Data is the cornerstone of digital marketing results and producing great campaigns for the future.
The more traffic you get, the better your tactics worked.
Are you ranking #1 for a keyword? It looks like your efforts have paid off!
But have your efforts literally paid off? Have they actually made money for your business?
You might feel good when you read those kinds of metrics, but they don’t prove that your company has fulfilled its ultimate goal: to make a profit.
We all like to look at this kind of data. But in reality, most of us are doing data wrong.
We are focusing on the wrong key performance indicators (KPIs) and using them to make bad marketing decisions.
Data should always be the first thing you look at when allocating a budget or informing a new campaign.
But what happens when the data you’re looking at isn’t good enough?
If the data doesn’t show you the entire picture, you risk dumping your budget into efforts that simply won’t produce results.
Tracking the wrong metrics is a recipe for disaster, but using those metrics to inform your decisions is even worse.
It could be the make-or-break difference for your business.
I did this countless times when I was a young entrepreneur growing my business.
I was using the wrong data to inform bad decisions and taking my budget to a different platform, only to realize that it was a waste of time and money.
Thankfully, I’ve learned a few things over the years that I can share with you to help you improve your marketing.
Here’s how you should be using KPI benchmarks to drive better marketing decisions.
What are KPI benchmarks and which ones should you focus on?
Key performance indicators are metrics that are designed to tell you how effectively you are achieving your business objectives.
They are meant to quickly tell you if your marketing tactics are working or not.
Tons of businesses use KPIs at multiple levels to measure the success of their efforts.
KPIs can range from high-level to low-level and could be anything from traffic to sales depending on your goals, business, and specific campaign.
A lot of times, marketers get caught up in things like traffic or clicks. We obsess over having the best click-through rate or the number one ranking spot for our goal keywords.
But when it comes to KPIs, you need to focus on real data.
You need data that tells you exactly what impact you had on your business.
For example, is your goal to drive more Facebook Page likes?
Then your KPI shouldn’t be focused on metrics like traffic or visits or impressions.
Why? Because your end goal doesn’t involve any of that.
Your end goal is page likes, meaning that your key performance indicator should be page likes!
It tells you in one metric how your efforts are performing.
It’s the blanket metric that you should use to inform your decisions.
So, what if you’re running a Google AdWords campaign and your end goal is leads?
In that case, your KPI wouldn’t be anything like traffic or clicks. It would be how many people you actually land for a consultation or convince to become an email subscriber.
Sometimes, we get caught up in metrics that are great on the surface.
But focusing on these metrics can send you down a rabbit hole that you may never escape.
It can sabotage your marketing efforts by making you think that certain tactics are working when in reality they aren’t.
Overall, KPIs should meet the following criteria when compared to other data and metrics:
KPIs should be meaningful enough to use in your marketing decisions.
They need to concentrate on material gains in terms of contributing cold hard cash to your bank account.
They need to align and even guide the strategic positioning and direction of your brand, too.
So, what falls into KPIs and what doesn’t? Well, this is a good rule of thumb:
If you want to find out your own KPIs, I have a formula that can help you uncover them in just a few minutes.
Step 1. Define your objective.
First, you need to figure out what your end goal for a specific campaign or department is. For example, the sales department exists to close prospects on sales.
For marketing, it’s likely to bring in more visitors and drive more lead sign-ups.
Once you’ve outlined the major objective of a campaign or department, head to step 2.
Step 2. Define the measurable success.
If your sales department’s goal is to close prospects to produce sales, measurable success metrics could be:
- Close rate
- Total sales
- Overall business growth in terms of profit
If your marketing department exists to bring in new traffic and leads, your KPIs might be:
- Conversion rate from traffic to leads
- Total leads
Once you’ve done this, you can use your data for the right efforts. Here’s how you’re doing data wrong and how to use your KPIs for better decisions.
A prime example of how data goes wrong and why
People often see A/B testing as the gold standard of benchmark data.
They put stock into these tests, and once they do them, they make massive changes to their marketing game plan.
But the truth is that A/B testing is a waste of time for most small businesses. At least when it comes to certain marketing campaigns.
According to Conversion XL, most A/B tests fail. Why?
It’s because you need a minimum of 1,000 conversions monthly to reach any sort of statistical significance.
But often — and I’m guilty of it, too — we take A/B testing data as foolproof evidence that should always inform our decisions.
It can cause us to put too much money into platforms that really don’t work.
For example, let’s say that you A/B test having a free trial sign-up with a credit card and without one.
You can see this on most SaaS product sites:
So you test a landing page with a credit card required and one without.
You quickly notice that you’ve got double, or maybe even triple, the conversions on your page without a credit card required.
You quickly think:
Wow! I’ve struck gold.
Eliminate the credit card usage ASAP. Take down the landing page.
Let’s pump all of your budget into this to drive more of these conversions!
But that’s dangerous. It’s the wrong way to look at data.
It’s not how KPIs are meant to be used.
For example, let’s say you check back in 2-4 weeks when the trials are starting to end.
You notice that only 5% of trial users converted to a final service when they signed up without a credit card.
But now you’ve put all of your eggs in one basket,= and it’s too late to go back.
All of those visitors who signed up for free trials didn’t convert.
And when you look back, you notice that the majority of people who sign up when a credit card was required actually converted to the full product.
KPIs are all about quality — not quantity. They are about what really moves the needle for your business.
A/B testing is a common pitfall that small businesses fall into when trying to use data to drive better marketing decisions.
Sure, A/B testing is useful. But only when you use it over and over to generate consistent results.
How to use KPIs to make realistic marketing decisions
Now it’s time to use data for good.
Tip 1. Create a KPI dashboard in Google Analytics.
KPIs are fantastic once you’ve got them outlined.
But how do you make better marketing decisions with them?
By making them the focal point of your data collection and analysis process.
They need to be the center of your focus if you want to make a real impact on your business growth and development.
To start, I recommend creating a custom dashboard in Google Analytics. To do this, head to the “Dashboards” report under “Customization:”
Next, hit “Create” to start a new custom dashboard:
Now you can choose between two different options.
You can either create a new custom dashboard from a blank canvas or select a starter custom dashboard.
For this, I recommend creating one from a blank canvas to really customize it to your efforts.
Click “Create Dashboard” to continue.
Now you’ve got tons of options to choose from when creating a new widget for your dashboard:
You can add dozens of widgets to your dashboard and customize them with different metrics, graphs, and stats.
Now, obviously, everyone will have a different dashboard depending on their company goals.
Metrics won’t always be the same, so there is no cookie-cutter dashboard you can copy.
Remember: KPIs should be the best of the best metrics and indicators for your success.
No two campaigns should contain all of the same KPIs.
But, I will show you how to set up a few different amazing widgets for your dashboard to get you started.
One of my favorite custom dashboard widgets is meant for marketers who want to analyze their traffic impact on conversions.
It helps you quickly identify which channels, whether it be organic or paid or direct, are driving the most sessions and ultimately the most conversions.
To get started, select the “Table” option as your widget:
Next, select “Source / Medium” as your first metric:
This will give you data on how your sources perform relative to these next two metrics:
In the end, your dashboard should look like this:
This will generate a table that analyzes how each source (direct, organic, etc.) plays a role in sessions (traffic) and how they impact goals (conversions).
Another of my favorite widgets is to track your content marketing backlinks.
Here’s how to set it up:
Select the “Table” option and display the following three metrics:
Full Referrer + Unique Pageviews + Bounce Rate.
This will give you an idea of which referral links you are getting and which are performing well for your business.
Setting up a few dashboards like this for your own KPIs is going to be critical in making better marketing decisions.
It allows you to spend less time analyzing vanity metrics and more time focusing on real data that shows the full story.
Tip 2. Take that data and put it to use.
The key to using KPI data is to see the big picture regarding what your tactics are accomplishing.
While a tactic like Pinterest posting might help you generate traffic, what was the real result in relation to your goals?
Sure, it might be awesome to increase your traffic via Pinterest by 67.65% like I did. But what resulted from it?
Did that traffic get you anything to grow your business?
Most people would see these numbers and instantly say, “Let’s cut out Facebook and Twitter and focus on Pinterest.”
But what if Facebook and Twitter are driving most of your real conversions to sales even if they have fewer traffic numbers than Pinterest?
You’ve just essentially cut off two amazing sources of direct sales in exchange for traffic that doesn’t convert.
That’s a big mistake.
This is why key performance indicators are so powerful for marketing decisions.
They help you look past the surface and understand the real impact of your marketing tactics.
A great way to do this is by analyzing the entire customer journey and producing reports that don’t only focus on the last-touch attribution bias that we see in typical conversion data.
Here I’ll show you how to analyze both right inside your own Analytics in minutes.
To get more data on the customer journey and lifecycle and to see how each part of your marketing strategy plays a role, head to Analytics and open the “Behavior Flow” report:
From here, you can analyze how different traffic sources impact behavior flows on your site:
For example, is referral traffic sticking around? If not, it might not be worth your budget to focus heavily on it.
Is your organic traffic having multiple on-site interactions and converting? This is important data.
It tells you that prospects aren’t just coming to your site and giving you impressions or new sessions.
It shows you that you’re actually driving business growth with it.
The behavior flow is one of the most underutilized tools in Analytics.
It’s essentially a free buyer’s journey or sales cycle model tailored to your site.
It helps you visualize how each source and medium works to bring in visits, where they go, and what they did on-site.
You can also change the starting metric to social networks if your objectives focus on social media marketing:
The options are diverse here and you can select between dozens of them to see how each impacts behavior with your site.
Now, you also need to focus on reporting data that shows you conversions, too.
For example, what if your conversion report says that social media is getting you zero conversions?
It’s not doing a darn thing!
That’s probably 100% false.
Let me explain:
Marketing data suffers from serious bias in the form of last-touch attribution.
Last-touch attribution is defined as conversion data that gives credit to the last “touchpoint” that a user landed on before converting.
For example, if they hit your landing page via organic search and converted, then the conversion data would give credit to the organic search.
Do you see a problem with this?
Take a look at the typical buyer’s journey and tell me if you think it’s that cut and dry:
Does a user really only need one touchpoint to convert?
Obviously not, or this wouldn’t exist!
Buyers can take weeks or even months to convert, landing on your site or other online channels potentially dozens of times.
They could have found you on social media, clicked a lead magnet remarketing ad, typed your direct link, found your blog via organic search, and then converted finally from a PPC ad.
But in that case, PPC would get the credit, when in reality, all of your channels played a role.
This is potentially dangerous because it can cause you to think that some platforms aren’t driving conversions when, in reality, they were critical factors.
Try running a report on the “Model Comparison Tool” in Analytics to see how different channels helped conversions:
Next, select the model to analyze:
You can choose between multiple models to see how your channels were involved in the buying journey:
You can even create new custom models or import more templates:
In the table below, look at what percentage your individual platforms play as their roles in the conversion process:
Do you notice that one is lagging behind in almost every test?
Then you might really consider eliminating it from your strategy. This would be a prime example of using data for real marketing efforts.
Give it a shot today to use your data to make real, informed marketing decisions.
Data is the fundamental proof that marketers should be using to create campaigns and inform marketing decisions.
Think about it:
When you check Google Analytics and see that your traffic is on the rise, you must be performing well, right?
At first glance, the tactics you’ve put into practice appear to be working.
But it’s not that simple. In reality, most of us are doing data wrong.
And using data in the wrong ways can sabotage any quality marketing campaign.
Putting your budget into the wrong platform could make or break your business.
Trust me. I’ve been there.
It’s easy to get the data wrong and use the wrong KPI benchmarks.
But once you’ve started to hone in on these benchmarks, you can use them to make better marketing decisions.
Start by creating a custom dashboard in Google Analytics to weed out the bad metrics and focus on the real key performance indicators.
Next, take the data that expands beyond the simple metrics and put it to use.
Make sure that you back up any tactic with sound data.
Revolutionizing the way you see and understand data can turn your business from a zero to a hero in no time!
What are the KPIs that you track to inform better marketing decisions?
The post How to Use KPI Benchmarks to Drive Better Marketing Decisions (And Results) appeared first on Neil Patel.