Rankings
The position of a website or webpage on search engine results pages in response to a search query is referred to as search engine optimization ranking. The page’s link is more likely to be seen and generate more traffic and visibility the higher it appears in the search results.
17. Paid Advertising Conversion Rate
The paid advertising conversion rate is the percentage of paid ad clicks that result in conversions. A conversion rate records the percentage of users who have finished a desired action. The entire number of users who “convert” (by clicking on an advertisement, for example) is divided by the total audience size to determine the conversion rate. This number is then converted into a percentage.
18. Paid Advertising Cost per Conversion
In internet advertising, the phrase “cost per conversion” describes the overall amount paid for an advertisement in relation to its performance in reaching its target. This marketing key performance indicator provides insights into how well your marketing campaign efforts are faring. The paid advertising cost per conversion marketing KPI is calculated by dividing the total cost of ads by the number of conversions.
19. Social Media Engagement Rate
The social media engagement rate is a measure of how engaged, involved, and receptive an audience is to a certain piece of content or brand on social media is the engagement rate. This particular marketing KPI assists companies in evaluating the success of their internet marketing campaigns by acting as a crucial indicator of the impact and efficacy of a brand’s marketing initiatives. The engagement rate is calculated as total engagement divided by total followers multiplied by 100%.
20. Email Marketing Open Rate
Email marketing open rate is the percentage of subscribers who open a specific email out of your total subscribers. The email marketing open rate provides insight into the success of a business’s marketing strategy.
21. Email Marketing Click-through Rate
The email marketing click-through rate is a measure of the number of people who received your email and went on to click at least one link in that email. The email marketing click-through rate is calculated by dividing the number of clicks by the number of emails delivered. A good email marketing click-through rate is anything above 3%.
22. Marketing Channels Attribution
The process of assessing the marketing touchpoints a customer experiences before making a purchase is known as marketing attribution. Attribution aims to determine which messages and channels influenced the decision to convert or perform the intended action. Marketers today employ several well-liked attribution models, including time decay, lift studies, multi-touch attribution models, B2B marketing attribution, and more. Marketing teams may adapt and tailor campaigns to match the unique needs of individual customers by using the information these models provide about the how, where, and when of consumer interactions with brand messages. This improves marketing return on investment.
23. Marketing Channel ROI
Marketing channel return on investment, or marketing channel ROI, is a general term that describes how a business’s marketing channel initiatives contribute to sales and profit growth. This is contingent upon the approach and nature of the marketing campaigns that certain companies decide to undertake. Marketers generally use the ratio of sales growth to marketing cost to calculate marketing return on investment.
Marketers use specialized marketing cost studies to determine the amount and quality of marketing expenditure based on the business model and strategy of the firm. A comprehensive examination of marketing costs typically considers both present and future expenses, the importance of specific campaigns across all touchpoints and channels, and short- and long-term outcomes.
24. Share of Voice
The marketing KPI called Share of Voice (SOV) is used to evaluate a brand or product’s quantity of media coverage or online discourse compared to its rivals. Usually, it is stated as a percentage of all mentions or media coverage. A brand or product gets more visibility and mindshare, and its SOV is higher. Advertising campaigns, products, or brands can be compared across different areas, demographics, and media channels, including print, online, social media, and television. SOV can be computed for all of these purposes.
25. Organic Traffic Growth
Organic traffic growth is a measure of the growth of the number of visitors to your website that came from search engine results pages (SERPs) on Google, Bing, or other search engines. Google Analytics measures organic traffic and organic traffic growth. This metric is a reliable indicator of your website’s search engine optimization (SEO) quality.
Conclusion
Marketing teams may optimize their return on investment, pinpoint areas for development, and modify their tactics by utilizing these KPIs and conducting frequent reviews. Additionally, marketers may better coordinate their efforts with overarching company objectives and enhance long-term performance by using these KPIs.
