It Starts With Key Performance Indicators

The TL;DR version:

                      • Are big, business-building goals like revenue or leads
                • Have a direct impact on business growth
                • Force us to think strategically
                • Help turn upsetting into consulting
                • Break down silos in any organization
                • Get the entire team – client and agency – on the same page
                • Reduce the need for expertise

key-performance-indicators

I’m going to get a little lecture-y in this post. I’m talking about Key Performance Indicators (KPIs). It continues to amaze me how few internet marketers really focus on them. It kills our entire industry. Whether your client is literally a client, or your client is your boss, or yourself, KPIs measure campaign success and drive growth. So:

A KPI is the ultimate goal of a business. It’s the one critical number the business must attain to be successful. KPIs can include:

  • Revenue
  • Votes
  • Pageviews (if you’re a publisher, selling banners CPM)
  • Visibility/share of voice

Companies may have more than one. My company, for example, needs a specific number of leads and needs to convert those leads to a certain amount of revenue. And, we track client satisfaction using the Net Promoter system.

Regardless, KPIs absolutely dominate strategy. What we do in a marketing campaign must support improvement in KPIs.

KPIs break down silos

Focusing on KPIs immediately takes you — in-house or agency — from being a vendor of siloed, commodity services like “SEO content” and “web page design” and makes you a true marketer, focused on strategic success.

If your job with a client is to improve revenue, you’re in the revenue growth business, not the content production business or the PPC business or the web site design business.

Even if a client hired you for PPC and only PPC, a PPC analyst who knows the ultimate is higher revenue (not a lower CPA — cost per acquisition — from paid search or more clicks) would work on ad and landing page language. They might also do a little usability review and recommend page optimization. Sure, these bleed over into other disciplines. But with a strategic KPI, it doesn’t matter. You’re moving work forward.

On the other hand, a PPC analyst who’s only responsible for a lower CPA might slash spending in order to reduce the CPA, at the cost of revenue.

example 1

This is a completely made-up story, based on 10+ clients over the last 10+ years. None sold hats, None were named Harrison. Oh, and I wrote these present-tense. Sorry about that.

We have a potential client called Harrison’s Hats. Oddly enough, they sell hats.

When CEO Harrison filled out the “contact us” form on our site, he said he wants “20 blog posts per month for SEO, at a cost no higher than $200 per post”.

Amelia, the agency salesperson, calls Harrison. After the usual introductory stuff, she asks, “What’s your long-term goal for your business?”

Harrison’s a little taken aback. Usually, the firms he calls start with a question like, “What key phrases do you need to rank for?”

But he rallies, answering “Profit growth is key right now. We sell a lot, and revenue is great, but we need profit”.

Amelia pauses, scribbling some notes. “OK. To get the web site helping with that, do we need to get you more customers, or change the ones you’re getting, or…?”

“More and better, definitely”.

“In that case, adding 12 so-so blog posts isn’t going to help”.

Harrison nearly hangs up the phone. He knows what he wants: The damned blog posts. More posts = more content. More content = higher rankings.

“I need more mentions of ‘hats’ on my web sites. These posts will give me that. All my competitors have done this, and every SEO I talk to says we need more posts”, he snapped.

Amelia takes a deep breath. “Google’s Panda update shut down the tactic of rankings through bulk”.

She then explains Panda, and how it values quality content. She also talks a little bit about TF-IDF. She doesn’t know the maths, but she knows the principle: More uninteresting content may hurt a site’s relevance for a specific phrase.

“Here’s my suggestion”, she says, “To rank, you need to build an audience. Instead of writing 3 posts a week, month after month, can we take two months to do a single, really fantastic piece of content, and promote the heck out of it? That’s got far better odds of success than pouring content no one ever reads onto your site”.

Harrison’s really not sure. This goes against what every other agency has told him. But we’ve been honest, taught him something, and avoided a scenario where we take his money knowing we’ll get zero results.

Getting sales numbers is important. But getting an extra $4000/month for 2 months isn’t worth a permanent detractor. Amelia made the right strategic call — more content won’t necessarily improve Harrison’s Hats performance, as far as KPIs. Maybe we lose the business, maybe we don’t. But she based her vision for the client on the right strategy. That builds credibility, or at least doesn’t erode it. Amelia’s thinking like an agency salesperson.

example 2

We’ve got a new client: Wiggin Enterprises wants a new web site. They’re paying us scads of money. Our designer, Rory, wants to build a responsive site. Wiggins’ CEO, though, doesn’t want a responsive design. She needs the site now. She wants to do the responsive piece later on.

Rory talks to her about KPIs. Wiggins builds spacecraft (Hey, I’m the one writing this. geekery will abound). She needs larger clients (like, say, the UK government). Her KPI is average deal size, and she wants 50% growth in 1 year.

Rory explains that most government and big-company buyers research vendors in ‘working downtime’ — at airports, in line buying lunch during the work day, sitting on the bus, etc. (I may be wrong about this, but play along). They’re using portable devices with smaller screens. Also, many government buyers are using out-of-date hardware on their desktop. They have lower resolution monitors. So the site needs to look good for them on a screen that might be 900 pixels wide (which means 800 or so pixels viewing space).

The CEO ‘gets it’ immediately and changes the project. Adding a few weeks isn’t really as big a deal as shutting out a sizeable chunk of her audience.

We could have given in here. But this is the right decision, based on the client’s KPI. Rory is the site designer/developer. He could have avoided the discussion altogether. But he’s aware of the client’s KPIs. So he kept them on the right strategic path.

example 3

In 2007 we had a client paying us to manage a $50,000+ monthly PPC campaign. The PPC analyst on the campaign was one of our best. I was the account strategist. The client said, “We want a lower cost per acquisition”.

I relayed this to the PPC specialist — no attention to KPIs, no strategic thinking at all. Yikes.

The PPC-er looked at the client’s analytics data and saw some campaigns with a cost per acquisition of $500 or more. He (very logically) slashed those campaigns and shut them down. The product only sold for $10 or so per order. How the hell could a $500 CPA make sense? He shook his head at the follies of PPC ‘experts’ (something we do a lot) and moved on.

The next day, I got a call from the client. It went something like this:

“IAN WHAT THE BLEEP OUR BLEEPING REVENUE IS BLEEPING IN THE BLEEPING TOILET, MY BLEEPING BOSS IS BLEEPING UP MY BLEEPING BLEEP, BLEEP BLEEP BLEEEEPPPPPPPPPPPPP.”

I’ve had my share of these calls in my career.

Eventually I figured out that the PPC specialist had shut down campaigns that didn’t have proper analytics set up. The CPA was high because the client’s site wasn’t recording any revenue at all. So, we’d shut down accounts that weren’t reporting but were likely generating tons of revenue!!!!

Oy, vey.

The client apologized (a little) after they realized what had happened. But this was really all my fault.

If I’d focused on KPIs, I would have put revenue first, not CPA. That would have made me immediately go our analytics team and double-check that Google Analytics was properly reporting revenue. That would have immediately flagged the problem, and prevented our little debacle.

I don’t have to know anything about pay per click, or cost per acquisition, to know that I need 90% accurate revenue reporting to help a client improve revenue. It would’ve taken 5 minutes to find a problem.

By the way, if the PPC specialist had known the client’s KPIs, he would’ve warned me and/or prevented the entire blunder. Lesson: Always make sure the entire project team knows the KPIs.

KPIs Reduce the Need for Expertise

I don’t mean that KPIs mean anyone can come off the street and run a complex campaign. But, everyone in business understands revenue, even if they don’t understand pay per click, SEO or social media. And, by relying on KPIs, any account strategist and salesperson can manage and sell masterfully while only knowing the very basics about all of the disciplines we practice.

Remember when I blew up a client’s PPC campaign? There, I actually got in trouble because of my expertise. I fell into the trap of narrow, services-focused, siloed thinking. What made perfect sense in the realm of PPC (OK, maybe not perfect sense, but some sense) was an utterly dunderheaded move from a revenue standpoint.

KPIs Rule

KPIs should guide all discussions with potential clients and clients. They’re the guidepost for all decision making. They’re also the connection across all teams, internal and external. And it’s your responsibility, as a marketer, to guide all conversations accordingly.

Stick to that rule, and you’ll have far more successful campaigns with internal and agency clients.

Note: The opinions expressed in this article are the views of the author, and not necessarily the views of Caphyon, its staff, or its partners.

About Ian Lurie

Ian Lurie is the founder and CEO of Portent Inc., an Internet marketing agency founded in 1995 that provides digital marketing services, including search, social, and analytics. He recently co-published the 2nd edition of the Web Marketing All-In-One for Dummies and wrote the sections on SEO, blogging, social media and web analytics. Follow him on Twitter.

  • Dinesh

    In very simple terms, the definition of a KPI (Key Performance Indicator or also sometimes referred to as a Key Success Factor) is a quantifiable measurement, agreed to beforehand, that reflect the critical success factors of a business or organisation. They will differ from business to business.

    SEO FIED

  • https://plus.google.com/u/0/103425903757169585740/about/p/pub Summer Wanner

    These small case studies are the best way to learn. As a relatively new Conversion Specialist I am always reading and trying to find the best resources to continue learning. I have concluded Portent webinars and your blogs are the most helpful. Thank you so much for all the great resources that you provide Ian!