The ability to track your progress and understand if you are achieving the right results is crucial to eventually reaching your goals.
Despite the importance of creating and calculating KPIs, a lot of marketing leaders struggle to create meaningful KPIs that are understood by their teams and contribute to the business goals of the organization.
We will provide you with some fundamental and tactical tips on how to create and calculate KPIs in a way that will help you succeed in 2022.
Let’s create an example to illustrate the differences between Marketing Goals and KPIs.
KPIs and Goals: What’s the difference?
Marketing goals are the overall objectives your marketing organization is trying to attain within a certain period of time.
Key Performance Indicators (KPIs) are quantifiable measures used to evaluate if an organization (or employee) is meeting its objectives.
Let’s create an example to showcase the differences between Marketing Goals and KPIs.
Q1 2022 Marketing Goal
- Generate $350K in new marketing-generated pipeline
- Opportunities: Generate 10 new opportunities
- Sales Qualified Leads (SQLs): Generate 40 new SQLs
- Qualified Leads: Generate 180 new MQLs
Your KPIs need to be created from your marketing goal, so you need to build effective goals for your marketing organization before even thinking about KPIs.
Now we are ready to cover some tips fundamental and tactical tips on how to build effective KPIs that will put your marketing organization on track to hit your 2022 marketing goals.
Tip #1 – Directly Align your KPIs with Your Marketing Goal
Sounds simple enough.
The problem is that many marketers still chase metrics that loosely relate (or don’t relate at all) to their primary marketing goals.
Not directly aligning your KPIs with your primary marketing goal will lead to a disconnect between your production and results and send mixed signals about your overall success. If you hit all of your KPIs but fell short of achieving your primary goal, there is a problem.
Your KPIs should map your way to hit your goals in a way that every step will be tangible and concrete. If your goal is to generate $350K in new pipeline for Q1 2022…
What drives new pipeline? Opportunities.
How do you create opportunities? By generating SQLs.
How do you generate SQLs? By generating qualified leads.
Voila! You now have KPIs that directly correspond to your goal.
Tip #2 – Don’t prioritize more than 3 KPIs
This is an easy trap to fall into.
In B2B marketing, there are so many important metrics that all seemingly tie into the primary marketing goal. Many marketing leaders have trouble prioritizing their KPIs and end up tracking and setting targets for too many KPIs.
It’s a hard thing to avoid since there are things that seem very important to the success of your marketing organization.
Let’s use the example of Conversion Rate (CR).
CR is a VERY important metric for marketers, but setting a KPI of “5% CR” may seem like an important KPI, but when we look at the goal of generating $350K in new pipeline, it doesn’t fit. It just doesn’t correlate directly with the primary marketing goal.
You can achieve a conversion rate of 5% but if you have a low volume of generated leads, you still might not generate enough opportunities to hit your primary marketing goal.
Creating, tracking and optimizing for more than 3 KPIs can cause disorganization. Chasing seemingly important metrics that don’t correlate with your marketing goal will only complicate things and cause your marketing organization to focus on KPIs that will not directly work towards achieving the primary marketing goal.
Tip #1: Account for Velocities when building your KPIs
Funnel stage velocities are the average amount of time it takes for prospects to move through your funnel stages. It is a super important piece of data that needs to be accounted for BEFORE you build KPIs. Velocities will help you understand exactly what you need to generate and, more importantly, when they need to be generated.
To show the importance of velocities, let’s use the previous Q1 2022 marketing goal example.
Many marketing leaders will say:
“Our average deal size is $35K so we need to generate 10 new opportunities in Q1 2022 to hit our goal of adding $350K in new marketing-generated pipeline.”
You are going to miss your goals if you do that.
If you study your velocities, you might find that:
- MQL > SQL: 14 Days
- SQL > Opportunity: 14 Days
This means that it takes 28 days for an MQL to become an Opportunity. Your KPI of 10 New Opportunities needs to be generated by the end of February 2022 at the latest in order for you to hit your goal. If you generate 4 opportunities in March 2022, you’ll miss your goal. Your KPI for opportunities would need to be higher than 10. In fact, you’ll likely need to generate a minimum of 5 opportunities a month to hit your goal.
As you can see, your velocities are crucial and can completely change how you calculate your KPIs for the quarter.
Tip #2: Calculate the impact of seasonality
Seasonality has a huge impact on marketing planning.
Certain seasons can impact the availability of your target audience to be receptive or responsive to your marketing activities and can impact the efficiency and effectiveness of your marketing channels.
In B2B SaaS, it’s common to find that lead generation and sales decline during the summer (summer break for kids = more family time) and during the holiday season in December. You might also see increased competition for the attention of your target audience during the holiday season.
Let’s stick with the example that we’ve been using to show the impact of seasonality on the creation of KPIs:
- Generate 350K in new pipeline revenue in Q1 which will require the production of 10 opportunities, 60 SQLs and 180 MQLs.
- Your data indicates the entire velocity for MQLs > Opps is 28 days.
These KPIs might not hold up. January can be a bit slow. Sometimes, it can take people a week to get back from vacation (and even longer for them to get back into “work mode”).
If you go back into your data from Q1 2020 and Q1 2021, you may see that it takes MQLs, on average, 44 days to become opportunities in Q1 for your business.
That changes everything!
Your 10 opportunities will need to be created by mid-February 2022 to hit your goal. In addition, this needs to be done with a slow 1-2 weeks in January!
Understanding the impact of seasonality will help you craft better KPIs for your organization, which marketing channels can be used to deliver upon your KPIs and even how you are going to allocate budget during specific time periods.
Creating KPIs for your marketing organization that will enable your team to focus on what will lead to success is key in your 2022 strategy. If you don’t set proper KPIs or fail to calculate all the factors in determining the targets for those KPIs, you are setting your marketing organization up for failure.
Have you set the proper KPIs? Do you have too many to accurately track and follow? Do the targets correlate with the marketing goals?
Take a good look at your goals and KPIs for 2022.