5 outdated marketing KPIs to toss and what to reference instead

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Moving away from conventional KPIs and toward a more advanced understanding of your campaigns gives you real competitive advantages. 

I could have written about this topic years ago, but it’s especially important as engagement costs on major advertising channels continue to increase, and an unpredictable economy puts a premium on efficiency. 

Ready to change the way you measure your campaigns? In this article, I’ll look at five KPIs I still hear clients reference and explain: 

  • Why it’s past time to replace them.
  • What they should analyze instead.
  • Why it matters.

Bad KPI 1: Spend

What to use instead: Profit

I’m not saying the concept of a budget is moot, but spend should not be the starting point or goal for campaigns unless:

  • You’re just beginning and have no CRM data to reference.
  • You’re going for scale without regard to efficiency. 

That said, we still get companies coming to us frequently and saying, “We’d like to spend this.”

Even more off-base, “We’d like to spend {x} on Google, {y} on Facebook, and {z} on LinkedIn.”

A better approach is to aim for efficiency goals, agnostic of channel. 

If you start with an ROI goal of 3.0, good analytics folks will be able to crunch numbers and tell you how much you can spend and stay within that goal – no matter which channel you spend it on. 

Referencing spend without tracking efficiency is how you hit growth walls (and get on the wrong side of your CFO).

Specifying spend across channels is a good way to doom yourself to the fate of spending too much on certain channels and not enough on other, more incremental sources of revenue. 

If you aregoing for scale without regard to efficiency, metrics like conversions, spending, revenue, and visitors do become more important, while CPA and ROAS (efficiency metrics) will take a hit. 

A core tenet of digital marketing is that the more conversions you get, the more expensive they are, so you’ll have to decide whether your first goal is improving efficiency or driving scale. 

Avg. ROAS vs. Gross Profit
Avg. ROAS vs. Gross Profit: There is an optimal efficiency target where gross profit is maximized.

Bad KPI 2: Platform-provided CPA

What to use instead: CRM-based CPA

Relying solely on CPAs delivered by Google Ads, Facebook and LinkedIn without assessing the quality of those acquisitions (leads in B2B, purchases in ecommerce) makes it likely you’re spending too much on the wrong leads.

(Note: Google Search Partners and display campaigns produce particularly weak lead quality.)

Instead, integrate your CRM data to understand cost per down-funnel metrics (for B2B) or cost per CLTV (B2C and ecommerce). 

This is especially important for B2B, given its long sales cycles and purchase stages.

Knowing what you’d like to pay for opportunities and understanding what you have to pay to acquire them on certain channels is more important than straight-up lead acquisition.

And it’ll make you more likely to swallow high CPCs (hello, LinkedIn) if the resulting leads carry enough value. 

Ad Platform vs. Back-end Efficiency
Ad Platform vs. Back-end Efficiency: In this example, ad platform efficiency without further analysis suggests that you should dial up LinkedIn Remarketing. In contrast, analysis that incorporates back-end efficiency suggests you should dial up LinkedIn Prospecting instead.

Dig deeper: 3 steps for effective PPC reporting and analysis

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