KPIs, Key Performance Indicators, are measurements used to evaluate specific marketing activities and follow their progress. Before we discuss different kinds of measurements, let’s think about our objectives for, let's say, email marketing. What we choose to measure and analyze should be in line with our reasons for carrying out our different email projects, and our goals should be set accordingly. Measurements of opening rate or cost per conversion won’t tell you anything unless you know why you are actually measuring them, or what your goals are.
We use two types of KPIs. Type one usually concerns activity in the emails:
- Opening rate
- Click rate
- Conversion rate
- Number of recipients
- Number of unsubscriptions
These are good indicators to work with if you want to see how ”healthy” your recipient lists are, but they say nothing about what profits your email marketing is actually generating.
To find out what your activities really result in, you need to also measure financial performance and profit. That’s when we encounter the second type of KPI, which is of a more strategic kind and tells us how activities and actions relate to profits. This type of KPI is often connected to concrete objectives, such as:
Profit per communication
Value per conversion (remember to value all conversions, not just sales-related ones but also ones that drive actions such as communicating with customer service through your web site rather than over the phone)
- Profit per recipient
Often, the two types of KPI are used together, and the acronym includes both categories. What you choose to call your measurements is not the important thing here, but the fact that they should always give you information that contributes to your activities – they should indicate the value of your email marketing. Measuring what all your hard work actually results in is important, as well as worthwhile and fun. It also provides hard facts that can help you show management the value of email marketing and provide an incentive for greater budget allocations and importance within the business.