If you are starting a career in Marketing, you need to understand the concept and importance of KPIs – Key Performance Indicators.
Having Marketing KPI’s is essential for measuring brand performance, aligning activities with business goals, making data-driven decisions, optimising resource allocation, fostering continuous improvement, ensuring accountability, gaining customer insights, adapting to change in the marketplace, and demonstrating the ROI of Marketing efforts.
With growing pressure on business results due to internal and external challenges, Marketers need to be on top of their KPI’s, even more than ever before.
As all functions contribute towards the delivery of their organisation’s vision and goals, it is crucial for Marketers to also work towards a broader set of Business KPI’s and play their part in building a performance-driven Marketing culture for their organisation.
1 – Business KPI’s
2 – Marketing KPI’s
3 – Performance Marketing culture
1 – Business KPI’s
The Key Performance Indicators for a business can vary depending on the industry, size, and specific goals of the company. However, some fundamental KPIs are generally relevant across most businesses.
• Revenue: The total income generated from sales of goods or services. This is a fundamental indicator of a business’s financial health.
• Gross Margin: The percentage difference between revenue and the Cost Of Goods Sold (COGS). It reflects the profitability of the core business activities.
• Profit Margin: The percentage of revenue that represents profit after accounting for all costs. It helps assess the efficiency of operations.
• Return On Investment (ROI): The ratio of net profit to the initial cost of investment. It helps evaluate the profitability of specific investments or initiatives.
• Market share: The percentage of the total market that a company control. It indicates competitiveness and potential for growth.
What does this mean for Marketers?
• You need to understand the different components of a P&L’s and the P&L levers that can be pulled to grow the net profit of the brand/s you are in charge of.
• You need to be able to analyse and discuss sales results (volume and value) with cross functional teams and leadership teams, using internal measures (P&L’s) as well as external measures (market data like Nielsen, IRI, CGA).
• You need to understand how to flex all components of your brand Marketing Mix in order to drive volume and value sales.
• You need to efficiently manage and spend your annual Marketing budget, which typically has a significant impact on your brand P&L profitability. Align your A&P spends (Advertising & Promotion) with the strategic priorities for your brand, regularly evaluate the ROI of your offline & online activities and work closely with your Finance team on the administration tasks linked to Marketing budget management.
As delivering overall business P&L targets is a shared responsibility across all functions within an organisation, Marketers need to be ‘fluent’ with financial and commercial metrics as well as Marketing metrics. Rightly, Marketers are expected to be commercially minded as well as be brand building champions and the voice of the consumer.
If you want to progress to Senior roles within Marketing or within other functions, you have to get close to the financial and commercial agenda, which ultimately drives organisations.
2- Marketing KPI’s
As a Marketer, there are several Key Performance Indicators that you need to learn and master during your career, in order to deliver performance-driven Marketing.
a) Strategic KPI’s
• Consumer Penetration: Consumer recruitment is key to short-term and long-term brand growth so make sure you have ways to robustly measure this KPI. Quantify how many people currently buy / consume your product or service on a 12 months basis and set yourself an annual recruitment target in order to deliver your volume sales target.
• Brand health measures: These KPI’s indicate where your brand is at in its lifecycle and its potential for growth
Amongst these are Customer funnel metrics (brand awareness, consideration, purchase, loyalty, advocacy scores and conversion rates) as well as brand image perceptions, that are sourced from brand tracking studies.
• Shopper measures: Penetration, frequency, average weight of purchase (AWP) and annual shopper churn are all important KPI’s to track (mainly available for products sold in the Off-trade channel) through Retail shopper panels and commissioned data analysis.
b) Marketing Mix KPI’s
The Marketing Mix, also known as the 4 P’s, consists of Product, Price, Place, and Promotion.
Key Performance Indicators (KPIs) help measure the effectiveness of Marketing strategies and activities for each element of your brand Mix. KPI’s setting and measurement is done using internal and external data sources.
Product:
o Customer satisfaction: Is your product meeting customer needs? Use surveys, consumer research or feedback to assess your ability to meet your target customers’ needs and expectations.
o Core SKU performance: If your brand offers several products / SKU’s (Stock Keeping Units), you need to assess if your core SKU is performing (profitable volume growth, market share gains, strong customer funnel)
o Innovation success: Is your brand NPD (New Product Development) delivering sales target in its first year of launch and subsequent years? Is your NPD recruiting new consumers into the brand and unlocking new usage occasions for existing consumers?
Price:
o Price evolution: Are you able to take annual price increases on your product? Although price increases are led (more often than none) by the Finance and Sales teams, Marketers need to be involved in pricing conversations from a brand building and brand selling perspective. Annual price increases are typically built in brand P&L’s so Marketers need to collaborate with Commercial teams to deliver this business and brand KPI.
o Competitive pricing index: Assess how the price of your product compares to key competitors. Are you competitive in the marketplace? Are you within the brand positioning pricing guidelines set by your global team?
o Incrementality: Is your pricing and promotional strategy delivering incremental sales year on year? Are you building your annual Shopper penetration? Are you stealing volume from your key competitors when price promoting your product?
Place:
o Physical & online availability: Is your product listed and gaining distribution in key Trade channels and with key Customers? What is your product distribution level versus your key competitors? What is your geographic reach / product distribution in key markets, regions, cities?
o Distribution channel effectiveness: How is your product performing in different distribution channels?
o Inventory turnover: Measure how quickly your product moves through its distribution channels (unit Rate Of Sales). Do you loose to your competitors due to Out Of Stocks?
Promotion:
• Mental availability: Measure the levels of brand awareness among your target audience and broader potential customers.
• Brand Share Of Voice: Looking at your total Media spends (Offline and Online), measure your brand SOV within the category you operate in versus your key competitors. Then correlate your brand SOV with your brand SOM (Share Of Market).
• Digital performance: Set annual KPI’s for your different digital channels / assets (brand website, social media channels, online store, customer emails database etc…) so you can measure overall performance on an annual basis, alongside setting and assessing KPI’s for time specific digital campaigns.
It is important to note that KPIs across the full Marketing Mix of a brand can vary based on the industry, product type, and overall Marketing objectives. Additionally, businesses may choose to develop custom KPIs based on their unique goals and strategies.
Regular monitoring and adjustment of KPIs are essential to ensure Marketing efforts align with the overall business objectives.
c) Brand campaigns KPI’s
Alongside tracking strategic and Marketing Mix KPI’s, you also need to measure the performance of your brand campaigns including Offline & Online activities (tactical KPI’s).
We are talking here Paid Media (using Traditional and Digital channels), Social Media, email Marketing, PR, Experiential, Partnerships, Sponsorships etc…
• When defining what success looks like for individual brand campaigns with your agency partners, make sure your campaign KPI’s connect and ‘ladder back up’ to your broader Marketing objectives and strategic KPI’s.
– When agencies measure results for your brand campaigns on your behalf, make sure you get some transparency on their data sources and validate if they provide robust and reliable KPI’s assessments.
– It is also a good idea, if your Marketing budget allows, to bring external auditors to assess the performance of your brand campaigns, especially those with high investments.
Companies like ebiquity (for Broadcast Media) and Rethink X Social (for Social Media) can be great partners to objectively assess the performance of your brand campaigns and the ROI on your Marketing spends.
A final note…
When it comes to the overall number of Marketing KPI’s you can track, it can quickly become overwhelming.
So, make sure you prioritise the ones that are the most relevant at specific points in time for your overall brand growth and development. Focus on quality Marketing KPI’s over quantity and track those consistently and regularly.
As financial KPI’s are the most understood across an organisation, take the time to educate your stakeholders on the Marketing KPI’s you are tracking, explaining the What, the How and the Why.
Find an efficient way to record and share your selected KPIs’ across your organisation and take the lead on discussing the implications and actions needed with your cross functional team and Senior stakeholders.
3 – Performance-driven Marketing culture
With an increased focus on costs and results within businesses, it is important for Marketing leaders to create a performance-driven culture within their teams.
In companies with a performance-driven Marketing culture, there is a strong focus on measurable results, data-driven decision-making, and continuous optimization to achieve specific business and brand objectives.
• Results-oriented mindset: Marketers are driven by tangible outcomes. The emphasis is on achieving specific, measurable results such as increased sales, market shares and other high-level KPI’s for brand selling and brand building.
• Goal alignment: Team members understand and align their efforts with the broader business goals. Marketing objectives, strategies and tactics are chosen with the aim of contributing directly to the organization’s success.
• Clear performance metrics: KPI’s are well-defined and Marketers understand the metrics that matter most for their function and the broader organisation. This clarity helps in measuring progress and success.
• Data-driven decision making: Decisions are based on data and analytics. Marketers collect and analyse data to gain insights into consumer behaviour, brand campaigns performance and overall effectiveness of their Marketing spends.
• Cross-functional collaboration: Collaboration between Marketing, Insights, Sales, Finance and other teams is strongly encouraged. A performance-driven Marketing culture recognizes that success often requires a coordinated effort across several functions.
• Experimentation and testing: A culture of experimentation prevails, where a test & learn mindset, A/B testing and other forms of market experimentation are embraced. This allows Marketing teams to identify what works best and refine brand strategies and investments accordingly.
• Technology and tools adoption: The organization invests in and adopts the latest Marketing technologies and tools that facilitate data collection, analysis, and campaign optimization. This includes Marketing automation platforms, analytics tools, and other relevant technologies.
• Continuous optimisation: There is a company-wide commitment to ongoing improvement. Business and Marketing processes, brand campaigns and market tests are continuously evaluated and optimized based on data and key learnings shared across the organisation.
• Agile and adaptable: The organisation is agile and adaptable to changes in the market environment. Quick responses to shifts in consumer behaviour, industry trends, and competitive landscapes are characteristics of a performance-driven Marketing culture.
• Accountability and ownership: Individuals and teams take ownership of their performance and are held accountable for results. This accountability fosters a sense of responsibility and a commitment to achieving objectives.
• Training and development: There is a focus on continuous learning and development. Marketers are encouraged to skill-up and stay updated on consumer trends, commercial challenges, emerging technologies and Marketing best practices across industries.
• Feedback and communication: Regular and open communication between Marketing and other functions about performance, challenges and successes helps in fostering a culture of continuous improvement across the whole organisation.
Overall, establishing a performance-driven Marketing culture requires leadership commitment, clear communication, and a willingness to embrace change and innovation.
Organisations that successfully cultivate a performance-driven culture, across ALL functions, are better positioned to adapt to evolving market dynamics and achieve sustainable growth over time.