As a marketer, you're probably had to report on KPI metrics or regularly use a KPI dashboard to setup goals and track the performance of your marketing campaigns and strategy.
Because in most cases, without using marketing KPIs, there's no way to determine whether a campaign is worth investing your time and money, or even run tests to optimize it.
In the words of management guru Peter Drucker, "What gets measured, gets managed."
To ensure you're monitoring the right metrics across your marketing efforts, and have access to key insights that can lead you to the right decisions that power your campaigns for success - we're sharing the top 10 marketing KPIs to focus on.
These have been the north star for guiding our marketing strategy and success at PixelMe
💫. We've broken down the top marketing KPIs into 2 groups:
- 💰 5 Marketing KPIs to measure revenue
- 💻 5 Marketing KPIs to measure website performance
What Is A Marketing KPI?
KPI stands for Key Performance Indicator. So the definition of a marketing KPI is:
A Marketing KPI is a measurable metric used to track the performance of a marketing campaign, monitor its progress towards key marketing goals, and lead a business to understand how effective they are at reaching their targets.
As you can imagine, marketing KPIs are fundamental to your efforts. Without them, you'd be blindly launching campaigns and not know whether they bring in customers or revenue 🙈.
With them, you'll be fully equipped to measure and report on which efforts are most successful and leading your company on a profitable path 💪.
5 Marketing KPIs To Measure Revenue
The top 5 KPIs in marketing to measure revenue in your KPI dashboard include:
- Cost per lead (CPL)
- Customer Lifetime Value (CLV)
- Average Revenue Per Account (ARPA) per acquisition channel
- Customer Retention
- Return on Ad Spend (ROAS)
1. Cost per lead (CPL)
📘 Definition: A lead in simple terms is a person who expresses interest in your company's products or services. So cost per lead (CPL) is the amount spent to acquire a new potential customer.
For example, any of these actions would be considered a new lead for us at PixelMe:
- An individual who signs up for a free trial
- An individual who schedules an attribution demo
- An individual who subscribes to our newsletters
📈 How to calculate CPL:
Cost Per Lead = Total costs / Total number of leads acquired
To most accurately calculate your CPL, include every expense involved in generating new leads, such as all marketing & sales costs, salaries, and any overhead or outsourcing costs.
It's also good idea to calculate and monitor your CPL per campaign and channel, and track how many leads convert into customers. You'll then have an understanding of your Customer Acquisition Cost (CAC) and can compare this with your Customer Lifetime Value to determine your ROI (more below!).
💥 Why it's useful: Knowing your CPL is key to understanding how much it costs to ultimately generate customers. This lets you build a profitable business, as you can compare your CAC from your CPL, and ensure that your CAC is lower than your customer lifetime value.
Tools to use: In addition to tracking your CPL, monitoring the quality of your leads lets you spend on channels and tactics that can better nurture leads into customers. The following 3 types of tools will best set you up for CPL tracking and lead nurturing:
- CRM platform (manage, track, and score leads): Salesforce & HubSpot
- Customer Attribution platform (automatically calculate CPL): Smart Attribution
- Marketing automation tool (create lead nurturing programs): Marketo
2. Customer Lifetime Value
📘 Definition: Customer lifetime value (CLV) measures the amount of revenue each customer brings in over their lifespan with your company.
📈 How to calculate CLV: There are a few basic formulas to determine your Customer Lifetime Value. In its simplest calculation, CLV is your total lifetime customer revenue minus lifetime customer costs.
For B2B SaaS companies:
Customer Lifetime Value = ARPA / Customer Churn Rates
Note: ensure your ARPA and customer churn rates use the same time period.
Customer Lifetime Value = ARPA x Average customer retention time in months
For example, let's use the following data points, for a 1 year period:
- Your monthly ARPA is $100
- Your monthly customer churn rates are 3%
- Customers stay with your company for an average of 18 months
Using the second formula:
Customer Lifetime Value = $100 x 18
So your CLV is ~$1800 per customer.
For E-commerce companies:
Customer Lifetime Value = Average Order Value x Average number of repeat sales per customer per year x Average customer retention time in months
💥 Why it's useful: Understanding your CLV across different channels and customer segments is crucial to growing your business. As a general rule, a CLV:CAC ratio for SaaS high growth businesses is 3:1. With CLV you'll understand:
- How much to spend on your paid advertising channels.
- Who your highest value customers are, and who to target in acquisition campaigns.
- Types of promotions and discounts you can offer to still stay profitable.
- Typical customer behaviors, which let you test customer retention strategies to prevent churn and increase their lifespan.
Once you have both Customer Acquisition Costs (CAC) and CLV, you'll be able to calculate your ROI, which is the ultimate holy grail in marketing 🔥.
Tools to use:
- Customer Attribution tools: Smart Attribution shows your CAC, LTV, and ROI across all your channels, so you have a clear view of where to put your marketing efforts.
- Business analytics software: We love ChartMogul, as they specialize in SaaS analytics, and we use them to regularly monitor our MRR, ARPA, and Churn.
3. ARPA per acquisition channel
📘 Definition: Average Revenue Per Account (ARPA), also called Average Revenue Per User (ARPU), tells you how much revenue on average, every customer brings in.
📈 How to calculate ARPA:
For any business:
ARPA = Total revenue across all accounts / Total number of accounts
For SaaS businesses:
ARPA = MRR / Total number of monthly customers
ARPA is typically is calculated over a monthly or annual time period. We also recommend calculating ARPA per acquisition channel, to track which channels bring in the highest ARPA.
💥 Why it's useful: ARPA is useful for segmenting your users by different demographics or industries, to view any trends in revenue growth and churn. As you saw earlier, ARPA is also essential for calculating your CLV.
For example, if you're a B2B company targeting SaaS & E-commerce customers, you can segment ARPA by industry (e.g. do SaaS or E-commerce audiences have higher ARPA?), as well as monitor trends (e.g. does higher ARPA result in lower churn?). We also use ARPA at PixelMe to plot out our progress towards monthly, quarterly, and yearly MRR goals.
Tools to use:
- Business analytics software: We use ChartMogul to monitor our ARPA, MRR, and Churn rates.
4. Customer Retention
📘 Definition: Customer Retention in its basic form is how many customers using your product in month 1 are still using your product in month 2 (or over another designated time period).
Customer Retention rate is the percentage of customers you've retained over a period of time (e.g. 1 month). The opposite of Customer Retention is Churn, and your Churn rate tells you the percentage of customers that have left over a period of time (typically monthly or yearly).
📈 How to calculate Customer Retention:
Customer Retention Rate = ((CE - CN)/CS)) * 100
- CE = Number of customers at the end of a time period
- CN = Number of new customers during that time period
- CS = Number of customers at the start of the time period
💥 Why it's useful: Retention can make or break any B2B or B2C company. It's a vital metric for telling you how valuable people find your product and how long they're willing to stick around.
Even with strong CLV and ROI from your marketing efforts, if you're not accounting for retention rates, it could stall your customer growth rates and you could end up not being very profitable at all. No business wants to lose customers, which is why it's crucial to monitor your retention and churn, track patterns across customer segments, and understand when and why people leave.
Tools to use:
- Business analytics software: For SaaS businesses, ChartMogul, is a great analytics platform we use to monitor Customer Retention and Churn rates.
5. Ad Campaign ROAS
📘 Definition: Ad campaign Return On Ad Spend (ROAS) is the total revenue you generate from each dollar spent on ads.
For example, from our Marketing Benchmarks guide, the average ROAS for Google Search Ads is 2x. This means for every $1 spent on Google Search Ads, businesses typically generate $2 in revenue.
📈 How to calculate ROAS:
ROAS = Total revenue generated / Total ads spend
As you can see, ROAS is super simple to calculate per campaign and channel, over a time period.
💥 Why it's useful: When it comes to online advertising, ROAS is one of the main metrics you should monitor to gauge the effectiveness of specific campaigns or an ads platform.
By combining ROAS with CLV and CPL, you can get a more complete picture of where to keep investing our advertising efforts, campaigns and messaging that resonate with your target audiences, and how much budget to allocate across ad platforms.
Tools to use:
- Customer Attribution tools: Smart Attribution shows your CAC, LTV, and ROAS across ad platforms (Facebook & Google, with more coming soon). It also has multi-touch attribution, so you can see which part of your customer journeys your ads platforms contribute to.
5 Marketing KPIs To Measure Website Performance
The top 5 marketing KPIs to measure website performance in your KPI dashboard:
- Conversion rate landing pages
- Bounce rate
- Time on-page
- Number of sessions
- Pages per session
To measure these 5 KPIs, we recommend using Google Analytics, as it's a powerful and free website analytics tool.
1. Landing Page Conversion Rates
📘 Definition: Conversion rates on your landing pages are the percentage of people who visit your landing page and then convert.
A landing page is a webpage on your site that's designed to convert people. For example, our Smart Attribution landing page is tailored to B2B companies and is designed to get people to convert by signing up for a free 7-day trial.
Other examples of B2B or B2C landing page conversions:
- Signing up for a consultation
- Making a purchase
- Signing up for a newsletter
- Subscribing to a service
📈 How to calculate Landing Page Conversion Rates:
Landing Page Conversion Rates = (Total number of conversions / Total number of landing page visitors) * 100
💥 Why it's useful: Landing pages exist to increase leads and customers, so the most important metric to track is how well they're converting.
It's best to build your own internal conversion benchmarks, and run A/B content and design tests to see which tactics result in the highest conversions. Some examples of A/B tests you can run:
- CTA buttons: for example, button colors (e.g. red vs. green), copy (e.g. sign up for free vs. sign up for a free 7-day trial), and actions (e.g. sign up vs. book a demo)
- Try different unique value propositions
- Test different headlines
- Create different content (e.g. test images vs. videos)
- Add social proof (e.g. customer testimonials, success story videos, customer reviews)
2. Bounce Rate
📘 Definition: Bounce rates are the percentage of people who visit a single webpage on your site, and then exit immediately without browsing your content.
Google Analytics defines this as:
"Bounce rate is single-page sessions divided by all sessions, or the percentage of all sessions on your site in which users viewed only a single page and triggered only a single request to the Analytics server.
These single-page sessions have a session duration of 0 seconds since there are no subsequent hits after the first one that would let Analytics calculate the length of the session."
📈 How Google Analytics calculates bounce rates:
Bounce rates are calculated in Google Analytics based on sessions that only send a single request to their server, and no subsequent ones in the same session.
In other words, the visitor landed on your webpage (sent a single server request), but left right away (didn't send any additional server requests in the same session).
💥 Why it's useful: Bounce rates are typically a leading indicator of how relevant your content is to your website visitors. If you have high bounce rates, it could mean a variety of factors, depending on the bounce rates across different webpages and where the traffic is coming from. For example:
- Optimization is needed on the audiences you're targeting in campaigns.
- Your webpage content needs to be updated to be more clear and easier to browse.
- Your webpages need to be mobile-optimized.
3. Time On-page
📘 Definition: Time on-page (sometimes known as Average Session Duration in Google Analytics), is the average period of time a visitor is actively viewing page(s) on your website.
📈 How Google Analytics calculates Time On-page: Google Analytics counts the following as sessions: multiple page views, events, and E-commerce transactions.
💥 Why it's useful: The length of time people spend on certain webpages across your site (e.g. homepage, blog articles, landing pages) is usually telling of how relevant, educational, or valuable your content is to people reading it.
For example, our top blog articles that bring in the most leads have higher Time On-page rates compared to articles that people may simply skim but not take action on.
When it comes to landing pages, it's a good idea to monitor trends in your Time on-page rates and run different A/B tests to see whether optimizing your content results in longer page views and conversions.
4. Number of Sessions
📘 Definition: In Google Analytics, a Session is the length of time a visitor is engaged with your site. A session ends based on 2 factors:
- After 30 minutes of inactivity
- At midnight
- Campaign change:
- If someone comes from one campaign, leaves your site, and then returns to your site from a different campaign. Campaign examples include: Google Ads, referring sites, search engines, or other URLs you've tagged with UTMs.
So the Number of Sessions is the total number of sessions within a date range.
💥 Why it's useful: If a visitor has multiple sessions, this is a strong indicator that they're a quality lead and interested enough in your products and services to return to your site.
Monitoring the number of sessions by marketing channel can help you understand which channels lead to more sessions and conversions. Or, if there's a certain channel with a high number of sessions but low conversions, it can give you deeper insights on where you need to optimize your strategies.
5. Pages per Session
📘 Definition: In Google Analytics, Pages per Session is defined as the average number of pages viewed during a session. Multiple, repeated views of a single page also get counted.
📈 How Google Analytics calculates Pages per Session:
Pages per session = Total number of pageviews / Total number of sessions
💥 Why it's useful: Similar to Number of Sessions, Pages per Session are a great indicator for how engaged visitors are on your site.
You can track your Pages per Session across your site on a weekly and monthly basis to see any trends in how people are increasing or decreasing engagement with your site over time, especially if you're launching new campaigns or content.
Getting Started With Marketing KPI Tracking
Now that you have the top Marketing KPIs to track, and ideas on how to measure your KPIs in marketing - you're ready to start tracking and growing!
Here's a recap of the tools that can help automate your tracking and easily display the metrics you should monitor to improve the success of your marketing:
- 🔥 Customer Attribution platforms: Smart Attribution is the first Customer Attribution solution that displays multiple KPIs you can use to measure your ROI, customer journeys to conversion, and better allocate where you place your budgets.
- 📊 Business analytics: For SaaS companies, ChartMogul provides a great KPI dashboard for tracking the health of your business.
- 💻 Website analytics: Google Analytics is the leading web analytics provider and preferred tool by our customers (and our team at PixelMe!).
Want to automatically calculate your CPL, CLV, ROAS, and ROI across channels? Sign up for a free PixelMe trial 🎉 or book a demo with us 👋. If you have any questions, just message us from the blue chat icon in the bottom-right corner! 💬
If you liked this article and want more similar content, subscribe to our PixelMe newsletter 🥳