What is a KPI and How to Use It in Digital Marketing

How do you know whether your marketing strategy is moving in the right direction? By monitoring key performance indicators (KPIs). Let’s see what key metrics are used in digital marketing and how to calculate them.

What Does KPI Stand For

KPI is a metric that measures performance and effectiveness of any business process or task. It’s used in sales, marketing, advertising, etc. to assess current results, optimize effort, and make adjustment to strategies if needed.

How to Choose KPIs

As Vilfredo Pareto said, roughly 80% of the effects come from 20% of the causes. You need to find that 20% of useful efforts to control them with KPIs. Wrong KPIs will lead to pointless labor and financial costs. Each KPI should be specific to your business.

Your KPIs should meet the SMART principles:

• to identify a specific business goal,
• to be measurable,
• to be achievable,
• to be relevant for overall business goals,
• to be time-phased.

Digital Marketing KPIs

Digital KPIs are metrics that measure success across all available online marketing channels. The basic KPI examples are cost per lead (CPL), pay per click (PPC), cost per conversion (CPC), customer lifetime value (CLV), return on investment (ROI). Also specific KPIs exist in every industry of digital marketing. What are they in email marketing?

Email Marketing KPIs

KPIs in email marketing should depend on your primary goals: get more followers, convert leads into buyers, or increase the audience on social networks.

There are 5 key indicators that are commonly used in email marketing:

• Open Rate

This KPI shows brand engagement and email subject line attractiveness.

Calculation formula: (Number of open emails ÷ Number of delivered emails) × 100.

• Click-Through Rate

This KPI shows the percentage of subscribers interested in the content of your campaigns.

Calculation formula: (Number of all clicks ÷ Number of delivered emails) × 100.

• Bounce Rate

The Bounce Rate is a key criterion by which mail servers determine sender reputation. If this KPI is too high, your emails will end up in spam.

Calculation formula: (Number of rejected emails ÷ Number of sent emails) × 100.

• Conversions

This KPI shows the percentage of users who completed some desired action in your email (read, click, buy, etc.).

Calculation formula: (Number of performed actions ÷ Number of delivered emails) × 100.

• Email Marketing ROI

This KPI shows the return on investment in email marketing in monetary terms.

Calculation formula: [(Sales generated from email - Money invested in the campaign) ÷ Money invested in the campaign] × 100.

To achieve good performance on all of these KPIs, you need to:

• send newsletters only to your subscribers;
• maintain the contact base hygiene;
• collect subscriber data to personalize your content.

You can get a comprehensive overview of all your marketing successes on the analytical dashboard. This allows you to make informed decisions and improve your KPIs from month to month.

Email Marketer’s KPIs

Business KPIs are often used when calculating employee salaries. In this case, it's important to set the right priorities too.

Let’s look at the Open Rate. On the one hand, the more personalized your campaigns, the more Open Rate you will have. Thus, the marketer can send fewer emails. On the other hand, you need to send bulk campaigns as well, as they generate a significant part of your income. So you can't use the Open Rate as an objective indicator of the marketer's performance.

Another popular KPI is the Total Email Opens. And it will be higher if you send more emails. But too high sending frequency can burn out the email list.

That's why you should separate the campaign and marketer's KPIs.

If you are just a beginner in email marketing, take a look at these KPI examples:

• Regularity. The marketer launches promo campaigns according to the schedule, for example, weekly.
• Setting up triggers. You can calculate this performance indicator by the number of implemented workflows over a certain period of time.
• Optimization and automation. Repetitive processes should take less and less time.

By implementing such KPIs, you will help your specialists to grow as professionals. Also, you will increase the effectiveness of your marketing campaigns in general.

To sum up

The advantage of digital marketing lies in a variety of available analytical tools. Thanks to this, a digital marketer can easily measure any KPI.

We advise you to focus on how users interact with your campaigns, website or mobile app. This will help you to achieve the best scores for your company's KPI.