What Are KPI’s and Why Do They Matter?

To ensure that your business is progressing toward its goals, you must have a way to measure them. Key performance indicators (KPI’s) are the tools you can use to track and monitor your goals with unique, specific measurements.

Keep reading to learn more about KPI’s in marketing!

What are KPI’s?

KPI’s are quantifiable indicators of progress toward a specific result, goal, or outcome and stand for key performance indicators. They can be set at the individual, department, or company level. Companies use KPI’s to evaluate performance and achieve larger initiatives.

What is the difference between KPI’s and metrics?

KPI’s are often interchanged with metrics, but these two represent different figures. It’s important to understand the distinction to set KPI’s correctly.

KPI’s are targets that you set to measure your progress. They measure performance based on business goals. Metrics give data about everyday business activities. They measure performance based on one activity.

While metrics are low-level points that help with contextualizing your business activities, KPI’s allow for strategic decision-making that targets a goal you’ve set.

Why use KPI’s?

KPI’s are essential for maintaining progress toward any goal, whether it’s sales-oriented or company-culture-specific. Having solid KPI’s allows you to accomplish the following:

• Give team members actionable tasks: KPI’s are great for breaking down specific tasks and making sure everyone on your team has something productive they can contribute. Instead of offering busywork, you can make sure they are helping with the overall goal.
• Look for areas of improvement: If you don’t have the right training or tools to accomplish a goal, your KPI’s will indicate that. You can use KPI’s to evaluate areas you lack that could impact your objectives.
• Monitor progress with objective data: KPI’s keep you on track with your goal and prevent you from wasting time. Also, you might feel like you are making little progress, but your KPI’s can prove otherwise!

Above all, KPI’s can help you accomplish your goals, making your business more efficient and prosperous over time. So if you’re wondering how to prove the value of SEO or another marketing strategy to leadership, tracking KPI’s can help.

What are the types of KPI’s?

There are a few different types of KPI’s you may use, including the following:

• Strategic: These are the most high-level KPI’s that represent how the company is performing as a whole. Executives can use these to strategically plan the company’s future and next moves.
• Operational: These month-to-month or day-to-day figures represent how the company operates on a smaller timeframe. So, if there are dips in high-level KPI’s, one might look to these figures to find the cause.
• Functional: These KPI’s focus on a specific function or department in a business. They can be strategic or operational, but they provide the most value to one specific set of users.

You will likely use each type of KPI depending on your business size and overall goals.

Smart KPI examples

So, what are some smart KPI examples that businesses actually use? It can be helpful to break it down by industry, since there are different goals for different companies.

Smart KPI’s in business include:

• Number of purchases
• Quality rate
• Error percentage
• Cycle timeline

So, what are smart KPI’s in marketing? Here are a few examples:

• Number of blog posts published per month
• Website traffic
• Leads generated from search engine optimization (SEO)
• Click-through rates
• Calls generated
• Contact forms submitted

Finally, some smart KPI’s in sales contexts could be:

• Customer acquisition cost
• Number of qualified leads
• Number of repeat customers
• Average conversion time

How to set smart KPI’s

So, how can you set smart KPI’s effectively to give your business the best chance at success? Here are four different tips to make sure you develop a solid list of KPI’s:

1. Set your goals
2. Use a SMART approach
3. Assign responsibilities
4. Review KPI’s periodically

Each of these steps will help you not only with KPI’s but with goal setting in general!

1. Set your goals

In order to set KPI’s, you have to establish your goals. This first step will give you an objective to strive for and something to frame your KPI’s. Without a solid goal, you won’t have a direction.

You can set company- or department-wide goals to start. Each goal should have a clear purpose and path to help you create logical ways to track progress.

2. Use a SMART approach

Part of setting goals and outlining your approach is using the SMART model.

Your goals should be specific, measurable, achievable, relevant, and time-bound, or SMART.

Your goals should be specific, measurable, achievable, relevant, and time-bound, or SMART. This approach helps you set realistic goals instead of setting yourself up for failure.

Some examples of a SMART goal are:

• Improve website traffic by 50% in the next year from SEO.
• Launch 5 new blog posts a month for the next 12 months.
• Close 3 sales a week from online ads for 5 months.

With these goals, you can make a list of ways to track your progress. For example, if you want to boost the number of blog posts on your site, you might use your writer’s draft completion turnaround as a department KPI.

Learn more: What are SEO KPI’s?

3. Assign responsibilities

As you create your goals and smart KPI’s, be sure to assign specific responsibilities to teams and individuals so everyone knows what they have to do to contribute. If there is a clear chain of command, it makes it easier to accomplish and track progress.

Get buy-in for KPI’s by explaining the ‘why’ behind them.

Also, be sure to explain your goals and KPI’s to all of your teams — especially if your company has a multi-department goal. Keeping everyone on the same page will better help with productivity and overall strategy.

4. Review KPI’s periodically

You may find that some KPI’s don’t point to anything significant with your company. In that case, don’t be afraid to adjust your approach and find new ways to measure your progress.

Track your business success with SEO.com

KPI’s can come in handy for any project, whether it’s earning more sales or optimizing your website for search engines. Setting goals and using KPI’s as a tool can help you see more success and grow your business overall.

If you want to learn more about tracking and measuring SEO with KPI’s, SEO.com has plenty of resources to help — browse our blog to get started!