A Tale of Three Types of KPIs

“It’s like you don’t care about branding.”

“Obviously, we need people to know about our products.”

“Our latest video went so, like, totally viral that, like, a trillion people saw it.”

“This is a really pretty picture.”

These are things I hear a fair bit. Well, in more or less those versions. And it has lead me to bucket KPIs in three different groups which I’d be very pleased if you would let me present to you:

1) Hippie KPIs

2) Pseudo KPIs

3) KPI(s)

ad 1) In this group, we find things like awareness, engagement, Likes, +1s, views, etc. Much like their namesake, hippie KPIs are absolutely useless unless they are put to work. You could show me a billion ads for Coca Cola, you might even get me to +1 (yeah, I’m not too active on FB, but you get the point) a few of them, but send me down to the store and I’ll bring you back a Pepsi any day of the week.

ad 2) Pseudo KPIs are those which look so tantalisingly like something worth measuring, such as click through rates, store visits, app downloads or even conversion rates. The problem is that they may very easily mask a bigger problem. Say your conversion rates suddenly start increasing on your website. Sounds great! However this is normally measured as conversions/visits, so really it could be covering the fact that you are getting fewer absolute conversions! 10 sales from 100 visits is a conversion rate of 10%, 9 conversions from 73 visits is ~12.5%. Which would you rather have?

ad 3) There are very roughly two different types of businesses in this world. New and established. The new are chasing growth any way they can get it, especially in the .com sector, but the established (look, even Amazon – shock horror – came out with a quarterly profit!) need cash. So it comes down to profits. If your ultimate KPI is not profit (yes, including everything, manufacturing costs and all) then you may as well just hazard a guess as to what your targets will be. I suggest either number of seagulls in the park or red cars with even number license plates.

So how do these come together? Quite simply, you need to work from the bottom up. Once you’ve determined your profit point then you can start to care about conversion rates. Since you now know exactly how much you will earn from selling 9 or 10 (economies of scale will play in here too, remember that). And once you’ve tapped all the existing interest, then the hippies – sorry, Hippie KPIs – can be put to work. Because if no one knows you sell [thingy X] then no one will buy it from you, so obviously you need to let people know that you do, and also why they should buy it from you.

The crucial difference with this approach is that you are making this investment (there’s that word again) into branding on a fully informed and profitable base rather than a tie dyed one.

So yes, I do like branding and I do like pretty pictures. As long as they’re done right.

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Professionally passionate about performance advertising and helping businesses to maximise the output of their marketing. On a larger scale, it's also about introducing the best of the opportunities that lie in ensuring a digital transformation on the entire business and not just marketing.

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