KPI stands for key performance indicator and it basically means you can track and evaluate the success of specific goals .
From this blog post we found out that you need to set SMART targets, an overarching goal, marketing strategy, content plan, marketing funnels and a way to measure progress.
But, we didn’t look into specific KPIs to help your business grow. You can actually use this and the mentioned blog post to help set targets that will help your business grow.
Let’s get to it!
Customer acquisition cost
This is the cost involved when convincing a potential customer to purchase a product/service from your business.
This is one of the most important metrics to measure. This is because in order for your business to grow, you need customers.
You need to know how much it costs to convert a customer. You also need to set a goal – this goal will “efficiently acquire customers.”
Effective at acquiring customers.
Efficient in terms of cost.
The reason I say this is down to the fact that if it costs more to acquire a customer than what you get from the customer, you’re doing something wrong. Before we get into this further, we need to look at the different ways in which we can acquire customers.
There are a few different ways to acquire customers and some include:
Lead generating website
Developing business partnerships
Lead generating website
If you own a business the thing that you actually need the most is a well structured website.
You need a well structured website in order for your website to perform as your users expect, if not the less likely it is for users to stay on your website pages.
You want to keep users on your website and get them to come back if they are still thinking about a product or service.
If you haven’t read the linked blog post some points include are:
Website must meet your business goals
Must have the relevant user journey
Good call to action buttons/links
Good site map and hierarchy
The relevant meta tags
Have good content/keywords
Contextual internal linking
The necessary landing pages
Having a website designed and developed is a good investment, the last thing you want is cheap web design.
Having a good website will contribute towards your business being effective and efficient at acquiring customers.
Over time, the investment put into a good website will pay off over time with the customers you get from it.
Content marketing plays a vital role in acquiring customers – content is applied to different mediums – print and digital.
Print marketing includes things like business cards, banners, posters.
Digital marketing includes things like social media and your website. Your website is actually one of the best methods in getting your content out in the open for everyone to see.
When people are searching for products or services on search engines, the search engines look for keywords in content.
People will then visit the websites from the list of results and depending on the quality of content they will either stay or go.
Over time if people keep leaving your website pages, Google will learn this and your website pages could start to rank lower.
Your website and social media work alongside each other extremely well.
Now, some businesses have either a website or social media. But, if you’re serious about your business – you need a website.
Using social media for your business has two sides – it can cost you or it can be totally free.
If you stay the organic route (free), the only thing you’d need to worry about is time spent on content.
You will spend x amount of hours generating content for social media – we mentioned just before that social media and your website work alongside each other well. This is because if you generate good content for your website you can share this on your social media platforms.
People will then move from social media to your website.
The other way is to pay for adverts, but these are generally short term. But, creating ads is a really good way to kick start your exposure and once you’ve got the content you’ll less likely need paid ads.
Now back to the point “if it costs more to acquire a customer than what you get from the customer, you’re doing something wrong.”.
Your business needs the correct content marketing plan in place. You need to understand what your target audience uses and how they behave. Do they even use social media, what social media platforms do they use? Do they search Google and land directly on websites and skip the social media part?
If you start acquiring customers from all possible methods – you’ll end up wasting time (money) and money spent on ads that you may not even need.
To get your totals for your customer acquisition cost, you simply divide the total cost spent on acquiring customers by the number of customers during the same period of time this money was spent.
Customer Lifetime Value
You have your customers and your customer acquisition cost, it’s time to look at the customer lifetime value.
Before calculating your customer lifetime value, you need your customer acquisition cost. So, before carrying out this step make sure you’ve completed the first step.
By measuring the customer lifetime value in relation to the customer acquisition cost you can see how long it takes your business to cancel out and exceed the costs it takes to acquire new customers.
You measure the customer lifetime value by getting the average purchase value and multiplying this by the average rate at which people buy your products/services.
The average purchase frequency rate is how many times your customer purchases a product or service within a set period – this could be three months, six months or one year etc.
Remember, it’s just the customers who have bought from you more than once.
The reason you want to measure this, is that you can see how much you’re making on repeated purchases.
You can see how the customer retention cost can affect the lifetime value. From here you can adjust/rethink how you acquire customers or even adjust costs of your products/services. This will help your business grow in terms of return on investment.
This is because you can adjust how you acquire customers (this can affect the costs i.e. if you stop using paid adverts), if you find you can’t reduce acquisition costs you could even adjust the price of your products/services.
You can even improve the customer lifetime value once you have these metrics. You could even look at customer service as your repeated customers may like your customer service and that’s one of the reasons they keep coming back to your business. This will help your business grow in terms of how it performs on a personal level, who doesn’t like great customer service?
If you have the most excellent customer service people will, over time, know your business for it’s customer service and they’ll spread the word.
Customer Retention Rate
The customer retention rate is your business’s ability to actually hold onto these customers. This is an important factor when it comes to growing your business because not only do you want new customers, you want to keep the customers you already have.
Losing customers could potentially slow down the growth of your business.
It’s the percentage of customers you have kept (retained) over a set period of time, this could be 3 months, 6 months or 1 year. This is an important metric to measure as it can affect how much your business makes profit wise.
To get the customer retention rate you need the number of customers at the end of a period (could be 1 year). The number of new customers acquired during the same period and the number of customers at the start of that period.
From here, the formulae is as follows to get the actual retention rate as a percentage:
Number of customers at the end of a period – the number of new customers acquired during the same period / the number of customers at the start of the period multiplied by 100.
This rate is dramatically impacted by the number of new customers your business acquires and
how many customers you lose.
You need to know this percentage as it’s an important factor that contributes towards actually growing your business. The top level answer it gives you in meaningful terms is it shows you how good your business is at acquiring new customers and how well it satisfies the existing customers.
On top of the above point, another point worth mentioning is it’s actually easier and more efficient to retain customers than it is to acquire new customers. This means you can focus on returning customers (who already know you exist) meaning you don’t have to worry about how they are going to find you, again.
The reason it’s easier and more efficient to retain customers rather than acuiring new customers is down to returning customers actually have the tendency to spend more money and purchase on an often basis. Returning customers also like to refer to friends and family. Referrals cost you nothing.
According to hubspot, it’s 5.25x more expensive to acquire new customers than it is to retain them, a 5% increase in customer retention rate can see 25%-95% in return on investment.
A small fact: on average businesses have a 30% customer retention rate for their eCommerce websites.
Landing Page Conversion Rate
The landing page conversion rate plays a key factor in how effective your website is at converting users into customers/potential customers.
This is because your business website’s landing page has a large impact on your users. It needs to perform as your users expect and it needs to load fast. It’s all about making a good first impression.
You’ve probably heard this fact before, but if your webpage takes just a few seconds to load, you can dramatically increase your website’s bounce rate. People will leave after seconds of being on your webpage.
The bounce rate is the rate at which people land on a webpage and leave. They simply “bounce” away from your webpage.
This can be down to various reasons, if you’d like to know more about these make sure to check out this blog post on 10 digital marketing reports your business needs (LINK) .
If you have a good landing page, people will be engaged. Engaged users will stay on your website (hopefully) to then turn into customers and increase your conversion rate.
A little fact before diving into more on the conversion rate of your landing page. The average conversion rate of a landing page is 4.02% according to unbounce (a landing page builder).
You want to monitor your landing page conversion rate so you can remove what isn’t working, or simply improve it. You can also see what’s working and you can improve this even further (if necessary).
If you don’t monitor the conversion rate of your landing page, your page may not be performing. Why have a landing page if it’s not performing? It simply means people will be more likely to leave, thus, increasing your bounce rate.
If people keep bouncing away from your landing page and you don’t know, your webpage won’t rank as well as it could.
You want to be seen on Google, you want people to be engaged as soon as they land on your website.
You need your landing page to behave how users expect, it needs to take them to other parts of your website such as the services pages, products pages, or single product pages.
Even if you just have a landing page for an upcoming product or service, or even a new website. You want to make people excited so they either stay on your website or come back after launch.
You simply can’t ignore how your landing page converts.
To get your landing page conversion rate you simply divide the total number of conversions by the total visitors (during a set time period) and multiply this by 100.
A landing page will help your business grow because it will keep people engaged with your website, it will let them know about a new product or service or even a featured product or service your business has.
People will remember that page and revisit it later, if they are revisiting your website you want to make sure they come back to you after looking at other businesses websites.
Other reasons as to why a landing page can help your business grow is that it drives traffic to your website. It also helps with SEO – if people are using your landing page and going to other various sections of your website from there that page will start to rank well.
A landing page is also a great way to build your brand. You want your brand known and recognised.
If you’d like to read more on landing pages, checkout this blog post .
Website Traffic Growth
You want to focus on growing the traffic of your website. This is because the more people you have on your website the greater the chances are you will acquire more customers and increase your conversion rate.
Monitoring your website’s traffic growth means you can also see how well your funnels are performing. I haven’t mentioned funnels in this blog post – so, a funnel could be your social media activities that bring people to your website, any paid adverts, organic SEO.
You can see how many people are coming to your site from various sources (LINK).
To calculate your website’s traffic growth you simply get the number of visitors from the current period (could be one month) minus the number of visitors from the period before (previous month) multiplied by 100.
Different periods could be three months, six months or one year etc.
Over time you can see if your website traffic is actually growing, if it’s declining, what funnels are working better than others.
But, to know where your traffic is coming from you need to monitor your traffic sources. (LINK).
You should be monitoring where your traffic is coming from so you can focus on what’s really driving traffic to your website and improve it.
If you have a low amount of traffic, you’ll be able to see what’s performing poorly and even look at what you are not using and maybe try a different method.
If people are coming direct to your site from search engines and your traffic is good, this could potentially mean you’ve got good content on your website and/or have a really good landing page.
There are so many variables to look out for. If you need any help be sure to checkout our digital marketing services.
Average Session Duration
The average session duration is the average time people spend on your website. This can be new users or returning users.
The session duration is calculated by monitoring how long a visitor stays on your webpage, but, if the user becomes idle for 30 minutes and greater the session time count will stop.
This is because someone could be idle for a long time (away from the computer) meaning they aren’t really spending time on your website. This would create alse calculations.
The actual average session time is calculated by adding together the duration of each session. For example this could be six visitors. Visitors 1 to 3 could spend 360 seconds on your website and visitors 4 – 6 could spend 60 seconds on your website.
You simply add all these times together. You then divide this total time by the number of sessions which would be 6.
So , 360s + 360s + 360s + 60s + 60s + 60s / 6 people = 210s. 210 seconds is the average session duration.
There are various methods that you can implement on your website to increase your average session duration.
These can be:
Good content that people want to read
The correct user journey (you need to make sure your website behaves as the user expects
The reason you want to increase the session duration is that it can actually help your business grow.
This is because if you have good media (imagery, video, graphics), good content and a user journey that the user/customer expects they will be engaged and want to use your website.
If you have an ecommerce site and it has really good imagery (product images) as well as engaging content (text for the products) and it’s really easy to carry out the buying process your eCommerce website will have a higher chance of being used by people than other eCommerce sites – your pesky competition.
Page Load Time
People are impatient, especially when it comes to websites. People simply do not like waiting for a web page to load. For a small fact, people do not like waiting more than 3 seconds for a web page to load. After that time they will leave your webpage, this will increase your bounce rate.
Your webpage may have the best content, have the right user journey and behave as the user expects. But, if your webpage is slow people simply won’t stay on your webpage and leave.
There are numerous factors that can contribute towards a slow load time, these can be unoptimised images, large background images, many graphics such as SVGs. It can also be down to how your website has been coded.
The code could be poorly optimised, the more code your website has the slower your website will be. One reason is that more code equals a larger file size. Larger file sizes take longer to load on the web.
It could also be down to poor code practices, this could be something as ridiculous as a never ending loop. In simple terms, a loop is used to loop over all your blog posts and output them to your webpage. If the loop never ends it will dramatically slow down your webpage.
Now, this is an extreme example. But, it’s an example that’s easy to understand as to how code can slow down your website.
There is no mathematical formulae when it comes to measuring page load time, it’s simply just the time it takes for your webpage to load.
Page speed is an important factor when it comes to driving traffic to your website (more traffic means a higher chance of acquiring customers and increasing conversion) and increase your business growth.
If you have the right website for your business, you want to make sure it loads fast so people aren’t waiting around. If it’s slow, people will start to use other websites over yours and you could end up losing business meaning less business growth.
Conclusion: 7 Website KPIs to Help Your Business Grow
There you have it, 7 website KPIs that can help your business grow. For a reminder these were:
Customer acquisition cost
Customer lifetime value
Customer retention rate
Landing page conversion rate
Website traffic growth
Average session duration
Page load time
If you don’t monitor these KPIs you could simply struggle to actually grow your business. If you’d like help with growing your business checkout our digital marketing services .
Read more: canny-creative.com