The ultimate guide to marketing KPIs

Before we delve deeper into the topic, we would like to tackle a common misconception: even though “metrics” and “KPIs” are often used interchangeably in the marketing world, there is a major difference.

Metrics are general measurements that provide data about your marketing activities, such as the number of visitors of your website or the social media reach of your brand. They are useful for gaining operational insights into how successful your company currently is in terms of awareness or reach, for example.

KPIs are specific key figures that are closely linked to your overarching company goals. A key performance indicator measures how successful your marketing strategy or activities are in relation to a specific goal, such as increasing the conversion rate by 10% or boosting earned mentions on the social web through an influencer campaign.

While metrics provide an overview of the operational status quo, KPIs show whether your activities are achieving the desired results. This makes them crucial for planning, controlling and evaluating your marketing strategies, as they allow you to monitor the performance of current and past activities.

In day-to-day marketing work, KPIs are indispensable tools for making data-driven decisions and adapting strategies based on current insights into the behavior of customer groups – not only on a weekly or daily basis, but in many cases also automatically and in real time.

KPIs are therefore not only instruments for retrospective performance measurement, but also provide an essential basis for (automatically) optimizing ongoing campaigns and underpinning long-term strategies with solid data. They help to make decisions based on tangible results and thus ensure sustainable corporate success.

There are various models that support the setting of targets and the measurement of KPIs. Depending on the requirements and preferences, a different model may be suitable for each company and each project. This is usually evaluated together with the customer during the initial meeting. Nevertheless, we would like to present two different models for the mapping of metrics and KPIs that are universally applicable and can be adapted flexibly.

The success measurement model from the German Association of the Digital Economy (BVDW) shows very clearly that the value contribution of marketing activities should always be based on the company’s objectives.

In a commercially oriented organization, increasing profits is usually the top priority – driven by reducing costs and increasing sales as well as ensuring autonomy of action (e.g. by having sufficient staff to complete all tasks). The strategic goals, which marketing and sales can directly influence with targeted measures, serve to achieve these overarching corporate goals. The next level of the target hierarchy pyramid contains the operational measurement targets to check whether the marketing activities are contributing to the achievement of the targets and therefore to the overall added value. This is where the metrics that provide information on marketing success are located.

If this pyramid is now rotated 90° to the side, it results in a target-oriented model that can be used to measure marketing and sales attribution:

Just a little reminder: The number of LinkedIn followers, for example, is initially just a key figure or metric. If you combine this with a specific goal, e.g. increasing LinkedIn followers by 25% to boost brand awareness, it becomes a KPI – an indicator that shows whether the targeted activity is actually working. A KPI can consist of one or more metrics, as the following example shows:

Gartner’s marketing metrics pyramid is also based on corporate goals and business outcomes, which are at the top. From these, various sub-goals are derived, whose success is made visible through relevant marketing metrics.

This example shows a measurement of digital commerce marketing metrics and breaks it down from the main objective to website traffic.

This basic structure can now be used to add further dimensions for needs-based reporting, e.g:

• Positions of stakeholders: C-Level / VPs, Directors, Managers, Analysts and Specialists
• Decision level: from business strategy to campaign and content optimization
• Granularity: from top-level to detailed
• Frequency: from real-time to monthly or semi-annual

The following impact matrix is an example of the implementation of this model for the e-commerce sector. Of course, the matrix and its dimensions need to be customized according to the company’s objectives and needs:

The aforementioned BVDW and Gartner models can be used for strategic marketing planning as well as to define goals for the marketing and sales team and then measure their degree of achievement. The advantage of using a model like this is that you can ensure that your marketing and sales goals are directly linked to the company’s goals and are not set separately from them in a silo approach. In some cases, however, it also makes sense to completely redraw the KPI model from scratch if the use case is very specific and does not fit any of the existing models. However, the focus should always be on the objective.

To summarize: KPIs are essential for setting clearly defined, realistic and, above all, measurable goals. Ideally, these goals should be determined according to SMART logic, which means they are: Specific, Measurable, Achievable, Relevant and Time-bound.

KPIs serve as a compass on the path to successful marketing, making the success of a strategy measurable and ensuring that activities are aligned with the achievement of objectives. They therefore not only provide a clear direction, but also enable the continuous review and adjustment of the strategy. KPIs and metrics provide the necessary framework to regularly measure progress and to act proactively if the results deviate from the set targets. Anchoring KPIs in target planning ensures that every team member knows exactly what is important and that all activities are aligned with achieving the overall company goals.

Note: In many organizations, KPIs are often combined with OKRs (Objectives and Key Results) to ensure that each individual employee is working towards the department and corporate goal.

VBelow are some practical examples of marketing and sales KPIs and their significance that we come across on a daily basis in our work with well-known companies from a wide range of industries. Many marketing KPIs have a direct impact on sales or the sales cycle of the classic funnel logic and can therefore be regarded as a hybrid (Marketing and Sales KPIs).

1. Return on Investment (ROI)

The ROI shows the relationship between the marketing investments and the resulting profit. By analyzing the ROI of past campaigns, for example, the marketing team can set specific targets for future measures based on actual results. This data not only creates transparency, but also ensures optimal marketing efficiency. Thanks to the data-driven insights, resources can be allocated in a targeted approach which ensures that the financial effort is proportionate to the achieved outcome. In addition, more specific KPIs such as the Customer Acquisition Cost (CAC) provide a valuable basis for realistically setting customer acquisition targets without exceeding the budget.

2. Conversion Rate

If a B2B company is aiming for a conversion rate of 5% for its website, for example, this KPI provides a clear focus for all subsequent actions. The team can optimize campaigns, adapt content or carry out A/B tests to achieve this goal. When measuring the success of the activities, the total website visitors (unique visitors) are then set in relation to all “converted” users, i.e. “How many of all visitors fill out a form, download a content piece or become a lead by submitting a contact request?”

3. Cost per Lead (CPL)

The CPL is a form of remuneration in online marketing that indicates how much a company pays for the acquisition of a potential interested customer (lead). If the cost per lead increases during a campaign, the marketing team gets a direct indication (either in the dashboard or via an alert) that the costs per new contact are above target, thanks to well implemented digital analytics processes. This means that measures such as optimizing target group segmentation or adjusting ad placements can be initiated immediately in order to bring the CPL back down. These optimization measures can be automated in line with data-driven marketing, saving valuable time and costs.

4. Customer Lifetime Value (CLV)

The customer lifetime value (CLV) shows which customer groups offer the greatest long-term value for the company. New customers often only become profitable through repeat purchases. Insights into this can optimize the cost-benefit ratio of marketing and customer loyalty campaigns. If the CLV identifies certain customer groups as particularly attractive, marketing can take targeted measures to strengthen this group’s loyalty to the company, for example through personalized campaigns or loyalty programs. Our free CLTV checklist gives you practical tips on how to best establish this KPI in your company.

Of course, there are many other KPIs that have different relevance depending on the company objective, industry and sales cycle. As the list is almost endless, we will not list all of them. However, in the next section we provide an overview of various categories of marketing KPIs that we encounter repeatedly when implementing complex customer projects.

Below we have compiled a list of the most important KPIs that marketers should definitely have in mind. We have categorized them into five groups that follow the funnel logic:

In addition to the basic KPIs that are important for every marketing manager, there are a number of other KPIs that can be very individual depending on the industry, department and management level within the company. For example, an e-commerce company will focus on different KPIs than a B2B service provider. In addition, KPIs can often be divided into short-term and long-term categories. A short-term KPI could be the conversion rate of a specific campaign, while a long-term KPI measures the increase in brand value over several years.

For a full picture of the performance of a company and its marketing activities, the most important KPIs must be combined. A practical example that we like to use when advising major brands is the RFM model, a scoring method for segmenting customers based on three factors: Recency, Frequency and Monetary Value.

This analysis helps companies to gain valuable insights into their customers by categorizing them according to their purchasing behaviour. It looks at how long ago a customer bought (Recency), how often they bought in a given period (Frequency) and how much money they spent in total (Monetary Value). Some of the KPIs mentioned above could be successfully used in an RFM model and serve as the basis for the corresponding RFM analysis and RFM scoring:

This model is often used in e-commerce, retail and the financial sector, among others. It helps to develop targeted marketing initiatives, promote customer loyalty and maximize customer lifetime value.

We hope that this first article in our blog post series has given you a helpful insight into the topic of “KPIs – classification, examples, application”. Ideally, you can now start to review existing KPIs and metrics or completely revamp your performance measurement strategy.

Even if your performance measurement is already running smoothly, it is still worth reviewing your KPIs regularly and updating them if necessary to ensure that they remain relevant in the medium and long term. It is also particularly important to continuously measure your defined KPIs, e.g. via digital analytics, campaign tracking or social media measurement. This allows you to track the success of your marketing activities (e.g. in data visualizations or reports) and adjust your strategy and marketing plan if necessary.

In the coming weeks, we will be looking more specifically at the practical application of KPIs. This will include the following topics: