KPIs. Key Performance Indicators. Few subjects in marketing can become complicated quite as quickly. Which ones should you track? How much weight should you give them? Which data should you trust? Who gets to interpret that data for you? And perhaps more importantly, what incentive does that person have when explaining those numbers?
Here's an even more uncomfortable question: How much should you actually care?
Don't worry. I'm going to make this considerably simpler, because if you own a business, you already know the most important numbers—and there's a pretty good chance you look at them regularly. How much money came in, and how much money went out? Eventually, everything else has to find its way back there.
“A marketing KPI is useful because of what it tells you about the business—not because the number itself looks impressive.”
Let's Start With the Ridiculously Obvious
A traditional business model isn't particularly mysterious. You bring money in. You spend money to operate the business. Hopefully the first number is larger than the second. Congratulations. You have successfully grasped a concept that occasionally becomes surprisingly difficult to recognize after someone opens a PowerPoint presentation.
Obviously, actual business finance is considerably more complicated than that. We have margins, overhead, cash flow, depreciation, taxes, inventory, payroll and a host of other things to worry about. But the fundamental equation remains: a business has to produce more economic value than it consumes if it's going to survive.
Marketing exists within that same equation. When you spend $5,000 on advertising, you're moving the money out number in hopes of eventually moving the money in number by considerably more. That's an investment. Conceptually, it's no different from buying a machine that lets you produce more widgets or hiring another employee so you can serve more customers. You spend money because you reasonably expect something valuable in return.
So why does marketing suddenly become a discussion about 37 other numbers?
Because We Need to Know What's Happening Between the Dollar Out and the Dollar Back
This is where KPIs actually become extremely useful. Marketing rarely works like a vending machine. You don't put $1,000 into the advertising slot on Monday and have $1,400 fall into the tray on Friday. There are steps between exposure and revenue, and understanding those steps can help us understand whether the investment is doing what we expected it to do.
People see an advertisement. Some remember it. Some engage with it. Some visit your website. Some call. Some fill out a form. Some walk through the door. Some eventually buy. Depending on the campaign, we might look at impressions, reach, frequency, click-through rates, cost per click, calls, conversions, leads, appointments, cost per acquisition, return on ad spend and plenty of other measurements.
Those numbers can be extraordinarily valuable.
But they're clues. They're not automatically the objective.
“Don't confuse evidence that your marketing is doing something with evidence that it's doing something valuable.”
And that's where business owners occasionally get buried in numbers.
When Should You Be Talking About KPIs?
In my experience, there are three common reasons a business owner ends up deep in campaign-performance data with a marketing professional. The first is healthy: we're trying to figure out what's happening.
Maybe the campaign is generating plenty of traffic but not enough conversions. Maybe people are clicking but aren't calling. Maybe calls are coming in but aren't turning into appointments. Maybe one advertisement is dramatically outperforming another. This is exactly what KPIs are for.
A good marketing professional should be able to look at the information, identify where something appears to be breaking down and recommend what to test or change. Sometimes that's the media. Sometimes it's the creative. Sometimes it's the offer. Sometimes it's the website. And sometimes—as I've discussed elsewhere—the marketing is successfully delivering customers to a business that isn't successfully handling them once they arrive.
That's why we measure things. Not so we can admire the spreadsheet, but so we can make better decisions.
Then There's the Less Comfortable Conversation
The second situation occurs when the business isn't seeing the expected result and someone begins using KPIs to demonstrate that the campaign is nevertheless performing wonderfully. This is where I become cautious.
Imagine spending thousands of dollars on a campaign that isn't producing meaningful business, only to receive a report explaining that your click-through rate is 18% above the industry benchmark.
Great. Now where's the money?
That's intentionally simplistic, because there are legitimate situations where revenue shouldn't be immediate. Brand development takes time. Some products have extremely long buying cycles. New businesses may need to establish awareness before customers begin responding. Certain campaigns are designed primarily to educate rather than immediately sell.
That's fine. Those expectations should have been discussed before the money was spent. If we're running a six-month awareness strategy, don't judge it like a two-week retail promotion. But the reverse is equally important. If the campaign was sold with an expectation of generating leads, appointments or sales, we don't get to quietly change the definition of success afterward because the intermediate numbers look nice.
“The definition of success should be established before the campaign begins—not after the results arrive.”
Sometimes campaigns fail. I've been doing this long enough to know that. Experienced marketers get things wrong. Audiences surprise us. Offers don't resonate the way research suggested they would. Markets change. Competitors react. Sometimes an idea that looked fantastic on paper simply lands with a thud.
That's business.
I'd much rather have someone say, “This isn't working. Here's what I think happened, and here's what I recommend we do next.” That's considerably more useful than 14 slides explaining why technically everything is going extremely well.
And Sometimes the Business Owner Wants to See Under the Hood
There's a third situation: the owner wants to see the data. Wonderful. If you're spending the money and you're interested in understanding the mechanics, any competent marketing professional should be comfortable walking through the information with you.
But I've noticed something over the years. When an owner who normally doesn't care about the granular details suddenly wants to inspect every metric personally, there's often another question underneath it:
“Am I actually getting what I'm paying for?”
That's a perfectly reasonable question. The difficulty is that marketing data requires context. A click-through rate can be good or terrible depending on what you're doing. A cost per lead that's wonderful for one industry might be catastrophic for another. High engagement might indicate genuine customer interest—or simply that you created something entertaining that attracts people who will never purchase anything.
Numbers without context can tell some spectacular lies—or, perhaps more accurately, tell the absolute truth while leaving out the part you probably needed to know. There is a certain breed of marketing professional who loves dazzling potential clients with enormous percentages, incredible growth numbers and impressively low lead costs that become considerably less impressive once you look under the hood. I once saw a local agency promote a social media success story boasting growth of more than 1,000 percent after taking over a company's account. Wow! A thousand percent! Clearly these people have discovered sorcery and we should all hand them our Facebook passwords immediately. Except there was a little context missing. The company started with a Facebook following somewhere in the high single digits. The agency eventually grew it to somewhere around 150 followers and then advertised the enormous percentage increase as evidence of its abilities. Was the claim true? Technically, absolutely. And growing the account was certainly better than notgrowing it. But does that demonstrate they can increase your established audience of several hundred or several thousand people by 1,000 percent in a completely different market? Maybe. Maybe not. And that's exactly where using giant KPIs as a sales pitch can fall apart in a hurry. The number isn't necessarily wrong; sometimes it's simply answering a much easier question than you thought it was.
That doesn't mean business owners shouldn't look at them. It means someone needs to explain what they mean without hiding behind them.
Attribution Is Messier Than We'd Like to Admit
Here's another wrinkle. Let's say you've operated a respected local business for 15 years. You've advertised on television. You've sponsored community events. People have seen your trucks around town. Customers recommend you to their friends. Your sign has been sitting beside a busy road for a decade. You run radio. You maintain social media. And now you're running Google search advertising.
Someone needs your service. They've heard your name before but can't remember your phone number, so they Google the type of service they need. Your ad appears. They click. They call.
Google gets the conversion.
Did Google create the customer?
Maybe.
Or maybe Google was simply the final doorway the customer walked through after 15 years of your reputation, branding, word of mouth and other advertising helped convince them which door to choose. This is the problem of attribution.
Digital platforms are particularly good at showing measurable actions because digital behavior is relatively easy to track. That's valuable. But don't automatically confuse the thing we can measure most easily with the thing that deserves all the credit.
“The last thing a customer clicked isn't necessarily the first thing that convinced them.”
That's an important distinction.
New Businesses Need to Understand Time
This is particularly important if you're new. If you sell something with a long decision-making journey, marketing may require patience. People need to learn who you are. They need to understand what you provide. They need to encounter you enough times to remember you. They may need to trust you before they'll consider buying. And they may simply not need your product today.
You can run excellent marketing and still not see the cash register explode next Tuesday.
That's why expectations matter so much. If someone promises an immediate flood of business from a product with a six-month buying cycle, I'd have questions. Likewise, if you've been running a supposedly response-driven campaign for six months without meaningful response and you're still being told to “give it time,” I'd have some different questions.
So Which KPIs Actually Matter?
The frustrating answer is: it depends on what you're trying to accomplish.
And that's exactly why your objective needs to come first. If you're trying to generate phone calls, measure calls. If you're trying to generate appointments, measure appointments. If you're trying to sell products online, measure sales and acquisition costs. If you're building awareness, identify reasonable ways to measure whether awareness is actually increasing. If you're trying to retain customers, measure retention.
Work backward from the business objective and identify the measurements that help you understand whether you're getting closer to it. Don't start with the metric simply because the platform happens to provide it, and don't allow a beautiful dashboard to determine what success means for your business.
The Simplest Rule I Know
KPIs matter. Some of them matter tremendously. But they are instruments—not the destination. They help diagnose what is happening between the money you invest and the result you're trying to produce.
At the end of the day, you can run the greatest radio campaign in history. The greatest television campaign. The greatest Google campaign. The greatest social campaign. Every benchmark can be green. Every arrow can point upward. Every graph can look fantastic.
And the campaign can still be a lousy investment for your business.
“You can run the greatest advertising campaign in history and still have a lousy business result.”
So absolutely look at your KPIs. Ask questions about them. Understand what they measure. Use them to improve your marketing.
Just don't fall in love with them.
Because eventually all those numbers need to answer a much simpler question:
Is this helping us accomplish what we spent the money to accomplish?
If the answer is yes, fantastic. Figure out why and see if you can do more of it. If the answer is no, the next question shouldn't be, “Which metric can make this look better?”
It should be:
“What do we need to change?”
That's what the numbers are actually for.