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January 30, 2014

What is a KPI & Why Should You be Tracking It

As a business professional, you have likely heard of the term KPIs or Key Performance Indicators. But which KPIs are important to track and how can they improve your company’s bottom line? By effectively monitoring your Key Performance Indicators, you can easily identify opportunities for growth.

Access to this information begins with embedding a small piece of code into your website from Google Analytics and Google Webmaster Tools.

If identifying and tracking KPI’s is completely new to you, we recommend starting with tracking five indicators from the list below. By taking small steps towards analyzing your business you will begin to identify a roadmap to improvement.

Website Traffic

The Holy Grail of KPIs is website traffic. As you may likely know, not all traffic is created equal and that is why we break out the total traffic into smaller, more manageable categories including:

  • Total Visits:

    Not every marketing activity must directly result in increased sales. Some, like SEO or PPC give you the opportunity to increase your website’s exposure to potential buyers, regardless of the stage of the buying cycle they are in.

    Why this is useful:

    This metric measures the difference / change in your traffic during the duration of your marketing campaigns.

  • Page Views

    The number of pages on average your visitors are viewing.

    Why this is useful:

    This metric can tell you how engaging the content on your website is. It could also indicate if you are receiving targeted traffic, or whether the keywords you position yourself for really match what your potential audience is looking for.

  • Unique Visitors:

    A unique visitor is someone who has visited your site for the first time. This metric is useful to establish how many new and returning visitors you acquire.

    Why this is useful:

    Customers often visit the site a number of times before making a purchase. This is a standard part of their buying cycle. An increasing number of returning visitors can indicate that they find the site engaging and are including it in their sales cycle. Alternatively, unique visitors can provide you with a good sense of the actual size of your audience.

  • Bounce Rate:

    A bounce occurs when someone lands on your site and then leaves immediately, usually by pressing the back button or typing a new web address in the browser URL bar.

    Why this is useful:

    Bounce rates can tell you if the keywords you position yourself for match what your website delivers, and, if your content engages your audience.

  • Traffic by Specific Channel:

    You should also track traffic by channels and monitor any changes to it. The best practice is to select the main traffic sources to track, i.e. Google / Search, Direct, Advertising, Email, Selected Referrals, Twitter / Facebook.

    Why this is useful:

    This metric can help you notice any anomalies in traffic. It is also a good method to monitor certain aspects of your online marketing efforts (i.e. social media campaigns etc.)


  • No. of Orders / Leads / Customer Inquiries

    Why this is useful:

    This indicator allows you to see if your marketing campaigns are affecting sales or leads on your website. This metric not only helps to establish if your new traffic is buying but could also be used to analyze if you are bringing targeted traffic to the site.

  • Average Order Value:

    You may want to know on average how much your customers are spending with you.

    Why this is useful:

    Knowing your average order value, and any cycles / seasonality associated with it, will allow you to plan ahead. This metric combined with your traffic, new visits and conversion rates can help you predict your future sales and estimated cash-flow.

  • Conversion Rate:

    The Conversion rate is the ratio of visitors who take a desired action (buying, signing up for your newsletter etc.) and go beyond a casual content view or site visit. This is probably one of the most important sales KPIs.

    Why this is useful:

    Tracking your conversion rate allows you to establish whether your marketing efforts and your online store are delivering desired results. Also, the conversion rate is an important metric to track after making big changes to the site, as these changes might greatly affect it.

  • Return on Investment:

    This metric can help you establish how many dollars you gain for every dollar spent.

    Why this is useful:

    Knowing your ROI allows you to decide whether your campaigns are paying back. It also allows you to plan ahead and make adjustments to your marketing plan.

Organic SEO

  • Keyword Opportunity:

    This indicator analyzes the possibility of improvement for search rankings by comparing current rankings to Google’s estimated search traffic volume and competitor’s ratings.

    Why this is useful:

    By effectively identifying keywords that drive organic search traffic to your site, you can create new landing pages that target those keywords. Visitors get relevant content that they are actually searching for.

  • Search Traffic Performance:

    This metric measures the number of visits to your website that are the result of organic search traffic.

    Why this is useful:

    This allows you to measure the ongoing success of your keywords. You can analyze which keywords are increasing traffic, especially when it comes to branded keywords.

  • Keyword Ranking:

    This measures your ranking on targeted keywords and analyzes changes in ranking over time as well as which URL is ranked for that keyword.

    Why this is useful:

    This allows you to see where your site ranks against your competition for specific keywords. You can update content, add landing pages, and more by looking at your keyword ranking.

  • Backlinks:

    Relevant backlinks contribute to your domain authority. They act as trust signals and link your site to other sites that offer quality content.

    Why this is useful:

    Quality backlinks allow your site to benefit from other websites that have strong domain authority and help boost your organic placement.

  • Click-Through Rate:

    This indicator measures how often your listing on the SERP (Search Engine Results Page) generates a “click” versus the number of people performing a given search.

    Why this is useful:

    This allows you to understand if the content on your site is actually relevant to what users are searching for. You can use this KPI to write more targeted content that is relevant to potential visitors.

Email Marketing

  • Open Rate:

    This is the percentage of emails that have actually been opened by your subscribers.

    Why this is useful:

    By looking at this KPI, you can identify what email subjects drives subscribers to open their mail and read the content.

  • Click-Through-Rate:

    The rate at which subscribers are clicking on links within an email.

    Why this is useful:

    This helps identify what additional information your subscribers are interested in. It also helps drive targeted traffic to your website or a custom landing page.


  • Pay-per-click Cost per Acquisition (CPA):

    This important KPI will tell you how much you spend to acquire a new customer.

    Why this is useful:

    This indicator allows you to monitor, spend, and track the success of campaigns. Also, it helps to establish if there is an opportunity for lowering cost-per-click without reducing your ROI.

  • Pay-per-click Total Conversions:

    Just like with general conversion rates, it is a good idea to monitor your conversions per channel. This is especially important when it comes to paid advertising, where you need to keep track of your spending and your ROI.

    Why this is useful:

    Allows you to gauge whether you are spending money the right way and target the right keywords with your campaigns.

Social Media

Social media has become an important part of a typical marketing mix and you should also measure your efforts in this area. Here are some of the basic KPIs to implement into your tracking:

  • Facebook “talking about this” and new Likes
  • Twitter Retweets
  • Google+ mentions
  • LinkedIn Connections
  • New Followers Per Platform

Why this is useful:

This allows you to quickly estimate if there is any response to your social marketing campaigns. This social engagement is especially useful if you are involving content marketing in your marketing efforts.

Key Takeaways

The success of using KPIs will be dependent on how effective they are at contributing to a better understanding of what drives the success of your organization. Keep in mind that KPIs will differ based on the type of organization and its goals. For example, a non-profit organization, such as a school or a hospital, will have different KPIs than an ecommerce store. Each KPI should reflect the mission and goals of the organization as well as creating opportunities for growth.

Using these KPIs is a great management tool because it gives a clear understanding of how improvement opportunities will be developed, and consequences of deteriorating performance.

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