Key performance indicators bear a striking resemblance to the shell game. Unless you focus on the most important, you’re bound to lose track of valuable data in the shuffle.
It’s difficult for small businesses to monitor every single KPI. You may experience data overload, lack the technology or talent to extract meaningful insights, or have limited time to invest in marketing measurement.
But proper KPI tracking is crucial to the long-term health of your small business. The trick is to think of marketing like a funnel with four sections: brand, leads, sales, and loyalty. Within these sections, focus on the five KPIs below to set your business up for success in 2015.
1. Website visitors: When it’s just getting started, your small business is trying to build its image and garner interest from potential customers. Website traffic is often a good way to measure how successful your efforts are.
Limited website traffic is typically a strong indicator that you have brand awareness flaws. In this case, you may need to focus more energy on top-of-the-funnel activities like social media, search marketing, advertising, and public relations. If you can’t attract visitors in the branding stage, it’s unlikely that you’ll meet lead and sales goals.
2. Marketing qualified leads: Once you’ve built your brand, it’s important to differentiate leads from new contacts — anyone who fills out a web form or calls your business. To do this, you should track marketing qualified leads. MQLs are prospects who have shown a certain degree of interest in your company’s product or service.
While the desired threshold will vary by company, you can score contacts based on activities like content downloads, phone calls, webinar sign-ups, and blog subscriptions to evaluate interest. A strong pipeline of MQLs ensures that you have enough volume to achieve sales goals, and it helps you forecast potential and future sales.
3. Sales conversion source and value: As you convert leads into sales, focus on the source and value of your conversions. Marketers need insight into which content and campaigns facilitated and directly resulted in sales. When your sales and marketing teams uniformly track this KPI, you will be able to accurately report on your marketing return on investment. You can also allocate resources in real time based on performance.
4. Cost of customer acquisition: This metric measures the average cost to acquire a new customer. It’s largely dependent on the strength of your foundation and reach, as well as the marketing channels utilized. The lower the CoCA, the better. This indicates that you are more effectively allocating your marketing budget.
5. Customer lifetime value: Loyal customers lead to repeat sales, recurring revenue, and trusted referrals. The more loyalty you generate, the higher your customer lifetime value will be. LTV measures the forecasted value that customers will bring to your business during their lifetime. This KPI is essential in determining how much money you should spend on customer acquisition. Engaging existing customers can also increase profitability.
As you move into 2015, pinpoint your weakest KPIs and identify how they relate to your sales funnel. Assess which campaigns have the greatest impact, and invest more resources in the ones that produce the best results. Review historical data to determine trends, and set realistic and achievable goals based on your past performance, available resources, and current budget.
The proper focus can mean everything when it comes to growing your small business in 2015. Keep your eye on the right shells, and you’ll generate more leads and loyal, happy customers.