12 KPIs Every Marketer Should Define and Know

12 KPIs Every Marketing and Customer Experience (CX) Pro Must Know

As marketers and CX pros, we measure lots of different things. These marketing and customer experience analytics are critically important to the day-to-day operations of our businesses. But certain marketing analytics get elevated to an even more special status: key performance indicator or KPI. 

A marketing KPI is distinct from any other day-to-day business metric because they track how well your department (or whole company) is tracking against the organization’s top strategic objectives. Any shift in marketing strategy and objectives should be accompanied by a reevaluation of marketing KPIs to ensure they align with your new stated direction.

As you work to ready your business for the upcoming quarter, for a customer-centric transformation, or for strategic changes of any kind, here are some of the most important marketing KPIs every marketer and CX pro should know. They’ll help ensure you’re always measuring performance in alignment with the company’s most important marketing goals.

1. Customer acquisition cost (CAC) — CAC is the financial investment required to convert a single new customer. So if I spend $75 total on a digital display ad campaign and it yields 1 customer, my CAC is $75. CAC can range anywhere from a few dollars for the simplest B2C businesses all the way through to six figures for major enterprise sales. In B2C and B2SMB, digital acquisition costs have been rising at a staggering rate of 25% per year. Marketers are keeping a closer eye than ever on CAC, and heightening their focus on KPIs that measure ongoing customer value—such as customer lifetime value and retention. More on those in a bit.
   
2. Conversion rate — This is the proportion of website traffic who see one of your calls-to-action and actually respond to it. So if 1,000 consumers are presented with your digital ad, and 50 of them click, your ad has a 5% conversion rate (impressive!). When those 50 people arrive on the landing page to sign up for your service, and 5 of them complete the form, your landing page has a 10% conversion rate. As you can see, the conversion rate KPI can be applied to just about any call-to-action you want a prospect or customer to take.
3. Return on ad spend (ROAS) — ROAS measures how much revenue was brought in versus how much you invested for a particular advertising campaign. One key to getting this KPI right is ensuring you collect customer data (especially orders, subscriptions, shipped sales, promo code redemptions, cash and carry transactions, etc.) from all your channels and touchpoints—both offline and online—so you get a comprehensive measure of response to the campaign. (Watch how Pandora Media reduced ad spend and increased ROAS by modernizing some of their martech).
4. Incremental Lift — Lift is the increase in lead generation, sales revenue, or profit generated by a marketing campaign or CX initiative and incrementality is what really matters. Properly measuring lift requires the ability to set up test and control groups. Group A receives the campaign you’re measuring. Group B doesn’t. The incremental lift attributed to your campaign is the difference in performance between Group A and Group B.
5. Customer lifetime value (CLV) — CLV is the total revenue a single customer spends with your business over the entire span of their relationship with your brand. CAC and CLV go hand in hand: the higher your CLV, and the lower your CAC, the greater your return on marketing investments. Many businesses are now transforming to become more customer-centric. There are many good reasons behind this trend, and one of them is to increase CLV so rising acquisition costs can be justified.
   
6. Revenue per customer — If your overall goal is to increase CLV, sales revenue per customer is one of the best KPIs to tell you directionally which way you’re headed. You’ll want to measure this KPI versus time, making comparisons appropriate to your business. For more seasonal businesses you’ll look at this year vs. last year for a particular quarter, month or week. For less seasonal, you can focus your trend analysis on comparing the most recent time period (e.g. week or month) with the periods immediately prior.
   
7. Customer retention rate — A 5% increase in customer retention can boost profits by 25% to 95%. For some businesses, like those offering a recurring service (banking, insurance, software, media, telecommunications), it’s easy to measure whether you’ve retained a customer—they’ve either renewed or churned. For more transactional businesses (like retail, restaurants and hospitality), measuring retention can be a little tricker. You’ll need to build a model of expected purchase frequency and $ amount, per customer. If the customer falls below what the model expects, then that customer has likely churned.
   
8. Churn rate — It may seem redundant to include churn rate in this list just below retention rate—since whomever you didn’t retain equates to your churn. But we’ve included it here because churn is something that’s important to drill down on, measuring its early signals (such as poor engagement or a thumbs down support experience) to detect churn risk and enact strategies to prevent churn before it actually happens.
   
9. Net promoter score (NPS) — NPS rates the likelihood a customer will recommend your company to others. NPS is such an important KPI because it encompasses the customer’s whole experience with your brand. It’s also directly linked to the customer’s propensity to repurchase, and your business’s overall sales growth versus competitors.
   
10. Customer satisfaction (CSAT) — CSAT is the rating a customer gives to a single experience with your brand—such as 4 out of 5 stars after chatting with customer support. CSAT is key to measuring and optimizing the quality of individual interactions that make up the customer’s entire experience with your brand.
    
11. Customer effort score (CES) — CES measures how easy it is for a customer to accomplish something with your brand. Like making an appointment, placing an order, filing a claim, or finding a spot in your parking lot. CES is important because helpful and frictionless interactions are the cornerstone of great customer experiences.
    
12. Return on Investment (ROI) — ROI is last on our list but certainly not least. It measures how much revenue is incrementally gained by your company as a direct result of your marketing investments. Linking sales to marketing activity can be difficult—this is why marketers spend a lot of time thinking about how to accurately manage attribution. By ensuring you have unified access to sales data across all your marketing channel(s), and using the concept of lift we described above, you’re well on your way to proving the value your marketing initiatives deliver to the entire organization.

Customer Data is the Foundation of Your Marketing and CX KPIs

You can’t have KPIs without data. And for marketers and CX pros, we especially need data about our customers and about the relevant experiences that touch our customers. These include their experience with our brand via mass media, social media, digital marketing, email, direct mail, physical locations, websites, apps, and much more. From our owned channels we gather first-party data about direct customer interactions. Then we supplement it with external second and third-party data to help us understand our customers on the channels we don’t own.

This breadth of data can include: 

• PII info—Personal customer information such as name, address, phone, email, etc. (for anonymous customers and prospects, brands will capture device ID or cookie ID)
• Campaign and customer engagement info—Data reflecting the campaigns a customer received, the engagement within them, and other interaction data across marketing, advertising, sales, and support channels
• Transaction info—KPI examples include products purchased, channels transacted through, purchase prices, discounts used
• Marketing metrics and scores—KPI examples include customer health scores, average click-through rate, customer loyalty status, lifetime value
• Demographic or firmographic Info—Examples include dwelling type, estimated income, company type, company industry, number of employees
• CSAT data—Examples include satisfaction scores from surveys and interactions with customer support associates

We also need to manage this data somewhere. Of course, every marketer and CX pro relies on one or more customer databases. But the volume, variety, and velocity of data marketers need access to—as well as the range of systems it can come from—goes well beyond what a typical customer database can handle.

Customer Data Platforms (CDPs) Help You Move the Needle on KPIs

That’s why many marketers and CX pros are turning to customer data platforms (CDPs) to help unify, analyze, and activate all the data that’s required to understand the customer.

CDP companies like ActionIQ’s, you can activate great experiences, set up the control groups that help measure lift and ROI across every single channel (online & offline), and help feed deep and broad data into the KPIs that matter most to your organization. Allowing you to move the needle on your most strategic marketing and CX KPIs. 

Learn More

If you’d like to learn more about how to create and implement KPIs that help guide you towards improving marketing and CX business performance—and delighting your customers—ActionIQ can help. Contact us today for an introductory conversation with one of ActionIQ’s expert consultants.