5 Marketing KPIs All SMBs Should Be Tracking And What They Measure
Marketing is fraught with buzzwords and acronyms. It often feels like things are made to sound more complicated than they need to be. Even the term “KPI” is laden with ambiguity. A KPI, or key performance indicator, can refer to any number of metrics, and if you are a small eCommerce marketer, it can be confusing to sift through the jargon and identify which ones are most important to keep track of. But there is no need to be overwhelmed. Behind most buzzwords and acronyms is a simple to grasp concept that can be really helpful in measuring a marketer’s success.
Choosing which marketing KPIs to track depends on your business and your goals. Here are five, however, that all SMBs should be tracking and what they measure:
1. Unique Site Visitors
63% of marketers report that acquisition is their biggest challenge. Tracking unique site visitors is one of the most straightforward ways to track if a business’s acquisition efforts are paying off. This KPI can also give a broader picture of how well many of a company’s marketing efforts are performing. The bottom line is that if things like a company’s ads are performing well, if organic search efforts are optimized, and if word of mouth is strong, then traffic to a site will increase.
2. Bounce Rate
Bounce rate is the percentage of single page sessions out of the total number of sessions. A session is simply a visit to a website, so a single page session is one where a visitor checked out one page and then left. In simpler terms, the bounce rate is the percentage of visitors that only check out one page and then leave, or “bounce.” However, the bounce rate does not indicate how long those one page sessions lasted. Some deeper digging on Google Analytics is necessary to understand the implications of a website’s bounce rate. For some reference, a bounce rate between 26% and 40% is considered excellent, between 41% and 55% is about average, and between 56% and 70% is considered above average, however depending on the website may not be a cause for worry. Anything above 70% is troublesome, except for blogs and news sites where it is common to read one page and then leave.
3. Conversion Rate
A conversion is the desired end action of a visitor. In eCommerce, a conversion is most likely a purchase, and the conversion rate refers to the number of store visitors that convert. While certainly a figure to keep track of, it is not the end all be all of KPIs. A business’s conversion rate is a strong indicator of the effectiveness of its marketing efforts, as it highlights how many purchases are being made, however this KPI is somewhat limited in the insights it can offer. Obviously a store wants to convert as many visitors as possible, but focusing on increasing this number cannot drive business alone. A business needs more customers to place bigger orders more frequently in order to drive revenue.
4. Click Through Rate
Click through rate (CTR) measures how many people click on an ad after viewing it (an impression). It is a good indicator of the quality of the content of an ad. The more people that click on it, the more likely a conversion will take place. However, if the content is meant to be click-baity and simply to attract attention, a high CTR is not necessarily going to be a leading indicator of a high conversion rate. One way to optimize your CTR is by A/B testing your creative units. (Hint: Pollen’s machine learning technology can get that done on the fly without any extra effort on your end.)
5. Cost to acquire a new customer
Again, the lower the better. Cost to acquire a new customer is exactly what it sounds like. It tells a business on average how much it spends to gain one new paying customer. This is similar to ROI, however cost per new customer acquisition considers the cost for a first-time order, not the value of a new customer’s order. Assuming the predicted lifetime value of a new customer is higher than the cost to acquire them, cost per new customer acquisition is a leading indicator for ROI in the long run. This is because acquiring a new customer is more costly and challenging than retaining one. A company’s goal does not need to be to sell a first time buyer a massive order. Once a customer has made even a small purchase, there are many strategies a company can employ to upsell, cross-sell, and increase the AOV of an existing customer’s next order. Ultimately, think of cost of acquisition as a marketer’s biggest overhead cost. Keep that low and you can expect to see impressive overall returns in the long run.
Any other important KPIs you track? Feel free to comment below.