Key Performance Indicators (KPIs) are metrics that help a business to follow and meet its strategic and operational goals. Depending on the age and stage of the company, the market is in, the channel is active in and the marketing budget, these indicators can be very different. But there are 7 KPIs that all online businesses should track, which hold major importance in the future of every organization relying on the World Wide Web.
For a better understanding, I have grouped these 7 KPIs into 3 categories:
- Traffic KPIs
- Paid Advertising KPIs
- Global KPIs
Why set KPIs?
A company has a multitude of processes that, put together, make it operational and financially functional. The larger the company, the more complex and numerous these processes are, to the point where tracking them in detail becomes impossible or very inefficient.
For this purpose each process has certain goals to meet that would contribute to the overall business goals and add to the progress…or not. to know if these goals have been met they need to be measurable, and that is where Key Performance Indicators come in.
Their role is, therefore to:
- offer tangibility and objectivity for a process
- create visibility on progress or possible blocks/ obstacles
- point where the strategy may need optimizations
- track or identify business patterns
With this Key Performance Indicator, businesses determine the total number of pages viewed on your website. It is the most basic user engagement metric that shows how often a page is visited by a user. A higher number of page views means that your content is appealing and informative for the users. It further encourages them to revisit your landing page and continue their search for information on a specific topic. Conversely, a low number of pageviews indicates poor user experience, and this will also show in your Bounce Rate.
To get more views, you will need to:
- provide good user experience,
- create interesting and authentic content,
- make your website or blog easy to reach.
A session is the duration for which a visitor stays on your website. A long session means that your site has valuable content that is attractive to visitors. If most visitors don’t stay on the webpage for long, you might want to rethink your content strategy. If your audience is dynamic and always on the run make the content shorter and easy to browse. If that is not the case, assess and optimize the topics, language, and wording to make the content more accessible to your public.
The average session is measured by the amount of time spent by the visitor in a single visit. It is also measured as the 30 minutes window from the initial page load if there is no additional activity and the user doesn’t exit the website entirely. Here you can find a more detailed description of Pageviews and sessions, as well as the difference between these and other important metrics.
3: Goal Conversion
A Goal is an action that is relevant to the marketing funnel and relevant for your online customer journey. By setting up goals in your reporting platforms, like Google Analytics, you can see if your marketing funnel is performing well and if the users are making the essential steps to becoming a client.
Goal Conversion reflects how effectively your website is encouraging visitors to take desired actions. This KPI category includes actions like adding to cart, purchasing products or services, downloading apps, contacting the business, submitting a form, or engaging with the website in one way that is specific and trackable. Depending on your business model you can choose to track all of the above or just a few essential actions users do on the website. The high goal conversion rate tells you that your marketing tactics are effective and your website is well-optimized.
Paid Advertising KPIs
Cost Per Click is a common KPI in performance marketing. It represents the cost a company pays for an action in your campaign, that in this case, is a click. CPC is influenced by a number of criteria like the channel you are advertising on, competition, relevance and searches, ad quality, and targeting.
To understand how a CPC impacts your campaign, let’s take the following example: you know that out of 100 sessions you get one lead (contact/ purchase), and our average CPC is $0.5. Then to get 10 clients you will need to have 1000 Sessions, and your minimum budget should be $500 (1000 x $0.5).
The paid media platform can be the one that suits you and your objectives best. You can test Google Ads, Outbrain, Facebook Ads Manager, LinkedIn Ads, etc. All of them will show the CPC metric in the analytics report. Being a metric with a direct impact on budget and results, it is crucial to know your CPC and to set goals using this metric. Only then will you be able to optimize your paid media activities and drive performance and revenue.
The cost per conversion is the corollary value per result/ action, and it is one of the most important KPIs. Sometimes, this metric is also your cost per acquisition, if your conversion is a purchase or your cost per lead when your conversion is a sign-up.
Even if you have high conversions and high value per visit, if the costs are excessive, your net income will stay zero or can also go negative. For example, consider you have an eCommerce store with a CPC of $0.3, but depending on how many of your sessions turn into clients, your cost can get to $150/conversion, and each conversion has an average purchase of $100. With these costs, you will be broke shortly.
That’s why I would suggest that when you are trying to increase the conversion rate, keep the cost per conversion and other margins in mind.
Mostly a Facebook Ads term, the key result is a metric that will quantify the objective of your ad campaign. For example, if you set an engagement campaign your tracked result will be an engaged user, whilst in traffic, it will be clicks or landing page views. The right approach for measuring results depends on how clear the marketing and business objectives are. Starting from the set of results you expect and the budget invested in obtaining them, you can calculate the net profit of the campaign.
On e-commerce platforms, these results should be correlated with a few extra metrics like revenue, average cart, time to conversion, and conversion rate.
7: Conversion Rate
Conversion rate or CVR is a Key Performance Indicator that holds great insights. It is not just an indicator of the campaign’s success, but it is the reason PPC/CPC marketers are hired. To measure the conversion rate in a traffic ad, for example, divide the number of conversions received by the total clicks on the ad. The online marketing conversion rate is represented in percentages.
This means that if your campaign got 100 clicks and 10 conversions, the conversion rate would be given as (10/100)*100%. The result will be 10%, which can be good or bad depending on the budget of the campaign, the benchmarks of your field, and how vague or specific your conversion was. A 10% conversion rate on your e-commerce platform’s overall traffic is an amazing number, while a 10% conversion rate from online meetings to clients in a CRM is not as good as the previous case.
The conversion rate as a global KPI refers to the overall website performance. You can also apply it to a channel, to analyze the traffic quality resulting from your ads.
All the KPIs in online marketing are used to measure the success, output, quality, and quantity of the ongoing processes and activities on a website. An organization that is serious about achieving its goals knows that KPI implementation is not just a nice-to-have approach, but a best practice.
What KPIs do you follow for your business?