Your boss is way too busy to sort through the huge lists of all the raw numbers and statistics that we call Key Performance Indicators (KPIs). But you really need to know what things your boss does want to see.
From a strategic level, things like the number of emails sent this week or the number of visitors to your page last year aren’t enough by themselves for your boss to make an informed decision about your inbound marketing efforts.
Inbound marketers use raw tactical data to make decisions. On the flip side, your boss needs processed, strategic information to draw conclusions as we all wrap up 2015 and pave a way forward.
The boss really needs KPIs focused on effectiveness because effectiveness takes two or more basic metrics and compares them. This ratio tells you what you’re getting out for what you put in.
These specific KPIs are what your boss needs to see to understand the strengths and weaknesses of your inbound marketing!
1) Return on Investment (ROI)
This KPI is so fundamental that it is really the key to measuring your marketing effectiveness in terms of bang for your buck. To calculate ROI is simple: take the total amount of company profit made from your marketing efforts, and divide it by the cost of your marketing budget. Knowing ROI is king, but understanding the other KPIs will help your boss diagnose areas to sustain or improve.
2) Site Conversion Rates
Your conversion rates will be vital to knowing how powerful the effect of your content is on your audience. To figure out a conversion rate, take the number of Information Qualified Leads and divide by the number of visitors. Your boss needs this number to know whether your marketing content is reaching enough of the right people.
3) Marketing Qualified Leads to Sales Qualified Leads Ratio
Every marketing funnel gets smaller at each stage, but your boss needs to know where in the process you are losing people, and how many you are losing! Take the number of sales qualified leads and divide by the number of marketing qualified leads. Your boss will want to identify any choke points in the funnel so that you can focus in on that stage in the process.
4) Customer Conversion Rates
Once you have obtained and developed relationships with potential customers, you must determine how many of them closed. It’s simple: How many sales qualified leads became customers? Your boss has to know whether your marketing efforts were monetized! This is a huge value measurement.
5) Traffic Required to Meet SMART Goals
This concept is what it all boils down to. All your other KPIs feed into your goals.
It takes a few steps to figure out a good traffic requirement, but this gives you a number your boss can work with.
- If your company wants to grow by, let’s imagine, $100,000 in new revenue, divide this number by the revenue from your average customer. This tells you how many customers you need. Imagine each customer brings in $25,000, so you need 4 customers.
- Calculate how many sales qualified leads you would need to bring in these 4 customers. Use your customer conversion rate. If you convert 1 in 2 sales qualified leads into customers, you need 8 sales qualified leads to meet your goals.
- Repeat the process for turning marketing qualified leads into sales qualified leads. Let’s say you convert 1 out of 5, so you need 40 marketing qualified leads to reach these goals.
- Information Qualified Leads work the same way. Assuming you convert 1 in 5 Information Qualified Leads, you would want about 200 Information Qualified Leads to meet your needs.
- How many visitors does this represent? With only 1 in 10 visitors converting to Information Qualified Leads, you would need 2,000 visitors to meet your sales goals.
- Let your boss know what your effectiveness is now, how it is feeding your company’s growth goals for 2015, and how much the company makes from every marketing dollar spent.
(Unsure what SMART Goals are? No worries, we have a free template to help not only understand SMART Goals, but to create ones of your own. Click here to get the free SMART Goals template.)
But my boss also wants more metrics. What are some other basic KPIs he’ll want to see for inbound marketing?
This is not a problem. If your boss is looking to dig deeper, here are some other metrics you should have available to provide details about your strategy:
- Production: The number of blogs, content offerings, emails, and social media posts.
- Consumption: Site visits, amount of time spent on the site, emails opened.
- Retention: Bounce rate, return visitor percentage, pages per visit, email unsubscribe rate, social media followers, blog subscriptions.
- Engagement: Social media shares, likes, and comments.
- Potency: Which specific marketing products converted best at each stage.
Performance and effectiveness can only be measured against a strategic goal.
This may shock you: none of these KPIs matter unless they are used with a larger strategy in mind. Your boss has a strategy for the company, and that’s why he needs to know your marketing effectiveness. Make sure you have the right marketing strategy built on SMART goals.
What is your inbound marketing strategy that will get you to your goals?
If your not sure, download a sample 3-month strategy document and see how it stacks up to your current strategy.