🔒The KPI craze: Making sense of marketing metrics

Ages ago, John Wanamaker, the founder of Macy’s, said: “Half of the money I spend on advertising is wasted. The trouble is I don’t know which half.”

Today, the trouble is we think we do know what’s working — but too often that assessment is based on mistaken assumptions and misaligned metrics. No doubt, there’s no shortage of data. But there is also no end to the confusion about what it all means.

Here’s a quick example. Let’s say you’re paying $1.70 per click to your website. But your goal isn’t to get the masses to your site. It’s to attract a niche audience to request a quote. So rather than evaluate your tactics on a cost-per-click basis, you need to compare them on a cost-per-conversion basis. That can drive a very different — and ultimately more effective — marketing strategy.

So how do you make sense of the Key Performance Indicator (KPI) craze to evaluate if your marketing is working? Let’s start by debunking some misconceptions.

Misconception 1: KPIs are only determined by your tactic.

Some people assume there is only one KPI for each type of marketing, e.g., social-media posts, digital ads, emails. But your KPIs should be driven by your objective, not your tactic.

Let’s say you’re creating a video. You can’t just ask: What’s the KPI for video marketing? That depends on why you’re producing that video.

Is your primary objective to build preference for your brand? Then you need to get the right people to watch your video. In that case, you should compare your distribution tactics by video completion rate, average viewing time, and engagement rate (likes, comments and shares).

But if your video is meant to drive leads, then your KPIs could be click-through rates, form completions and average time on your website.

Misconception 2: If you can’t measure it, you shouldn’t do it.

Many businesses try to zip through the marketing funnel and head straight for conversions. But to bring in more sales, you first need to get on your prospects’ radar by building awareness for your relevant, differentiated brand.

But brand-building isn’t as easy to measure as clicks or conversions. So it often gets thrown overboard for more trackable tactics.

Of course, there are highly sophisticated ways to measure brand health. But if your budget is limited, look for other KPIs for your brand marketing.

For example, before and after a campaign, try tracking the organic web searches referencing your brand. More searches for branded terms can be a proxy for more interest in your brand.

You can also measure social-media sentiment. Scan what people are saying about your organization on social channels — and the level of positivity.

And you can track media coverage — if you’re leveraging the tremendous power of PR to boost brand awareness. But don’t just measure how many outlets picked up your press release. Focus on quality metrics, like the number of mentions in targeted pubs, whether the story reflected your key messages, and how prominently your brand was featured.

Misconception 3: What matters most is what they did last.

It’s seductively easy to track what your prospects clicked on to get to your website. But it’s more important to track the entire customer journey — what else did they see along the way that ultimately made them more likely to take the desired action. So spend some time connecting the dots.

Misconception 4: You should use KPIs to find the best tactic.

In this media-fragmented world, there’s rarely one thing you should do to win customers. You need to optimize the most effective mix of tactics to surround your prospects along their journey.

In fact, studies show that harder-to-measure mass-media tactics, particularly TV advertising, have a tremendous lift on all other activities.

For example, in the financial-services industry, adding TV to your mix can more than double lower-funnel metrics, like customer acquisition. Why? Because prospects won’t want to hear from you — unless they’ve heard of you.

Data is definitely power. Just make sure you’re using the right KPIs to power the right marketing decisions for your organization.

Jill Adams is CEO of Adams & Knight, a branding and marketing agency in Avon.