Big data is projected to be a $53.4 billion industry in 2017. This is a huge spike from $10.2 billion in 2016. All this data can be interpreted and put to good use by measuring the right key performance indicators. KPIs should be the main influence for driving your business in one direction or the other. Here are five top KPIs that should be used as a measuring stick by any company regardless of industry.
Customer Retention (or Churn) Rate
Improved profit margins are sure to follow if you focus on customer retention rate. Why is loyalty so important? One study in the retail industry found that 1% of customers can generate up to 40% of revenue.
Make customer loyalty an integral focus. This applies for both B2C and B2B sectors. The KPIs should include data that specifically explore customer engagement. This includes data that measures:
Opt-in rate of loyalty programs
Frequency of purchases among repeat customers
Percentage of repeat customer spending vs first-time customer spending
It goes without saying that a good deal of resources should be catered towards retention. Offering customers incentives and dibs on limited-release products is a good way to foster loyalty.
You can also assign customers a profitability index score, which basically measures their purchasing history. Those with a high score are obviously the ones you need to invest your time in.
What’s the general consensus of a particular product or service? Just because a certain item sells like hotcakes does not make it a campaign success. In fact, high sales can even hurt a company in the long run. What if the product was poorly received by consumers? If surveys and reviews indicate a general dissatisfaction, that can really hurt consumer trust. In turn, that hurts retention, which will drastically hurt your overall ROI.
It’s estimated that 14% of customers stops doing business with a company due to dissatisfaction with a product or service. While that’s not an exceptionally high percentage, it’s still a hefty chunk of high-quality consumers that you may lose forever.
KPIs should measure customer attitude for specific products and services. Use surveys to determine what they liked, didn’t liked, and how they would like to see the product improved in future iterations.
Click-Through to Conversion Rate Ratio
Both click-through and conversion rates are common albeit general KPIs. You should, however, determine how much of those click-throughs are actually converting to sales. You can look further into multiple other KPIs from here. Of those that clicked the link but made no purchases, how far in the sales process did they get to? Once on your site, did they click on the company product, add an item to their cart, visit the FAQ page, etc.? How long was the average visit time on your site? Did longer time on the company site translate to a higher conversion rate?
KPIs should also measure where site traffic is coming from. How much is coming from organic traffic via keyword Google search? By comparison, how much is coming from paid ads? How about referrals from loyal social media followers? It’s important to have a breakdown of your traffic sources so you know where to allot the bulk of your efforts.
If traffic is mainly coming from engine searches, then you may want to invest more effort on SEO and keyword optimization for on-site content. If traffic is coming from referrals and affiliates, then you may want to invest in better incentives for brand advocates that produce high-quality user generated content.
Social Media Response
A whole set of KPIs can be derived from your social media presence alone. You will have a separate set of KPIs for each social network your company is active in. Some examples include:
Number of likes and shares for Facebook
Number of views, comments, and thumb-up/thumbs-down ratio for YouTube videos
The virality of company-related hashtags and retweets
The number of responses from a discussion in LinkedIn Groups
Engagement factor in a social media contest
Number of views and drop-ins during a company livestream
Data-driven marketing is smart marketing. It’s taking your campaign in a direction based on trends indicated by the raw data. The KPIs tell a story regarding customer behavior and points the direction you should be taking your company in for long-term profit gains.
Bio: Lucy Boyle (@BoyleLucy2), is a full-time mother, blogger and freelance business consultant, interested in finance, business, home gardening and mental health.