KPIs are the metrics that matter most to your business objectives.  These are numbers that, when they change, you stand up and take notice.  Most often, KPIs are a combination of more than one metric.  For example, ROI is a combination of revenue & cost metrics.  Revenue by itself can be considered a KPI, but it would be better if it was measured against something else, like this year’s revenue compared to last year’s revenue or actual revenue compared to goal revenue.

Revenue is generally a good metric in a KPI, since most companies care a lot about revenue.   However, bounce rate, a combination of all visits and visits that only have one interaction (a bounce), may not be.  Don’t get me wrong, bounce rate is a great metric, but as a KPI it may be lacking.  As an example, imagine that your organic search is sending you tons of traffic, but the bounce rate is high.  However, that traffic also has a high ecommerce conversion rate.  Which one of those numbers tells you more about the performance of your business objectives – at a high level?  It’s the ecommerce conversion rate…and you may be tempted to ignore the bounce rate (don’t do that).

Best Digital Marketing KPIs

So what are some of the best digital marketing KPIs?  Two were mentioned above – ecommerce conversion rate and ROI (Return On Investment).  Ecommerce conversion rate is the number of orders divided by the number of visits.  That can then be segmented by traffic source, demographic data, or other dimensions to get a better understanding of what is driving the ecommerce conversion rate.

ROI is calculated by subtracting the revenue from the cost, then dividing the result by the cost.  This will tell you the percentage of profit from your cost.  So, if the ROI was 50%, then your profit was 50% over your cost.  If, on the other hand, the ROI was -50%, then your profit was 50% under your cost.  I think that is fairly straight forward.

You may have heard of ROAS (Return On Ad Spend).  ROAS is calculated by just adding 100% to the above calculation.  So, if the ROAS was 150%, then your profit was 50% over your cost.  If the ROAS was 50%, then your profit was 50% under your cost.  See, to understand ROAS, just transform it into ROI.  If you made no money, then the ROI would be -100%, where as the ROAS would be zero.  ROAS always looks better and perhaps that’s why it’s used so often in marketing.   Another KPI that is effective and can be used, whether your site is an ecommerce site or not, is Goal Conversion Rate.

A goal can be an account sign-up, email sign-up, contact form completion, as well as time spent on the site or site pages viewed.  You can hone in on just one of these or add two or more of them up as an Overall Goal Conversion Rate.  For the last two, just set a threshold that represents engagement on your site, like greater than 3 minutes or 5 pages.   From there, you can create a Goal Value ROI – place a dollar value for each goal completed and measure that against ad spend.

If you are not sure how much a single goal completion is worth, like an email sign-up, start with a really large number, like \$200, and work your way down to something you would consider paying for a new email subscriber.  Maybe it would be \$10, for example.  So, if you had a campaign targeted to attract new email subscribers and it brought you 100 new subscribers, you now know the value of that campaign to you was \$1000 (\$10 * 100).  If the campaign cost was greater than that, now you know that you spent too much, since the ROI would be negative.  That would be good to know, and you can avoid doing that campaign in the future, or negotiate for a lower cost.

How Many KPIs?

You should only have a handful of KPIs – the metrics that make people jump out of their seats.  That doesn’t mean other metrics are useless, quite the contrary – without the other metrics, you have no idea what happened and you will fail to tell the story.  In the end, all this data collection is so that you can tell the story, through the data, of what happened and how, what worked and what didn’t and why and what to do next time.

Last modified: December 9, 2020