Do you know which of your marketing efforts are generating the greatest impact? Can you identify those that are blowing up your spend, without creating an equitable return?
Understanding what works and what doesn’t is a critical part of your growth strategy, as clear attribution modelling allows you to quickly pivot to the campaigns that are actually growing your company. At the same time, it also allows you to generate valuable learnings into what isn’t working by clearly isolating the issue.
“What you don’t measure you can’t improve upon”
Without this clear visibility, companies will often find themselves taking a capital intensive approach, with lower returns on investments. Intuition is a powerful tool, but relying on it without actionable insights (driven by data) is essentially like taking shots in the dark. You might land yourself a shot every now and then, but you’ll find yourself dragging along a bunch of low impact campaigns along the way because you were never able to identify them properly.
Efficient measurement isn’t just about knowing where to spend your marketing dollars; it’s also about knowing what data you should be generating and using. The digital space allows you to collect a plethora of information which can lead to ’paralysis-by-analysis;’ even if you’re properly collecting information, it can be a daunting task to then action it.
The need for marketers to develop good measurements is therefore twofold; to direct marketing spend and direct use of data. Having a great set of KPIs is the ticket to navigating this difficult space.
The key element here is to identify a limited set of KPIs that will track your progress towards clearly stated objectives. While you should be collecting as much data as possible that is relevant to your business, there is no need to track and visualise all of it. You shouldn’t clutter your dashboards with unnecessary KPIs. They should be a tool to direct your efforts, not a burden on the business’ ability to grow.
Dashboards must reflect the business level at which they’re used. They can’t be too detailed as their aim is to clearly (and simply) provide strategic overview and actionable insights to guide operations.
So when designing your KPI’s you should first ask yourself; What are your objectives? What is it you want to achieve? What level of granularity or overview is appropriate? This will allow you to narrow down the scope of what you need to be measuring.
Knowing what to track is only the beginning. When designing your KPIs, there are three key things to consider:
Your KPIs should measure various rates of change and not absolute values. Knowing the total number of users or the total servicing costs is important but it isn’t what you should be tracking on a daily basis to guide your efforts. Instead, you should look to, for example, the number of signups per day. The timeframe that you choose (per day, week, month etc) will depend on your business and growth stage. The important thing is to look for changes and trends.
Ultimately, any set of KPIs will only be useful if they guide you towards sustainable growth, and not short-term results. This becomes even more important in environments with high pressure for performance.
The famous example of the Siberian oil drillers serves as a classic warning of poor KPIs. The drillers were scored based on metres drilled, not on actually finding oil. The winning team was ultimately the one that hadn’t found any oil because they realised that it was easier to just drill the first 100m and then drill a large number of shallow holes to meet performance targets.
“You get what you measure.”
You need to ensure that they are framed in a way that promotes sustainable initiatives for long-term growth.
While cross-collaboration and sharing a stake in the business’s growth is of fundamental value for success, there needs to be clear ownership of the KPIs. If the control of the metric falls within multiple teams, the failure of one team can be obscured by the achievement of another. It’s therefore important in those circumstances to split the metric in two. That way it will immediately become clear which process is working and which isn’t.
These are some of the core best-practices around KPI setting, but at the end of the day, it’s important to bring your own creativity and flair to how you structure your team’s objectives. The key takeaway is to remember to be thoughtful about what you track. Don’t track everything under the sun, only the areas that are of great importance to growing your business.
Need help with setting up your data infrastructure and/or performance tracking to supercharge your growth? Give us a call on +61 2 8311 8689 or email us at firstname.lastname@example.org.
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This interview was originally posted on Marketing Trends which features Australia’s top marketers. Daniel Lohrmann founded ikaros in 2019 as a Growth and Analytics consulting business, yet always with the vision of eventually building and monetising products. In this interview, he shared how his career in Marketing and Growth started, pivoting from Investment Banking and how ikaros has grown into becoming the two-sided business he had envisioned.
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