María Alcaraz

What are KPIs?

In order to measure performance outputs in digital marketing, several tools are needed. Particularly in SEO, it is extremely common to use several indicators that let you know how your business is doing, or that enable you to provide reports to your clients. Here’s where the KPIs come into play.

What does KPI stand for?

KPI stands for Key Performance Indicator, which are used to show the performance of our strategies in online marketing and traditional marketing. Usually, when you plan a marketing action, either on-line or traditional, you need to set yourself several goals regarding performance, and you need some information on which you can outline your strategy.

In order to measure the outcome for each of the actions, you will need metrics whereby you can assign a given value to the most relevant variables. KPIs are usually included in a company’s scorecard or control panel.

KPIs are extremely useful for freelance professionals and SMEs that devote much of their time to project management every day. In order to find out what the output for each of the processes was, you will need high-quality KPIs that enable you to reach meaningful conclusions.

How can I design a KPI?

Properly designing a KPI involves several aspects that should be taken into account, one step at a time:

  1. Set the course of the actions you are going to undertake. What would you like to foster?
  2. Identify the variables that have a direct impact on the final outcome. For instance, if your strategy is oriented towards sales optimization, both price and the company’s location/positioning would be factors to be taken into account.
  3. Set a basis for your KPI. Time and money are usually taken on as a reference. In this case, you could choose monthly sales and product rotation.
  4. It is advisable to establish intermediate goals; that is, short-term goals that enable you to keep measuring your KPI and modifying it as required.

What should a KPI be like?

In most cases, both on-line marketing and traditional marketing are used to reach broadly defined goals such as “increasing the company’s sales” or “maximizing brand impact”. Nevertheless, in order to find out whether the goals we set are being achieved, KPIs should be much more precise and to-the-point. This is why they should include several features:

  • Being measurable: A KPI should provide a specific value from which the usefulness or the performance of a variable may be determined. For instance, we can’t measure customer confidence in a brand X using numbers. However, we may find out whether customers buy products of a given brand more than once in a given period of time, which would provide insight into customer confidence in the brand.
  • Being useful: KPIs are used to determine the distance between us and the goals we previously set for our company. Such goals should be realistic in order for the KPIs to be useful.
  • Being relevant: A KPI should provide to-the-point, useful information to reach conclusions. You may design as many KPIs as you like, but the only thing that really matters is that the KPIs you design provide useful information to achieve as good a report as possible.
  • Chronologically adjusted: The KPIs used in every action, strategy or campaign should be tailored according to its length. That is to say, we can’t use a quarterly KPI to reach conclusions on yearly sales. If we did, the information we obtained would not be as precise as desired.
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