KPI – I don’t think those letters mean what you think they mean.
One of the great things about marketing via digital channels is there’s so much opportunity to measure. We can measure almost every aspect of our campaigns. There’s no shortage of data and numbers. And, marketing leaders want to know how those digital marketing efforts affect the health of the business.
The problem that I routinely run into is with the letters K, P, and I. Despite being a very old acronym, there is a lot of confusion about it. It reminds me of the movie The Princess Bride, “You keep using that word. I do not think it means what you think it means.”
A KPI is a Key Performance Indicator. It is a measure of those things that are vitally important to your business. These are the things that keep the lights on. Things directly tied to revenue. Sales, engaged qualified leads, ROAS, etc. Those are KPIs because they either tie directly to or are very close to revenue.
A Metric is also a measure but is not critical to the business. It can go up, or down, or stay the same. These measures can be directional or leading indicators of possible business performance. But maybe not.
Let me give you an example. Let’s say you want to be an overall healthy person. That is your KPI. Now let’s say that you want to try achieving that by losing some weight. Can you lose weight and be healthier – sure. Can you also lose weight due to being very sick? Yes. Can you also gain weight and be healthier? Sure, muscle weighs more than fat. Many things affect your overall health. So, using a metric as a KPI can lead you to very wrong conclusions.
Things like brand awareness, mentions, Net Promoter Score (NPS), organic traffic, video views, PDF downloads, etc are all great measures/metrics. Even Cost Per Click, Click Through Rate, Conversion Rate, etc. are great metrics. But they are not KPIs. Those are measures of campaign effectiveness or efficiency. I can be very efficient and still not help the business.
So, what is a marketer to do if they want to focus on those numbers that most align with business health? You have to do the hard work of identifying what the business needs and what marketing strategies or tactics directly affect economic value. You need a clear map that connects what we do (marketing) to what it brings in (money). Once you do that, then KPIs become more visible. We still want all that metrics data but for context, not conclusions.
