What are KPIs and how do you choose yours?
Learn everything about your business’s Key Performance Indicators.
Every business strategy you adopt, whether online or offline, needs to have your data analyzed so people can understand where they are and where they need to go.
For this reason, two main concepts related to data analysis have emerged: metrics and KPIs.
Both are very important and have specific characteristics that make them different from one another. That’s why, as an entrepreneur, you must understand the meaning of each one well so you can come up with strategies that will make your business grow.
To help you in this journey, in this article, we’ll explain what KPIs are, their characteristics, and show you how you can choose yours.
What are KPIs?
KPI is the abbreviation of Key Performance Indicator.
But what does this really mean for a business?
The main function of a KPI is to measure a business’s performance. It can be a company, a website, a sales team, or even an individual.
But despite the similarities, do not confuse KPIs with metrics.
A metric is everything that can be measured or metrified; in other words, there are several types of data that may or may not be relevant in the decision-making process.
(In order to understand more about this topic, read our post with 4 essential metrics for a Digital Producer).
However, once a metric becomes an important factor in deciding that an action must be taken, it becomes a KPI.
In other words, KPIs are not metrics, but a metric can become a KPI.
It seems confusing, but you will gradually notice the difference between them.
To be clearer, you need to realize that a KPI is all data that helps you understand the workings and results of a strategy.
However, only a single number without other data for comparison cannot demonstrate whether your strategy is actually working or not.
So, don’t waste your time or your energy collecting a lot of information without knowing the purpose of each one.
Focus on collecting data that is really important for the development of your business and that in fact, will help you manage your project in a professional and profitable manner.
Types of KPIs
There are several types of KPIs, but here, we will only mention those used the most in the digital business.
Check them below:
This KPI mainly refers to the number of visitors your strategy can lead to take action.
There are several types of conversion.
It is very important, for example, to know how many site visitors downloaded an e-book or if they subscribed to your blog’s newsletter because this rate will help indicate the content that should be written or go through changes to please your audience even more.
Traffic sources (organic and paid)
Understanding how your traffic is distributed is essential for a website or blog to be successful.
As to the origin of traffic, there is no perfect metric because each blog has its own particularities and regardless of whether or not it is within the same niche, they can count on traffic coming from several or a few channels.
The most relevant data that should be taken into account in this case are those channels with high bounce rates.
If visitors coming from Instagram increase the bounce rate of your site, for example, make sure the links to your content published on this network match the text of the article posted on the blog.
You can also analyze the Facebook traffic from mobile devices, since most of that media is consumed on such devices.
There are basically two types of traffic:
It represents the traffic from search engines or any source of traffic not originated in a paid manner.
This includes direct traffic to your website, such as when your domain’s address is typed in the address bar, or through bookmarks and links in emails.
Visits from a link on another site are also part of this type of traffic.
This is the traffic from sponsored ads on platforms such as Facebook and Google AdWords.
If your data strongly points to a single source of traffic for example, 90% of all your traffic comes from organic searches and this may signal that you aren’t distributing your traffic properly or that your investment in ads isn’t working.
You must diversify your traffic sources so as not to risk being dependent on just one channel.
The most suitable is to have well-known social networks, quality content optimized for search engines and partnerships with sites within your niche, for example.
The speed with which a company can generate leads is certainly the best example of KPIs for your future success.
As there is predictability in the sales process, the number of leads entering the top of the funnel will help determine sales results.
Blog and newsletter subscribers
The number of subscribers of the blog or newsletter is one of the most essential KPIs for a company’s digital marketing strategy.
With this indicator, you can obtain a lot of important information, such as how many visitors become subscribers and potential customers.
With success and rejection numbers in hand, you can take action to improve results.
This KPI consists of your page’s number of views and the amount of time users spend on it.
If many visitors are visiting your website and leaving quickly, for example, this means that the page they tried to access has a problem or that the design and copy are not appealing.
Now, if the amount of time is longer, your titles are interesting, your design is attractive and everything is working well.
Of course this KPI goes far beyond that and therefore, is important for digital businesses.
This refers to likes, shares and comments on your posts and content.
But beware of vanity metrics!
Take into account only the most relevant indicators for your business (which is what makes it a KPI).
Comments and shares are important and demonstrate that your leads and customers are engaged. Likes also have their importance, especially when the goal of a campaign is to reach many people.
However, this kind of interaction does not always bring real results that help a business financially.
Most read content
This type of KPI is relevant both for the maintenance of content and for the creation of new ones or the restructuring of what has already been published.
When writing new articles, try to take advantage of the points that worked for the previous one or do what didn’t work before differently.
KPIs allow successful formulas to be replicated and also created.
New and recurring visitors
This KPI enables you to separate visitors who started accessing your website recently from visitors who are constantly accessing your site.
With this data, it is possible to perform a specific job with each of them.
Better landing pages
Like KPIs such as the most-read content, you can replicate successful formulas and improve your existing landing pages to make them even more assertive.
Choosing your KPIs
The choice of the most important KPIs depends on an analysis of the market in which you operate and the situation in which your company is inserted during each moment.
After all, an indicator might be important now, but in a few months it will no longer make sense to your business.
A startup for example, may prefer lead acquisition metrics since they are growing rapidly. A consolidated company in the market on the other hand, may be more attentive to the conversion rate.
That’s why a company’s key KPIs can change according to the business’ moment and how you choose to position yourself in the market.
In addition to this internal analysis, it is essential that the company perform an external analysis to know what companies with similar characteristics have been seeking and optimizing within these indicators.
Regardless, you need to understand that knowing how to apply KPIs to your business is extremely important and is directly connected to the success of your business.
For this reason, define which ones are necessary for the moment your company is going through and use them without moderation.
If you have any questions about KPIs leave us a message in the comments section below!