I recently attended the CMO Smart conference from American Marketing Association Chicago, which was all about “Marketing at the Speed of Change.” The two panels of six chief marketing officers (CMOs) mentioned with reverence a topic that’s been on my mind lately: Key Performance Indicators (KPIs).
To be honest, I already had this blog written about KPIs, but now you don’t just have to take my word for it. Top CMOs know that having the right KPIs means keeping their jobs. So you should, too!
Over the last few months, I’ve watched many marketers get lost in the weeds with social advertising. As much as I love the targeting and narrowing capabilities that come with Facebook and Twitter ads, folks have way too many segments, targets and metrics. But not one of them is a real KPI – it’s all just metrics. One client’s marketing department was at one point juggling 30 metrics to track their KPIs, and I think I started having chest pains. So much work for so little payback!
Like so many things, the old adage works all too well when it comes to KPIs: Keep It Simple, Stupid!
So let’s go back to basics. I tell my clients and anyone else who talks to me about marketing analytics that KPIs are what will tell you whether or not your business is burning to the ground.
If that doesn’t help you understand the difference between a plain ol’ metric and a KPI think of it this way: imagine you go on vacation for four glorious weeks. (Let’s pause, because I really want to enjoy that idea. Ahhh.) When you get back to the office, what are the first few metrics, data points and/or reports you want to see? Which ones will tell you quickly what has happened to your business while you were away? Those are your KPIs, and you don’t need more than 4 or 5.
Once you know your KPIs, give them this test regularly: does this metric drive me to action? If the KPIs you’ve chosen don’t tell you to reverse course or amp up your efforts, you’re looking at the wrong metrics. A solid KPI leads directly to action.
As the owner of a service business, one of my KPIs is the number of active new business conversations I have in my pipeline. If my prospect list drops below 10, then I know in 3 to 6 months we will hit a revenue slump. You can bet that means I take immediate action to start making calls!
Need a little more help? We’ve created a simple flowchart to help you determine whether you’ve got a KPI or a plain ol’ metric.
Food for Thought: 4-step Chicken Marengo
As you might imagine, I am a Food Network fan, and I have been watching Food Network Star since it began a few years ago. One of the winners whose last recipe I remember vividly was Melissa d’Arabian. According to the judges, ultimately she beat the other semi-finalist because of her simple 4-step Chicken Marengo recipe. Her point was – don’t make dinner hard – learn this 4-step process and change it up according to your family’s favorite ingredients!!