KPI’s
KPIs are metrics (measurable and quantifiable indicators) that numerically determine a variable (for example: income, expenses, number of visits) that is directly related to the objectives set within a marketing strategy or annual marketing plan.
KPIs allow marketers to put in place a system to monitor the actions they are taking to achieve sales, and the work they are doing. They allow companies to keep track of how business is going, and give them the possibility to take action to correct any small deviations or big problems that are standing in the way of their established objectives.
They also help provide an understanding of what was done well and what mistakes were made, in order to set the company up for improved results next time. They help people learn and improve their business and marketing decision-making.
How to Define KPIs
In order to define what metrics (KPIs) to measure for your business, it is important to know what factors affect your business objectives.
You can consider metrics that tell you where your buyers come from — ads, information search engines, published articles, etc. You can also consider using metrics to know how much you are spending on getting users to your store or website.
Another KPI could offer insight into which products or services are the ones that generate higher profits, if your business offers multiple products or services.
Do you know if your customers are happy? You can establish metrics to determine whether customers are satisfied or not with your company’s product or service.
Once you have a list of indicators that you want to measure, you want to make sure the KPI has all of the following characteristics:
Measurable: It must involve a unit of measurement, whether this is money, products, clicks, etc. — you want to eliminate subjectivity and focus on optimizing that number.
Quantifiable: You must be able to count it. This is similar to the previous point, but more specifically, it would be X amount of money, X amount of products, X amount of clicks. This way you can work objectively with the KPI to set goals.
Periodic or temporary: You must be able to measure it within an established range of time. Some businesses update their metrics daily, others must be updated weekly or bi-weekly. Establishing deadlines and timelines helps companies improve their performance by enabling them to make comparisons with the results of other specific time periods.
Specific: The aspect that is being measured must be specific, because if you want to measure different aspects of the same thing, the results will not be accurate unless you can differentiate between these aspects. Different variables can be combined to create complex KPIs that allow businesses to have a full picture of what’s going on.
Relevant: It must be a factor that has a real influence on the business model, and if negative results are detected, a company must act quickly to reach a solution.