Key Performance Indicator (KPI) is very important to businesses, especially startups. It is more than just performance indicators; it helps you to strategically plan and measure your way to the business success.
“A KPI: 1) echoes organization goals, 2) is decided by management, 3) provides context, 4) creates meaning on all levels of the all organizational levels, 5) is based on legitimate data, 6) is easy to understand and 7) leads to action!” – Dennis Mortensen, CEO and Founder of x.ai.
It is crucial for businesses to implement an effective marketing KPI strategy. In this blog, we are helping you to understand 3 principle KPI your business should monitor on a regular basis. Read on…
KPI # 1
Online Marketing ROI
Online marketing is similar to fishing in a wide sea. One always tries to catch the best-prized fish in the sea! Similarly, businesses always fetch for the right and the most valuable customers on the internet using various channels and marketing strategies.
Businesses may choose to initiate various types of online marketing activities such as Search Engine Optimization, PPC’s, blogging, community building to simple email and video marketing. But the most significant and effective way to be successful in implementing these endeavors is to be able to track and measure the performance and value-in-return a business is getting as an outcome. Thus, the most important point here is to ask yourself, how can you calculate and measure the effectiveness of your online marketing strategies and their implementations?
Constant monitoring of your online marketing activities and evaluation of the Return on investment (ROI) they incur will be your key performance indicator.
Few ways to measure online marketing ROI are:
- Track the conversions (goal tracking)
- Money spent on the campaign VS profit at the end of the campaign
- Call tracking
- Traffic to lead ratio
- Lead to client ratio
- Landing page conversion rates, and much more
KPI # 2
Sales Revenue
Quantifying the amount of income that a business receives from selling its product or services is a great performance indicator. It is utmost necessary for an organization to analyze their sales revenue growth ratio at regular intervals using specific metrics; thereby enabling a clear cut view of the objectives and milestones achieved along with the monthly or quarterly spikes in revenue realized.
There are a few minute sales revenue factors essential to be monitored:
- Total expenses of the company
- Gross sales
- Returns and rejects
- Net Sales, which can be calculated using this formula; Net sales = Gross Sales- (Returns and Rejects+ Discounts)
- Non-operating Income
- Financial Ratios
- Trend of profit
- New vs. returning customer sales
- Revenue per sale
- Records of inventory, and many other micro details
“More sophisticated metrics in this domain, like the Asset Turnover Ratio, Return on Sales, and Return on Assets, can tell you how your company’s performance stacks up against others in the same industry, or same geography. In the long run, these tell you whether you will live or die, compared to competitors.” Says Martin Zwilling, Founder and CEO of Startup Professionals, a company that provides services to startup founders around the world.
KPI # 3
Leads
It is truly significant for businesses to monitor, calculate and retain its leads at all the time. Whether, it be a marketing qualified lead (MQL) or sales qualified lead (SQL), understanding them thoroughly is mandatory for the business success. There are many sales and marketing lead management software available in market like; Salesforce.com, SugarCRM, Smartsheet Sales Pipeline, LeadSquared, etc., for making the job of marketing and sales smoother.
Few points on why it is necessary to oversee leads as a KPI;
- Generating sales leads is the most crucial step in a sales funnel
- A lead’s feedback and suggestions are important for positive growth of a company
- Sales velocity is totally dependent on how fast the business can identify the lead and convert them into customers
- It is by determining the lead activity one could actually say whether the online marketing, inbound and outbound strategies followed by the marketing team is successful or not.
Apart from the above Key Performance Indicators (KPI) there are many more KPI’s a business should be monitoring and it differs from business to business depending on their business goals. We at BusinessMojos thoroughly know the nuances of Business KPI’s and we give apt strategic sales and marketing solutions custom made for your business.
