KPI

A KPI (key performance indicator) is a metric you use to measure whether you are reaching an important goal. In performance marketing, KPIs are the handful of numbers you base your campaigns, channels and budgets on.

What makes a good KPI

• Tied to a goal: A KPI without a target is just a number. ‘Cost per lead under $60’ is a KPI; ‘cost per lead’ alone is not yet.
• Actionable: Your team must be able to move the number through its own actions.
• Reliably measured: If the underlying data has gaps, you steer in the wrong direction.
• Regularly available: A KPI you only see once a quarter is a poor fit for managing campaigns.

Typical KPIs in performance marketing

Depending on the goal and funnel stage:

• Reach and ads: CPM, click-through rate, cost per click
• Lead generation: number of leads, conversion rate, cost per lead
• Sales: close rate, cost per acquisition, lead value
• Profitability: ROAS, ROI, customer acquisition cost, customer lifetime value

Example

An agency works for a real estate agent. Goal: 20 listing agreements per quarter at no more than $1,500 ad spend per agreement. That gives these KPIs:

• Number of agreements: 20 per quarter
• Cost per acquisition: at most $1,500
• Cost per lead: at most $75 (at a 5% close rate)

Impressions, clicks and click-through rate are diagnostic metrics here: they help you understand why a KPI is missed.

KPIs in lead generation

In lead generation, the most important KPIs often live outside the ad platform – deals and revenue sit in the CRM or at the payment provider. If you only look at the numbers in your ad account, you steer by leads instead of customers.

LeadMetrics brings ad data, leads, deals and payments together and shows metrics such as cost per deal, revenue, profit and ROAS by channel, campaign and ad. You can define your own KPIs as custom metrics with a formula and add them to dashboards as Single KPI or KPI chart widgets. For clients, the numbers can be sent as automated PDF reports.

Common mistakes

• Too many KPIs: When everything is important, nothing is.
• Vanity metrics: Likes and impressions look good but say little about business success.
• KPIs without a target: Without a goal, you cannot tell whether a number is good or bad.