Online Marketing

8 online marketing KPI’s

Online Marketing

8 online marketing KPI’s

Ron Dukker 25 August 2020

Online marketing KPIs: you have probably heard or read about them before. Everyone in your organization has to deal with KPIs, in principle. These 8 online marketing KPIs are essential, especially if you are an online marketer.

What is a KPI?

KPI is short for Key Performance Indicator. KPIs measure the performance of your company, teams and individual employees. It is a benchmark that is formulated as a concrete goal. KPIs make progress measurable and concrete so that you can see where you are doing well and where there is still room for improvement.

A proper KPI is formulated according to the SMART principle. It should meet the following requirements:

S – Specific
M – Measurable
A – Acceptable
R – Realistic
T – Time-bound

8 crucial online marketing KPIs

Online marketing KPIs are important indicators that offer insight into how successful your organization’s online marketing activities are. We have listed 8 KPIs below that every marketer should know by heart:

1. Website visitors

For most companies, the number of website visitors is the standard when it comes to online marketing KPIs. This also includes the source of the visitors in order to deduce if, for example, your SEO still needs fine-tuning. Other data you can add to this include the number of pages visited, which pages were visited and how long people stayed on the website.

2. Total marketing expenditure

Online marketing teams often spend money on a variety of purposes, such as adverts on Google or social media or the publication of an article. If you add up the expenses for each month, you can easily measure whether your ROI (Return On Investment) was worth the effort.

Get started with KPIs for your organization?

Download the KPI file

If you are looking for closed-loop reporting for a clear overview of which marketing efforts offer the best results so that you can steer more clearly towards achieving your goals, a tool like HubSpot might be the right solution for your organization.

3. Conversion rate (visitor -> lead)

Now that you know how many visitors your website attracts and how much you have spent on getting them there, it is time to move on to the next step. The conversion rate is the number of leads divided by the number of visitors, times 100.

For example:
6 leads ÷ 340 visitors = 0.017
0.017 × 100 = a conversion rate of 1.7%

4. Cost per lead

Based on the number of leads and the total amount spent, you can calculate the costs per lead. This gives you an idea of your marketing costs per new lead and whether it is worth the money. It is worthwhile bearing in mind how much a new customer will eventually bring in. You will probably be happy to spend a little more on a customer who brings in half a million than a customer who purchases one product at €200.

For example:
The total amount ÷ the number of leads = the cost per lead
€3000 ÷ 6 leads = €500 per lead

You would think that this is enough information, right? Surely, sales and turnover is another department’s business? Let me be perfectly clear: it most certainly is not! If you want to be able to make the right choices, you will also need to have insight into several steps for which the sales team is responsible, such as:

5. Conversion rate (lead -> customer)

You can use the same method you used to calculate the visitor to lead conversion rate to calculate conversion from lead to customer. The aim is to find out how many of the interested contacts actually become customers. Once you have both conversion rates, you can calculate how many visitors you need to generate a certain number of customers.

For example:
2 customers ÷ 6 leads = 0.33
0.33 × 100 = 33% conversion rate

6. Cost per customer

Here again, we go back to the previous calculation. We want to know the cost of bringing in a new customer and whether it was worth the money.

For example:
€3000 ÷ 2 customers = € 1500 per customer

The sales and marketing departments should work together closely on these KPIs. For online marketers, it is also important to see these two KPIs as a part of the online marketing KPIs. If you don’t know these two KPIs as an online marketer, you cannot judge whether your campaigns have been successful. After all, you do not know whether your leads were worth anything. You can bring in 100 leads, but if they do not result in a single customer, your campaign was unsuccessful.

7. Customer Lifetime Value (CLV)

There are plenty of examples of new customers costing more than they initially yield. If you spend €1500 to bring in a new customer and they buy an item worth €800, you are technically losing €700.

This funnel can still be interesting, however, since this customer may buy something from you again later on. If you know that the average new customer buys something three times, they represent €2400 (3 × €800). In other words, spending €1500 to bring in that customer may still be a pretty good deal.

In this scenario, the €2400 is what we call the Customer Lifetime Value: the total amount that a customer generates in the entire time that they are a customer. 

For example:
The average purchase amount × the expected number of purchases = the Customer Lifetime Value
or
Purchase amount 1 + Purchase amount 2 + etc. = the Customer Lifetime Value

8. Return on Investment (ROI)

If you know how much a customer will generate, you can calculate the ROI on your online marketing activities. Thanks to the conversion rates, you know how much you can spend on a lead and website visitor. The knowledge you have thanks to this last KPI helps online marketers to always make the right decision. Click here to read how to generate more ROI in 10 steps. 

For example:
The revenue per customer – the cost per customer = the ROI
€2400 – €1500 = €900

The two customers we used as an example in this blog generated €1800, in other words. 

Other indicators

It goes without saying that several other indicators may be of interest as well – for example, your bounce rate and the number of sessions on your website. For online marketers, these are interesting indicators that can offer insight into specific opportunities. Ultimately, these indicators will also affect the online marketing KPIs that we described above.

If you are interested in easily gaining more insight into these KPIs for your organization, please download the KPI work file, with which you can easily report your KPIs on a monthly basis. Suppose you are looking for closed-loop reporting for a clear overview of which marketing efforts offer the best results so that you can steer more clearly towards achieving your goals. In that case, a tool like HubSpot might be the right solution for your organization. 

If you are curious about what the KPIs for your organization look like and where your opportunities lie, please get in touch. We would love to help you on your way!

Editor’s note: the original blog was written in August 2019 and updated in August 2020.

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