Digital marketing key performance indicators (KPIs) are measures of how your digital marketing activities are performing. KPIs tell you what is working and what is not working so that you can retain what’s working, and perhaps examine how you can make them work even better.
What’s not working may need examining to determine why they aren’t, what you can do to make them work or whether it would be better to discard them. Not all KPIs are created equal, and not all digital marketing KPIs are suitable for your particular kind of business.
Digital marketing performance indicators fall under 5 main categories; namely,
- Lead generation KPIs
- Website and traffic KPIs.
- SEO optimization KPIs.
- Paid advertisement KPIs, and
- Social media tracking KPIs.
This article is a focus on nine key digital marketing lead generation KPIs. Others KPIs like those relating to website and traffic, SEO optimization, paid advertisement, and social media tracking have been treated and can be accessed by clicking the internal links of each of these KPIs that are provided above.
The 9 Key Lead Generation KPIs
Leads can be generated organically by you inbound marketing activities or inorganically by paid ads like Pay-Per-Click (PPC). Lead generation is the starting point for digital marketing or inbound marketing activities, and measuring your lead generation strategies is a way of gauging the relevance of your business growth strategies. Leads are like fuel in the tank of your vehicle. The more fuel you have the longer the distance you can travel. The more leads you have, the better the chance you have of making more sales. Let’s examine these key lead generation KPIs:
- Marketing Qualified Leads (MQLs): when your digital analytics indicates that a prospective visitor has performed one or more of the following actions:
- Subscribed to your email,
- Downloaded your eBook,
- Downloaded your software demo,
- Have added an item to your e-commerce shopping basket,
- Has completed an online form on your website,
- Clicked your online advert,
- Has been browsing your site more often, or
Has performed other such similar activities that indicate interest or strong curiosity, then such a visitor is deemed a likely MQL and as such deserves more attention, nurturing, encouragement from you. However, this visitor is not yet a lead, as an expression of interest or curiosity is not a qualified lead.
Think about your past online buying journey for instance. How many times have you visited an online e-commerce site? How many times did you clicked on some items of interest and moved them to the shopping cart, only to abandon the cart?
Not all marketing qualified leads (MQLs) should be placed on the same pedestral as some are more promising than others. Some prospective leads are more fastidious or nitpicky than others. Perhaps there is something about your privacy policy, your delivery terms, your site navigation, or your landing page that may retard or discourage a potential lead from taking the next step through the sales funnel. You may need to set specifications for ranking your MQLs leads using such parameters as organizational title of a site visitor, online behavioral habits, or you may carry out analytics of potential leads. You may need to design a ranking system of your MQLs, which will aid you in weeding out visitors who rank very low in your MQL ranking profile. However, when your MQLs indicate a high probability of interest to buy, then the prospects are nudged along the sales funnel where they become a Sales Qualified Lead (SQL).
- Sales Qualified Leads (SQLs): when a prospective lead has been researched by the marketing department and found to be a good prospect, the prospect is then passed on to the sales department for follow-up. An SQL is a prospective buyer who has been vetted by marketing and deemed credible with a high probability that he or she will make an actual purchase.
- The Difference between MQL and SQL: the difference between MQL and SQL can be explained by using a hypothetical example: John Doe is browsing the Internet. He notices your e-commerce site, clicks and begins browsing. His browsing may be borne out of interest or curiosity. At this stage, John Doe is an MQL if he makes no purchases but from your analytics, you dictate that he lingered longer than usual at product category on a particular page before exiting your site. However, if he continues and loads some items of interest in the shopping cart, but abandons the cart, this action qualifies him as a SQL. It will, therefore, be worthy to follow up and find out why he failed to complete his buying journey along the sales funnel.
- Lead to Close Ratio: by dividing the number of leads you converted to sales by the number of prospective leads you generated within a period, you arrive at your lead to close ratio. This figure has a direct relation with your MQL and SQL and is a measure of how effective your sales team is.
- Cost Per Lead (CPL): this is also known as online lead generation. It is an online advertising lead generation pricing model where an advertiser places an online ad in a publisher’s site. When an interested consumer signs up for what is advertised or the offer being made, the publisher is paid. It is only when the consumer takes this action is the advertiser paid for the sign-up. With CPL the advertiser holds the lever of control and decides who the publisher of his ad campaign should be. The advertiser knows where his audience hangs out more and is therefore in a better position to choose where to reach them. The consumer details required for CPL is almost minimal. It could be just his or her email address.
Bear in mind that Cost Per Lead (CPL) pricing model is not the same as Cost Per Mille (CPM) or Cost Per Click (CPC) pricing models. This is an important part because each of the three pricing models serves different purposes. With cost per lead, an advertiser pays for only qualified leads, irrespective of how many clicks the ad attracts or how many impressions or views the ad receives. This type of lead generation is tailored for brand campaigns and political campaigns as the advertiser receives the contact details of prospects who are interested in the advertiser’s message. It is a direct response engagement with the consumer through multiple touchpoints, like a newsletter, email list, etc. CPL has grown significantly in recent times as a top-notch lead generation measuring metric. The publisher of ad known exactly how much revenue is accruable to him or her from the advertiser when a viable lead is generated. The advertiser knows what exactly his return on investment is. It's a win-win relationship.
- Cost Per Conversion (CPC): this is also known as Cost Per Action (CPA). This is the cost of actually converting prospects to customers when a customer has taken a particular action that is desired. The action could be to make a purchase, download software demo, subscribe to an email or a newsletter or whatever action that is desired from an ad.
The formula for calculating CPC is:
Cost Per Conversion = Total Cost of Traffic Generation/Total number of conversions.
Example: Suppose your ad campaign on an online publisher platform cost you $100 for 10 views and you generated 10 conversions for the period. Your conversion rate is $100/10conversions = $10 per conversion.
Note: Cost Per Conversion is not the same as cost per click (CPC)
- Cost Per Thousand (CPM): this is also known as Cost Per Mille (Mille is the Latin word for 1,000).Cost per Mille is a measure of how much an advertiser pays for every 1,000 impressions. This metric is not very productive as one viewer may view the same impression multiple times from different devices or URLs. For instance, if your ad is viewed 1,500 times and the advertiser charged you $4 per thousand impressions (views), then your total cost is $6. As an advertiser, you should judge the effectiveness of your ad by its Click-through-rate. This rate is a measure of how many viewers who saw your ad and clicked through on it. Even this is not a true measure of the effectiveness of your ad as a viewer may click through and yet not make a purchase.
- Retention Rate: in digital marketing, the retention rate is an important KPI. It is a measure of the number of customers who visit your site and make purchases compared to how many who are exiting or unsubscribing. It's a measure of how your digital marketing is performing; whether it is growing or you are losing customers. For subscription-based digital marketing, especially for software developers, your monthly recurring revenue (MRR) is vital to your survival. A higher MRR for one period compared to a previous period is an indication that your revenue is growing. The reverse is an indication that you are losing more customers per period than gaining. For a digital marketing business, the number of new sign-ups you have per period is just a part of the story; the other part is how many of these new sign-ups and current customers you can retain. This is a metric you should monitor as frequently as possible, perhaps, monthly or quarterly. Know the basics of retention rate, how to monitor and analyze it.
- Attrition rate: digital marketing attrition rate also known as churn rate is the proportion, (expressed as in percent) of your users or customers or subscribers who disengage with your digital business, or e-commerce within a specific time frame. There are two main causes of attrition. The first is voluntary disengagement where a buyer opts out of his or her buyer-seller relationship with your business. The other is an involuntary disengagement where a buyer ends your business relationship with him or her due to an unforeseen event beyond his or her control.
Just like your digital marketing retention rate, it is important to monitor and analyze your business attrition rate as often as possible. We advise that you do this every month or quarter.
Example: suppose you have 1000 subscribers at the begin of a quarter and 900 at the end of the same quarter. Your subscription churn is 1000 minus 900 or 100 lost subscribers. And your churn rate for the quarter is 100/1000 x 100% = 10%
There are still other lead generation metrics that you may wish to explore and incorporate into your KPI measurement dashboard. For instance, the metric, Page-Per-Visit, tells you how many pages of your website a prospect visited. Businesses are not all alike. So brainstorm with your marketing team to know what’s appropriate for your business, and what’s not.
