If there is one acronym that marketers live and die by its KPI. Any marketer worth his or her salt knows that measuring key performance indicators is essential to show progress and improvement when it comes to shoring up the company's bottom line. Without KPIs, marketers may have a difficult time proving to their boss that they're doing something other than playing Angry Birds all day long. Although KPIs are essential, understanding them is a bit like crossing the English Channel in a dingy--difficult and daunting. Which KPI is the best to measure? What exactly do they all mean? Should my KPI be different than my competitor's?
One blog post will not answer all your KPI questions. But I've provided insight here on avoiding one of the most common mistakes marketers make when it comes to analyzing KPIs: tunnel vision.
KPI tunnel vision--we've all got it
Though there are several KPIs surrounding campaigns, most marketers focus on one, be it page views or volume orders or, the big kahuna, revenue generated. Though they know a campaign includes several data points, many marketers seem focused one set of KPIs to determine a campaign's effectiveness to the exclusion of others. Some of us get tunnel vision and believe that the only KPI that matters is how much revenue a campaign generated. But if you focus only on the financial bottom line you may be missing out on equally important parts of a campaign story. And it's those ancillary metrics that can paint a fuller picture of your campaign's success or failure, as well as offer you the best information to improve your results.
Measuring multiple KPIs offers magical insights
Consider e-commerce sites as an example. Most live and die by Web analytics. Perhaps a site conducts a pay-per-click campaign on a product that yielded higher bounce and lower conversion rates than what it normally encounters. With just that data the campaign seems like a bust, right? It's not. In fact, when the site examines the total revenue resulting from the campaign, it turns out to be one of its highest. So how did that happen?
This is where looking at multiple KPIs offers a better picture of how your campaigns are really working. The site in my example also calculated the price of the product and the volume of the product ordered. Looking at this data revealed that fewer people ordered, but they ordered more products at a higher price. What's the story here? By choosing several KPIs to look at on this campaign--bounce rates, conversion rates, average order volume, and price structure--the site figured out a formula for how to increase revenue even if it didn't increase sales. Now who doesn't want that magic pill? The campaign wasn't a bust, it was a revelation.
No KPI should stand alone
What you measure is largely determined by your campaign goals. But this is just a cautionary tale to be diverse in your analytics. For example, one campaign may deliver a high engagement rate, but a low ROI; while another campaign passes the expected ROI mark. Was the engagement campaign a failure? Not if we were trying to increase customer engagement. Because your goals may be different for each campaign your KPIs should be varied, as well.
No KPI, even the almighty financial indicator, should stand alone as the measurement of whether a campaign failed or succeeded. That's too simplistic of a measurement to give you any real insight into the effectiveness of your campaigns. So next time you launch a campaign, consciously avoid tunnel vision--it may give you the clearest picture yet on how to guide your company to financial success.
+ + + + + + + +
About the Author: Tej Shah is vice president of marketing and e-commerce at Blue Soda Promo