The Power Of Key Performance Indicators (KPIs)

What are KPIs?

This is a common question people ask when analyzing data. KPIs refer to key performance indicators, which are measurable and quantifiable metrics that determine a variable, such as income, expenses, or number of visits, directly related to the objectives within a strategy or work plan. KPIs help put numeric values to the growth of a strategy, allowing you to monitor actions taken to achieve growth, sales, and more.

How do I define KPIs?

KPIs can easily be defined once you identify the factors that determine your business. Some of these factors include;

• Understanding where the majority of the people consuming your product or using your services come from. It could be social media, search engines, or published ads.

• Making use of metrics to determine how much your brand is spending.

• Considering usage of KPIs to offer insights into which of your brand’s products generates the highest profit.

What are the major characteristics of KPIs?

There are many characteristics of KPIs, however, KPIs need to have the following essential qualities:

• Quantifiable: You must be able to assign a numerical value to KPIs such as the number of clicks, number of views, quantity of product, and monetary value.

• Time-bound: KPIs must be measurable within a specific timeframe.

• Specificity: KPIs should be specific in targeting the objective you aim to measure. Each objective has its own KPI compared to other objectives.

• Relevance: KPIs of your brand must demonstrate compatibility and real influence on the objective or goal you aim to achieve with the strategy developed. They must relate to the goal you want to accomplish.

What are objectives?

You may have noticed the term "objectives" mentioned several times in this article, and that may have left you wondering what they are. Objectives are goals set by a brand that they aim to achieve. They are the main reason why a strategy is developed. A brand's objectives can be sales, awareness, conversion, and more. Various indicators are involved in achieving an objective, and each objective has its own set of indicators. Some examples of objectives are awareness and conversion. Let's break down these objectives and their indicators.

Awareness

When a brand wants to expand its reach and become the go-to choice for consumers in its niche, it strives to enhance the awareness of its brand identity and set itself apart from competitors.

Objective indicators for awareness include;

1. Unique user research: This is the total number of people who see your content or ad for the first time
2. Reach: This is the percentage of people who viewed your content in relation to the total possible universe (TPU).
3. Impressions: This is the number of times your content has appeared on a screen.
4. Frequency: This is the number of times each viewer has seen your post.
5. Cost per thousand(CPM): the amount paid to advertise per thousand impressions if an ad was put in place.
6. Cost per view(CPV): This is a commonly mentioned metric, simply referring to the average cost of a content (video) view.

Conversion

This is when you are attempting to convert a viewer into a customer. Its goal is to target specific user actions, such as sales, traffic, adding items to cart, leads, and more.

Objective indicators for conversion include;

1. Cost per action (CPA): This includes the types of conversions that occur on a site or an external application. These conversions include sales, registrations, downloads, and more.
2. Cost per click (CPC):This is also a popular metric. It is essentially the average cost per click leading to an external site or application and can be used to generate traffic.
3. Cost per lead (CPL): This is the average cost of obtaining a potential lead.
4. Cost per engagement (CPE): This is the average cost of interaction, which includes clicks, reactions, comments, shares, saves, and more.

In conclusion

KPIs, key performance indicators, are measurable metrics that determine progress towards specific objectives. They are quantifiable, time-bound, specific, and relevant. Objectives are the goals set by a brand, such as sales or awareness. KPIs vary depending on the objective, and for objectives like awareness and conversion, indicators like unique user research, reach, impressions, cost per action, cost per click, and cost per lead are used. Monitoring KPIs is crucial for tracking growth and can be easily done using social media platforms that provide automatic KPI generation.