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KPI (Key Performance Indicator)

A Key Performance Indicator (KPI) is a metric used to measure the performance of actions or processes that have a direct impact on the business. Not all measurements become KPIs, and there is no standard that defines which ones to choose or when the results are considered good.

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What is the purpose of a KPI?

A metric turned into a KPI is used to assess the performance of an action and, therefore, whether it's worth continuing or not. It also helps detect problems in time, before they become irreversible, and confirm their profitability. That's why it's not enough to just have the data; it's important to use it to understand its implications and take appropriate action.

To serve as a check on the business's progress, a KPI should be measurable regularly, for example, weekly or monthly, and be specific to precisely assess its short, medium, or long-term progress. Each company establishes its own KPIs based on the goals it has set.

Types of KPIs

KPIs can be applied to marketing but also to any other business process, which is why different KPIs can be chosen and tracked. They can be classified in various ways, including:

  • Which department uses them, such as quality, logistics, or marketing.
  • Whether the metrics are qualitative or quantitative.
  • The source of the information they use, whether it's internal or external.

Each company determines which metrics, from the many possibilities, are elevated to the level of KPIs. Choosing the right ones is crucial to focus all efforts on improving them and, in turn, the business results.

Examples of marketing KPIs

Different KPIs can be established depending on the action being measured. For example, there are many metrics in social media, including followers, reach, and engagement, but these are not typically considered KPIs. To be considered KPIs, they should be directly related to the business. It's better to consider metrics like click-through rate or conversion rate because they can be compared across different social networks and other strategies and are more closely tied to business performance.

In email marketing, there are also various metrics, such as subscribers, open rates, unsubscribes, bounce rates, and clicks. To turn these into KPIs focused on business performance, you need to transform raw data into information that can be used to improve performance. For example, consider the growth and churn rate of your email list or the return on investment (ROI) of each email campaign to determine if it's profitable to continue email marketing efforts.