A lesson from Gertrude we all should pay attention to:
Figuring Out Your KPI's
We could see that traffic was slowing and tail lights were backed up for miles. Gertrude (the name we've given that talking voice on our Google Maps) told us to turn right and get off of the freeway. An accident ahead had caused a 35 minute delay.
So we complied...and while we got to see a great deal of the countryside on our excursion down dirt roads and two-tracks, Gertrude brought us right back out to the freeway only 1 mile down the road from where we had gotten off.
Well that didn't work...unless Gertrude's intent was to give us something to do while the accident was cleared.
Would it have been better and faster to sit in creep-along traffic on the freeway rather than take Gertrude's suggestion? We'll never know. We hadn't been that way before, we didn't know what to expect off of the main highway, so we had no point of reference...and that's my point:
In launching and continually running your campaign you've got to know which direction to take – where you stand – whether things are moving forward or sitting still – or how a change affects performance. You need a point of reference. That is what KPIs provide.
Key Performance Indicators (KPIs) are all at points of interaction with your target audience that will easily be found in analytics. This starts with your anticipated number of keyword searches and an estimated click through rate on your PPC ads. It then goes all of the way through your sales funnel. Each point of prospect interaction gives you a point of reference for performance. But more importantly – it gives you a point of reference for split-testing each element to improve performance.
So once your campaign is launched, suppose you find that your conversion rate on Landing Page #1 is below your anticipated rate. Suppose it is 1.25%. No worries - write a new page and test it. If it comes out at 2.2% you know you're headed in the right direction. Dump the first one, keep running the second one but write a third and test its performance against your 2.2% page. That is how you keep ratcheting up performance while optimizing your time and your money.
But you'd never know that if you didn't take the time to establish KPIs. Even if initial estimates are off you can see which areas of your campaign are most troublesome. You can also use the same structure to estimate overall performance if, for example, you -
Pushed email captures up 2%.
Improved your time sensitive offer and got a 10% increase in engagement.
Or opened up PPC ads for additional keywords, providing more traffic.
If you work your way through the math you'll find all sorts of adjustments you can make and how each will benefit your campaign. But you can't fix what you can't measure! Using KPIs gives you a point of reference so you know if you're headed down the right road.
One tweak: What does it mean for your sales and your budget? What can you expect; what were the results? You won't know what you can't measure! That's the job of KPIs.
As an added benefit, this ties directly to your advertising/promotion budget. What would it mean for your business if you could move that closing ratio needle a bit? What if you eliminated the number of superfluous keywords and concentrated on those with the highest engagement? Sometimes a percentage point difference at one KPI makes a monumental savings to the budget while your sales/conversion rate remains the same. This can be just as beneficial as ratcheting up the end result because your CAC drops dramatically.
I've seen where a 1% change in a KPI added an additional $126,000 to sales without a lot of work while dropping customer acquisition costs by 9%. Wouldn't that be worth it? You'd never know without establishing points of reference - those KPIs.
QUESTION: Will your initial estimates be 100% accurate?
No – it's unusual to hit your all-out stride right out of the blocks on your first attempt. Your actual experience will be a better indicator of what your campaign is doing. So plan lower than industry standards shown in the guide and then shoot high with split testing various elements once you have real data instead of estimates. If you use KPIs in conjunction with a budget you'll:
Make the most out of your available money.
Know what changes to make and if your changes are headed in the right direction.
More accurately be able to forecast sales, ROI and customer acquisition costs...
...and you won't have to blindly listen to Gertrude and guess which way is better.
So, do you wonder which KPIs to use and how to set this up?
We actually cover this on one of the free phone sessions. Book your first one now!