May 29, 2024
Human Friend Digital Podcast

Understanding KPIs & Digital Marketing

in this episode

Key Performance Indicators are the data you need to gauge your investments.

In the digital marketing landscape, Key Performance Indicators (KPIs) play a crucial role in measuring the success of marketing strategies and the overall health of a website.

In today’s episode, we explore KPIs and their usefulness. A KPI helps businesses identify which data points truly matter amid a sea of analytics. For instance, conversion rates, which measure the percentage of visitors who complete desired actions, like form submissions or purchases, clearly indicate a website’s usability and effectiveness. Unlike metrics like bounce rates or engagement rates, which can be useful but are often misleading, conversion rates offer a more accurate reflection of user experience.

Selecting KPIs that are consistent and comparable within your industry is crucial. This allows businesses to benchmark their performance against competitors and industry standards. Small businesses, in particular, should focus on KPIs that directly impact their bottom line, ensuring their marketing efforts are both effective and sustainable.

By carefully choosing and analyzing the right KPIs, businesses can make informed decisions, optimize their marketing strategies, and drive long-term success.

Hit play and enjoy the episode!

At the end of the episode, I discuss a quote: “Nothing puts a bad business out of business faster than a good marketing campaign.” Variations of this quote are around the internet, and they are attributed to Jerry Della Femina! However, I ended up hearing this first in my business classes at Cincinnati State. Apologies to Jerry for hearing this through a game of telephone, haha, but it still carries a great point!

Episode Transcript:

View Full Transcript:

Jacob:

Welcome to the very first episode of the Human Friend Digital Podcast. I’m your host, Jacob Meyer. 

Jeffrey:

And I’m your co-host Jeffrey Caruso. So Jacob, let’s just dive into today’s topic, which is KPI. So, KPI has been coming up a lot in our calls with clients, and me being very new to the digital marketing space, or just marketing in general, can you lay it down? You know, what is KPI? Why is it important? For someone like me, who does not know these things. 

Jacob:

Right. The definition is “key performance indicator”. It’s very easy to get lost in the sea of data that you can get from things like Google Analytics 4, Plausible Analytics, or other data analytics sources. A KPI, a key performance indicator, is a way for you to pick and choose which ones you actually care about in that sea of data choices that you can get and what you should do depends a lot on the goals of your business, but there are ways to create KPIs that can be very consistent across different marketing efforts that means a lot to your bottom line.

Jeffrey:

So, like give me an example: What’s an indicator that you look for in your digital marketing space?

Jacob:

Right. And there’s a lot, it depends on your website and the industry that you’re in. So I’ve mostly focused, and most of my career has been, in the B2B sector. And so B2B websites are…

Jeffrey:

Business to business…

Jacob:

…Business. Yes. Acronym soup, here it comes. Business to business websites are very much focused on converting website visitors into leads. So, that’s a form fill, a phone call. Anything where they go and identify themselves. So you can track conversions, and that would be a great KPI that people like say, “great! How many conversions did I get?” But I actually recommend that you take your conversions divided by your total number of users that you get in a time period. And that gives you what’s called conversion rate, and that percentage is really helpful because even if one site gets thousands and thousands of visitors and one site gets a handful or hundreds of visitors, their conversion rate can actually be the same, because conversion rate, if you think about it, is based on the experience that a user has on your site. They have to go through your content. They have to go through your user interfaces. They have to go through your forms. This is a usability measure. So once you get people to your site, how many of them can convert depends on that conversion rate number: is your way to boil it down, and a lot of businesses that are B2B float around 1-3%– you definitely want to be closer to 3%– but you can go from business, to business, to business websites and you can see that if they’re floating between 1-3%, that’s like an industry average, and you can go right now if you go take that number and get your conversion rate pulled up, you will see if your website’s competing well in your space. Now, the benefit of conversion rate is taking those numbers and making a percent, because even if you get way, way more visitors, which would be awesome, that rate will actually stay the same, if you have a really consistent experience on your website and therefore, as you scale, it’s a better indicator of the usability and the success of your website. So you can turn off and on marketing efforts. You can turn off and on different offers and things like that. But that’s the needle you want to move because that will better indicate the long-term success of your website. 

Jeffrey:

So basically what you’re saying: you use something like conversion rate or other KPI’s to figure out if your specific strategy worked to increase whatever it is that you’re looking for, in this case conversion rate.

Jacob:

Right. Yeah. And the nicest thing about one where you take two data sets and combine them in one is that the number is kind of small, so it’s kind of easier to digest. And it’s a lot easier to standardize across industries if you want to go look around and say, “how’s my competitor doing? What’s average for my industry?” Well, it’d be hard to equate two different websites based on search volume, because one website might do fantastic SEO work, they have a great blog. Maybe they’re podcasting, like we are, maybe they’re doing all sorts of crazy stuff and you’re much smaller, but at the end of the day, your site, their site: conversion rate can stay the same. Now, that pass-through conversion rate, I should say, that’s for B2B, but as you move through different industries, you might change what your primary conversion is. So like, if you’re an e-commerce website, you might do a purchase rate, and that is still like conversion. And a lot of times you can see, again, that is in the 2-3 percentile, 4 percentile I see in e-commerce. One of the websites I was working with had it up to 11%. They were really killing it. But you could still move that needle and change effects, but one thing that conversion rate does is help you through, most of the time, is seasonality. And you need to keep that in mind because sometimes businesses…

Jeffrey:

Alright, break that down: seasonality. 

Jacob:

Oh, so like, I worked for the tourist industry website and, I can’t tell you which state, but it’s one of the 50! And they have… I mean, it’s a very seasonal business where you have, you know, winter it’s– it’s in the Northern regions of the United States– so winter really affects the traffic: it goes down; summer, it goes up really high. A lot of different businesses have seasonality. Depending on what’s going on. 

So like, in digital marketing, a lot of people, clients, are looking to spend their budgets when they have budgets in the beginning of the year. So it’s a really busy time to have that. But through all of that, it’s really interesting to see the conversion rates can stay pretty steady. Even if the season changes, even if the number of total users changes, the number of people that are interacting with your site, and actually doing the interaction you want them to do in your tracking as your KPI, can actually stay the same throughout the season. So you can… again, it’s a better gauge of the health of your website than how many sessions you get in a given month.

Jeffrey:

Right. Okay. That actually makes a lot of sense. So, you’re looking for a KPI, you want one that’s going to not fluctuate, is comparable over time, is comparable to your competitors, other parts of the industry. My next question, we touched on this a little bit, you said the KPIs people should not bother tracking. So we touched on search volume or… You, you take this. Take it away. 

Jacob:

Oh, that’s fine. Yeah, there’s a lot of KPIs and, I’m sorry, there’s a lot of data sets. Not all of them should be considered a KPI’s. And a good example of that would be bounce-rate. They’ve changed that with GA4. So if you use a different service, like Plausible Analytics you still might see bounce-rate in there. 

Jeffrey:

GA4 is Google Analytics 4? 

Jacob:

Yes. If you don’t know what Google Analytics 4 is on your website, you’re missing out. You should definitely get that soon. But Google Analytics 4 changed that to engagement rate. But even in that case, what you’re relying on in bounce-rate/ engagement-rate is that analytics service accurately detecting and giving you information back to get this rate of how many– it’s a percentage, and it’s a percentage of how many people either stay on your site and do something. Bounce-rate used to be terrible because I had a photography business I was working with, and they had a great conversion rate, like 4% conversion rate, which is awesome. And with their number of users that they were having, they got, you know, they’re getting like 60 to 80 form fills a month at any given time, which was great for them. But their bounce rate was 70%. And industry averages for bounce rates tend to be floating around plus or minus 50.

Jeffrey:

Quickly define bounce-rate. 

Jacob:

So that is when a user goes to the site, they look around, they could even scroll a little bit in the old one, and then they leave. 

Jeffrey:

They don’t click anything, they don’t…

Jacob:

Actually in the old universal analytics, clicking didn’t matter. It’s like a page specific view: so if they go to one page and then they leave your site. Turns out when they would switch to engagement rate, that photography place went from 70% bounce rate to 90% engagement rate. So people were scrolling, people were clicking, and that’s why conversion rate tended to be a better indicator for them because I couldn’t see that with bounce rate. I couldn’t see that interaction…

Jeffrey:

Looking at bounce-rate, all it looked like was people were coming to the website and then just: bye, see you later. 

Jacob:

Yeah. And they were seeing it, but they were leaving. But they could be coming back later and doing their purchase. But in their industry, a very aesthetic experience of photography, if you don’t like those photos, you just leave. It didn’t mean that the website engagement or usability of the website was at fault, which was what my biggest concern was getting caught up in bounce rate nonsense, was I was afraid of that. Where I should have just calmly looked at my conversion rate and thought, well, I’m beating my industry for conversion rate, and I’m having enough sales coming through from those leads, I don’t need to care about bounce-rate very much or engagement-rate or these kinds of things. 

That’s why conversion rate is one of your best indicators of engagement. Even though you get engagement rate, even though you get all these numbers, focus on that bottom line. If that’s happening, and people can go through your site successfully: that’s more important than what a data analytics service could successfully track about someone interacting on their machine. 

Jeffrey:

Okay. Right. I feel like we’re probably getting close to time, but, if you just want to briefly discuss, or I guess maybe just summarize how small businesses or ones with a tight budget, what their best strategy would be for choosing KPI’s and utilizing that. 

Jacob:

Well, I guess it really comes down to whatever your business… what’s the closest thing to your bottom line, and then passing that through a statistic, like, number of users, number of people coming into your store. Can you track the number of people? Even if you were going to do this offline, what you really need to do is track the number of people that are coming through the door and that success that you have there at the end. There’s gotta be that pass through that you’re going to combine into a number and I think not just relying on a single number is really important here: it’s about combining them. Because it’s going to give you something, like you said earlier: you can measure against other people, you can measure against yourself. And it’s about the experience, not just “can I get a ton of people in the door?” because that doesn’t indicate anything. 

One of my favorite phrases about marketing is from… I’m gonna look this up, put a link at the end of this for the pod: we’re gonna look this up, we’re going to find this guy, because I quote this all the time and I need to remember who this guy is. But he basically said “nothing puts a bad business out of business faster than a good marketing campaign”.  

Jeffrey:

All right, break that down. That’s interesting. 

Jacob:

Yeah. And so if your KPI is only based on the number of people you get in your door, right? A good marketing campaign can get a ton of people in the door, but if you have a bad business and you have a bad user experience, and it doesn’t go good, you’re going to put yourself out of business faster than you can imagine, because you’re going to get a ton of bad reviews. You’re going to look bad. People are not going to come back. They’re not going to come back at all, because they’re going to be telling each other. 

Jeffrey:

So, yeah, that’s so interesting because it would seem so counterintuitive to someone like me, who’s outside of this industry, you know? Who doesn’t really think about marketing. But that makes a lot of sense. Getting those bad reviews: it’s going to sink you. 

Jacob:

Yeah. The more you just create this cycle of putting good money over bad is really bad. But there’s an example of, wow, you could say “my marketing campaign was amazing because I got 10,000 people on my website, 10,000 people into my door”, whatever that is for my business in a given time. But if you have a bad business and a bad user experience and they don’t pass through, you’re actually going to run yourself out of business because you’re going to be spending all this money and you’re not going to be getting that revenue back. And that is basically the key of this is finding something where you could pass it through, mix it, and then give yourself something that you can weigh yourself against, against the whole world. 

Jeffrey:

All right. Well, Jacob, this has been a good chit-chat about KPI. It’s very educational for me. But yeah, I think that that does it for our first episode ever: The Human Friend Digital Podcast.  

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