How to measure your entire marketing strategy in 4 crazily simple KPIs.
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If you don’t have marketing KPIs – you’ve got a major problem. Data-driven marketers are fast turning to strategic KPI frameworks for visibility on the entire customer lifecycle – and you should be too.
The good news is it doesn’t need to be complicated. Actually, we think that when it’s done well – you can measure the entire customer lifecycle – and your brand’s ability to deliver on it – with just 4 Key Performance Indicators.
A strategic framework to measure the entire customer lifecycle
Different customer lifecycle models have different stages. We use the RACE framework developed by Dave Chaffey over at Smart Insights, because it’s really simple and easy to understand.
Step 1. Set the framework for your brand.
There are 4 key stages in the RACE model: Reach – Act – Convert – Engage. So you end up with a minimum of 4 KPIs, one to measure the success of each stage.
The first step is to apply this model to your marketing objectives (or failing that, your business objectives). Jot them down, then, thinking about each phase of the customer lifecycle, see if you can map your objectives to each phase. Sometimes they very neatly fit, if not, see if you can adjust them, but most business or marketing objectives are grouped into these themes.
There is no limit to how many objectives you might have for each stage, but we’d suggest you limit it to 1-2 for simplicity. You want to aim for something that looks a little like this:
Step 2. Brainstorm your metrics.
The next step is to map all the metrics available to you as a measure of each objective. How does your marketing strategy tactically deliver on each objective? Is it in website visits? Video views? Email opens? Get it all down.
We do this process a lot with clients and sometimes it can be surprisingly difficult to get everyone on the same page. Get all your stakeholders involved – it’s surprising how differently people interpret what a conversion is. It’s best to nail those conversations early in the peace.
Step 3. Prioritise (and get clever).
Once you’ve brainstormed all possible metrics, you can start to prioritise the most important ones. This can be tricky but it helps to work in a group so you push each other to get the metrics to a mature level.
- You may have had number of conversions as a conversion metric – but if your objective is about driving revenue not number of sales, a better metric might be revenue.
- Likewise, you may have had email click through rate as an engage metric – but if your business objective is about building an email subscriber base, a better metric might be subscriber rate.
You can also start to think about using calculated metrics as your primary measures. We love calculated metrics because they’re a simple way to have a single number that represents performance across multiple metrics.
“Calculated Metrics are user-defined metrics that are generated from existing metrics.”
It helps to have an analyst or website analytics manager around for this part to help advise you on some of the smarter metrics available to you. It’s worth the effort, as it really helps to get your KPIs to a mature level that tell you more of the story, and simplifies how many numbers you’re tracking.
You should now have something that looks a little like this:
To be really useful, each KPI should have a target. But it won’t surprise you to know that very, very few companies have defined targets for specific KPIs, beyond just the revenue or sales target. If you do set yourself targets, be careful to apply seasonal trends so you’re not setting yourself up for failure.
If you want, you can end your KPI exercise here, but you can also go on to think about groups or segments to really extend your view.
Extending your view – applying segments.
Notice how the KPI isn’t broken down by something – for example Conversion Score by Channel – that’s not a KPI. The KPI is Conversion Score. The channel is a different view of the KPI that you can be viewing the metric through – a lens if you will.
For example, in the Reach stage, a very simple segment might be Channel, so you can look at paid, display etc. Another one might be new vs. repeat visits.
As you get more sophisticated in your measurement, you’ll be applying more sophisticated segments and metrics. Maybe it’s customers vs. non-customers; maybe it’s recency of visit; maybe it’s cohorts. It’s really up to you, based on what’s important and how you’ve defined success.
Objectives differ for each stage of the user journey, so your KPIs should be aligned to the success of that part of the journey. Not only will you have visibility on how well you’re getting people to convert, you’ll also know how well you’re getting people through the entire journey in an ‘easy to understand and implement’ view.
Of course setting your KPIs is just a first step toward being data-driven. The next step is to bring visibility of those KPIs in the form of a great dashboard.
Editor’s Note: This post was originally published in March 2015 and has been completely revamped and updated for comprehensiveness.