KPI – Key Performance Indicators for Success Measurement
KPI stands for Key Performance Indicator and is an important performance metric. KPIs are performance indicators that are defined as targets in companies and reflect the business performance. Depending on the company and department, different KPIs are used for performance measurement. For example, marketing defines different KPIs than sales.
In marketing, KPIs provide information about the efficiency of executed advertising measures. Through continuous monitoring of the defined KPIs, advertising measures can be adjusted and optimized accordingly. KPIs thus play an important role in measuring success in marketing.
Typical KPIs are:
Bounce Rate
Bounce is an error message indicating an undeliverable email. There is a distinction between Hard Bounces, which are based on permanent errors (e.g., the email address no longer exists), and Soft Bounces, which are based on temporary errors (e.g., full mailbox). The KPI Bounce Rate (also known as the Absorption Rate) shows the percentage of visitors who leave the page immediately after opening it.
Click-Through-Rate (CTR)
An instrument to measure the success of online advertising. To calculate this value, the number of clicks on an ad is divided by the number of ad impressions (Ad Impressions). If an ad was shown 5,000 times and 5 users clicked on it, the click-through rate is 0.1%. The higher this KPI, the more successful the ad.
Cost-per Action (CPA)
This KPI shows the cost of a defined advertising action, such as purchases, downloads, leads, etc. A CPA can also be the basis for online price calculation between publishers and advertisers.
Cost-per-Click (CPC)
The Cost-per-Click KPI shows the cost for a click generated by an online ad.
Cost-per-Lead (CPL)
Similar to Cost-per-Click, this KPI is also a billing model. Success is measured by how many new addresses (leads) were generated as part of the advertising measure and what each lead cost.
Cost-per-Order (CPO)
This KPI refers to the advertising costs per order received. The value can form the basis for the advertising cost settlement (like all CPX billing models, e.g., CPA, CPC, CPL, and CPO).
Conversion
This KPI describes the rate of conversions from contact to customer. The corresponding metric is the Conversion Rate (CVR). This shows the ratio of conversions (e.g., purchase) to metrics like ad impressions, clicks, leads, etc. For example, if a campaign generates 10,000 new leads and 200 of them become customers, the conversion rate is 2%.
Lead (Prospective Customer)
This KPI looks at how many people left their contact details during the advertising campaign and thus became serious prospects. They might have, for example, subscribed to a newsletter and agreed to receive further information from the company, downloaded a whitepaper in exchange for their contact details, etc.
Open Rate
The open rate provides information about how often a newsletter has been opened relative to the number of deliveries. The reported value of the measured email openings is not always entirely accurate, as clicks from users who do not download images (e.g., because the email account only reads emails in text format) are not counted. The open rate is calculated as follows: Openings / Deliveries x 100. The Subject Line and sender address have a significant impact on this KPI.
Order
An order refers to a purchase made over the internet. However, this term does not only mean a purchase. It also includes newsletter registrations, sign-ups, etc.
Visitor or Users
This KPI considers the number of visitors on a website. Generally, the more visitors, the more interesting the website. Exception: the traffic generated is meaningless if wrong keywords have directed users who have no interest in the provider’s offers to the website.
Your Contact for KPIs in Online Marketing
All KPIs are fixed numerical or percentage values. The performance metrics primarily serve to measure conducted measures in real time. To be successful in online business, it is important to think about the relevant KPIs before a campaign and set goals. Only then is it possible to observe the development of the KPIs and, if necessary, optimize them. In online marketing, all KPIs are recorded in the framework of a reporting. Reporting includes, for example, Ad Impressions, the number of clicks, click-through rate, open rate of a newsletter, the CPO, etc. The details of a success-based reporting should be discussed with our online specialist Tanja Hensler (hensler@trebbau.com, Tel.: 0221/37646 – 330).