For anyone involved in managing a small business, data-driven decision-making is crucial, thus understanding the concept of Key Performance Indicators (KPIs) can be a game-changer. What are KPIs? And what do they mean for your digital marketing strategy?
In this guide, we cover key digital marketing KPIs for small businesses, how to align them with your SMART goals, industry-specific examples, and how to track your KPIs.
Key Performance Indicators Defined
KPIs are quantifiable metrics used to evaluate the effectiveness of a business’s various strategies. Acting as benchmarks, KPIs indicate performance and success across different sectors such as operations, sales, customer service, and marketing. They can be either financial (such as revenue growth rate) or non-financial (like customer satisfaction ratings).
Why are KPIs Important?
KPIs can provide insights into what is working and what isn’t in your organization. They can help your SMB determine its return on investment, and enable you to allocate resources effectively and efficiently. Ultimately, KPIs can guide your decision-making, allowing you to maximize your business’s success.
Key Digital Marketing KPIs for Small Businesses
Identifying the right KPIs for your business isn’t a one-size-fits-all approach, particularly when it comes to digital marketing. Depending on the size of a business, the scope, complexity, and capacity to analyze KPIs can vary significantly.
While larger organizations might have the resources to track detailed metrics, such as multi-touch attribution models or segmented user behavior, small businesses often operate under resource constraints. This means they may not have access to advanced tracking tools or the bandwidth to sift through vast data sets.
However, this does not diminish the ability of SMBs to drive improvements through performance measurement. By focusing on the core set of digital marketing KPIs that directly impact your bottom line, your small business can gain valuable insights into its performance. Here are some key digital marketing KPIs you might consider tracking:
Website traffic: The number of people visiting your site can offer an overall view of how well your marketing tactics are performing. Two common data points for SMBs to track are (1) total website visits which gives you an overall view of marketing performance and website popularity. And (2) organic traffic (from search engines) which indicates the effectiveness of your small business SEO efforts and content marketing. You might also want to track referral traffic (from other websites), social media traffic, or paid traffic (from online ads).
For low-volume websites, your team’s frequent visits can distort data. To maintain accuracy, you’ll want to filter out internal traffic to get a clearer picture of the actual number of visitors. This can be done by methods like excluding your IP addresses.
Bounce rate: The bounce rate represents the percentage of visitors who navigate away from your website after viewing only one page. This can indicate user engagement and the effectiveness of your website’s design and content. A high bounce rate could indicate that visitors aren’t finding what they’re looking for or aren’t having a positive experience on your site.
It’s important to interpret bounce rate in context. For instance, a high bounce rate on a blog post may not necessarily be a negative sign, as visitors might read the content and then leave. However, a high bounce rate on a product page or landing page might indicate that users aren’t proceeding to the purchase or conversion step, which could signal a problem.
Traffic sources: It’s not just the volume of traffic that’s important, but also where it’s coming from. These sources could be organic search, referrals, social media, email marketing, direct traffic, or paid ads. Understanding the sources of traffic helps in optimizing marketing channels and budget allocation.
Conversion rate: This helps you understand the effectiveness of your website and your marketing tactics in driving profitable customer actions. You could track the conversion rate for website visitors to leads/customers or for specific landing pages or campaigns. The percentage of visitors who complete a desired action on your site (like making a purchase, signing up for a newsletter, or filling out a form) is your conversion rate.
Cost Per Acquisition (CPA): This measures how much it costs to acquire a new customer. It is calculated by dividing the total campaign cost by the number of conversions. A lower CPA means you are getting more value for your marketing budget.
Customer Lifetime Value (CLV): This predicts the total value a business gets from a customer throughout their relationship. It can help businesses determine how much they should spend to acquire a new customer and retain existing ones.
Social media engagement: This could be likes, shares, comments, or follows on your social media platforms. High engagement usually indicates that your audience is responding well to your content.
Email marketing performance: Important KPIs for email marketing include open rates, click-through rates, and unsubscribe rates. These provide insights into how engaging your email content is and how effective your email campaigns are in driving traffic and conversions.
SEO ranking: This measures how high your website ranks on search engine results for targeted keywords. A higher ranking increases your visibility to potential customers.
Aligning KPIs with Your SMART Goals
KPIs and SMART goals—Specific, Measurable, Attainable, Relevant, and Time-bound—complement each other in the strategic planning process. KPIs will help to establish and track the “measurable” aspect of your SMART goals.
SMART goals provide the “what” (the targets your business aims to hit), while KPIs provide the “how” (the metrics that track your progress towards these goals). Goals guide what you want to achieve, and KPIs show you whether or not you’re getting there.
Specific: Be clear not vague. If your KPI is “website traffic growth rate,” it can be tied to a SMART goal such as, “increase website traffic by 20% over the next quarter.”
Measurable: Make it quantifiable. You need to be able to track and measure progress over time, so your KPIs should involve numerical values. For example, while “customer service improvement” isn’t a measurable KPI, “customer service response time” is a measurable KPI that can track progress towards a SMART goal like, “reduce customer service response times by 15% over the next six months.”
Attainable: Be realistic considering your resources and constraints. For instance, “increase website traffic by 200% in one month” might not be attainable if you are just starting with digital marketing.
Relevant: Your KPIs should directly relate to your strategic business goals. If your goal is to increase sales, tracking KPIs such as conversion rate, cost per acquisition (CPA), or average order value would be relevant. These KPIs can then be aligned with SMART goals like, “increase the conversion rate by 10% over the next quarter.”
Time-bound: Set a defined timeline. Although KPIs themselves are not time-bound, they should be able to measure the time-bound progress of your SMART goals. A KPI like “social media follower growth rate” can help you track a SMART goal such as, “increase social media followers by 30% in the next three months.”
Examples of Industry-Specific KPIs
The appropriate KPIs to track can vary based on industry and whether a business is engaged in B2B marketing or B2C marketing.
Professional Services: Law firms, consulting firms, financial advisors, and others might focus on new client acquisition cost, client lifetime value, website traffic, lead generation rate, email open and click-through rates, and client satisfaction score.
E-commerce: Focus on website traffic, conversion rate, shopping cart abandonment rate, average order value, customer retention rate, and CPA.
SaaS: Pay attention to metrics such as churn rate, customer acquisition cost (CAC), monthly recurring revenue (MRR), CLV, and trial to customer conversion rate.
Restaurants and Food Services: You might track online reservations, reviews and ratings, social media engagement, and website traffic from local search.
Healthcare Providers: Digital marketing KPIs could include patient acquisition cost, patient lifetime value, online appointment booking rate, patient satisfaction score, website traffic, and social media engagement.
Real Estate Agencies: You could focus on metrics such as online leads generated, lead conversion rate, website traffic, average time on site, bounce rate, social media engagement, and customer satisfaction score.
Nonprofits: You might track donation conversion rate, average donation amount, email open and click-through rates, social media engagement, website traffic, and event attendance rate.
Tracking Your KPIs
Tracking your KPIs is an important part of business success. By monitoring your metrics, you’ll gain insights into how your strategies are performing and can make necessary adjustments.
To ensure consistency, set a specific schedule for checking your data. Depending on the nature of your goals, this could be daily, weekly, or monthly. Regularly scheduled check-ins can help identify trends and catch potential issues early. The tools and platforms in your tech stack can help track your chosen KPIs:
Analytics: Some content management systems such as Squarespace provide easy-to-read metrics. Your business might also want to use Google Analytics—a robust tool for tracking a wide array of website-related KPIs like traffic, traffic sources, bounce rates, and conversion rates.
Social Media: Most platforms, including Facebook, Instagram, LinkedIn, and Twitter, offer built-in analytics to track follower growth, engagement rates, and more.
Email Marketing Software: Providers like MailChimp or ConvertKit can help track email-related KPIs, such as open rate, click-through rate, and unsubscribe rate.
SEO Tools: Tools like Google Search Console, SEMRush, or Ahrefs can help monitor SEO-related KPIs, including keyword rankings and organic traffic.
While the individual tools and platforms above can provide valuable insights into specific areas of your business, you might wonder how to consolidate and monitor multiple data points. This is where solutions like dashboards or spreadsheets come into play.
Dashboards: One of the most effective ways to track your KPIs is by using digital marketing dashboards. These can consolidate data from various sources into one place, providing a high-level overview of your performance. Dashboards can be set up using tools like Google Data Studio, Tableau, or Klipfolio. The visual nature of dashboards makes trends easier to spot and share with your team.
Manual tracking: If dashboards seem too complex or if you’re managing a very small business with few KPIs, you can track your numbers manually. For example, use a simple spreadsheet to record and analyze data, then generate visual reports.
Outsource: Alternatively, you could hire a digital marketing agency vs using in-house resources to manage your data analytics and reporting. They can provide regular reports tailored to your needs.
Remember, your KPIs may evolve as your business grows and your goals change. This process will allow you to make informed adjustments to your digital marketing strategies, enhancing your online presence and boosting your business success.
