If you’re reading this blog post, you’re probably familiar with the term “vanity metrics” — a concept used to describe data points that (1) look pretty without (2) adding value to your company’s bottom line.
The problem with vanity metrics is that they’re alluring. Performance-focused marketers and can’t help but fixate on ‘big growth numbers’ that have little to do with revenue. Notorious examples of vanity metrics include install rates (when in fact, retention is low) and tweets (when in fact, conversion rates are low).
While the data points you’re tracking might be important, do they have a direct connection to your company’s ROI? Maybe. Maybe not. The answer to this question depends on your business’s unique monetization model.
Marketing team members must join forces around a common set of key performance indicators (KPIs) that are closely tied to your company’s bottom line. The bigger your team grows, the more important that this goal becomes. Thanks to web analytics software, marketers have the opportunity to track anything and everything that they want — which is precisely the challenge.
How do you figure out what matters? Follow these steps:
1. Look for cause-effect relationships between marketing initiatives and long-term growth in conversion rates.
Marketing is a process that requires continuous experimentation. It’s this process of testing, iterating upon, and refining ideas that can help your company create scalable, technology-driven programs.
The process takes patience, a commitment to learning, and of course, a healthy budget. To manage the potential risk of losing money, many marketers will take the approach of running small tests and then scaling up — measuring cause/effect relationships over the short term.
But it’s important to measure these same metrics over the long-term to confirm that, on the aggregate, your efforts are yielding results for your team.
As an example, consider the following chart, which represents data from 14 Gigya customers who are using a suite of social login tools. Roughly a third of those surveyed experienced an increased a conversion rate increase between 50% and 74%.
What’s important to keep in mind when reviewing this anonymous trend data is that each of the 14 companies probably define their conversion rates differently (sales, sign-ups, logins, etc). An important takeaway; however, is that (1) these companies know what they’re measuring to define success and (2) they’re looking at performance over the long term. Which brings us to tip #2.
2. Measure what’s right for you.
If you’re reading this blog post, you’re probably well-aware that there is a lot of marketing-related thought leadership out there. Everyone seems to have a strong opinion on what you can and cannot measure. One claim that’s often made is that pageviews and web traffic have little to do with a company’s conversion goals.
Yes, this perspective holds true for some companies — but not all. Media brands, for instance, rely on web traffic and visits because they’re monetizing through display ad revenue. For B2B software-as-a-service (SaaS) brands, however? These types of companies are better off focusing on sales-funnel objectives like repeat user account logins, leads generated, and free trial sign-ups.
Don’t let rhetoric bog you down. You are the best person to assess your company’s unique growth and revenue drivers. In the world of marketing, context is everything — and you know what counts.
3. Map everything out.
Buyer journeys are complex. Often, audiences aren’t ready to commit to an immediate sale when they first visit your website. They’ll need to do some research, review your content, and maybe ask their peers’ opinions about your brand.
Metrics like social shares, sign-ups, and re-engagement rates (among others) have a clear place in this process — but it’s often challenging to see the big picture and prioritize the KPIs that can help your team identify how to best identify their marketing initiatives.
Start by making a big list of KPIs (yes, everything your team cares about). Identify every touchpoint along your buyers’ journeys. Then, map out your customers’ conversion funnels. The final step is to connect the dots between the KPIs you chose and each stage of the conversion funnel. Some KPIs won’t make their way onto your list. Others will.
Regardless, what you’ll end up with is probably too much. So trim your list down again to your most essential, conversion-centered KPIs.
This finalized list will be a map for your marketing programs.
How does your company choose KPIs that matter? What process do you follow, and how does your team maintain a structured approach? Share your thoughts, questions, and feedback in the comments section below.
By Ritika Puri