Key Metrics and KPIs in Internet Marketing

Building and scaling an online business involves spending time, money, and energy. It’s difficult to objectively assess the success of an SEO service, so it’s important to track key metrics and KPIs. (Key Performance Indicators). Metrics and KPIs are indicators that help evaluate the effectiveness of marketing initiatives and business processes. Metrics reflect actual results, while KPIs help determine how well those results align with established goals.

In this article, we will introduce you to formulas that allow you to assess the effectiveness of business processes.

What are metrics?

Metrics are quantitative indicators that allow you to measure the performance of a website, marketing campaigns, or specific business processes. They help provide factual data about a company’s performance. 

For example, metrics include:

• the number of website visitors;

• the number of registrations;

• the number of orders;

• the number of clicks on ads;

• the number of user interactions with content.

Metrics show what is happening with business processes, but on their own, they do not always determine whether the result is successful.

How do KPIs differ from metrics?

KPI – shows the effectiveness of business processes, especially those that want to grow predictably. It is easy to distinguish them from metrics: they are always expressed in percentages. There is a fixed “normal” KPI. So, when comparing your company’s KPIs and average market indicators, you can draw a conclusion about the effectiveness of business processes.

Metrics are indicators that can be calculated. For example, the number of registrations on a website or likes on a social network.

Key KPIs

We suggest considering 11 key indicators that will help assess the effectiveness of business processes.

Conversion Rate (CR)

The number of users who performed a targeted action: bought your product, filled out a form for a conference, downloaded an application. This is one of the main types of data that demonstrates marketing indicators and their effectiveness.

Click-through rate (CTR)

The indicator shows the percentage of users who clicked on advertising. This is one of the main indicators that you need to pay attention to when launching contextual advertising.

Return on advertising (ROAS)

This indicator shows the company’s profit for every $ 1 spent on advertising. Calculate this KPI for your business. If ROAS is more than 100%, then advertising costs are paying off.

Return on investment (ROMI)

One of the main KPIs (in marketing it is also called ROI), which shows income or business loss.

Average Revenue Per User (ARPU)

ARPU shows how much money each user brings in over a certain period of time.

Churn Rate

Shows how many clients have abandoned services for a certain period.

If the Churn Rate is high, this may be due to a high price tag for the product/service or low quality (compared to the product competitor).

Revenue Churn

Indicates the loss of profit due to customer loss.

Market Share (SOM)

Shows what part of the market your product/service occupies in the market.

Share of Customer Wallet (SOW)

Marketing metric shows your customer loyalty customer. This is the percentage ratio of the number of purchased products/services of your company to the total number of purchases in your niche over a certain period.

For example, in May, Masha spent 150 UAH in cafe X, and the total expenses in the cafe amounted to 600 UAH. SOW = 25% (150/600 * 100%).

Customer Retention Rate (CRR)

It is easier to sell to an existing customer than to acquire a new one. CRR shows how users behave on the site: do they buy once or return after a while?

A good CRR tends to be 100%. If the rate is falling, analyze what has changed in customer service.

Cart Abandonment (CAR)

This KPI shows the number of users who added an item to their cart but did not complete the purchase. This happens when a customer gets distracted, finds a better price, or decides to wait until payday.

Metrics and KPIs need to be monitored, even if sales are growing. Performance indicators allow you to analyze costs and the results obtained. It is important to be guided only by current data.

Key metrics

Let’s consider the key metrics that every marketer, online business owner, and analyst should have in their arsenal.

Cost per click (CPC)

CPC is the main metric when setting up advertising, which will help you evaluate the effectiveness of advertising campaigns.

Cost-per-action (CPA)

The cost you pay for a targeted user action (such as a subscription or registration on the site).

Cost per lead (CPL)

Shows the price for the contact information of users whose services/products are interesting.

Lead (application) – a potential client. CPL shows the effectiveness of your efforts and spending on customer acquisition.

Customer Acquisition Cost (CAC)

The portion of your budget you spend on acquiring each customer.

Time to Payback CAC

The indicator helps calculate the return on investment for each customer acquisition.

Monthly Revenue (MRR)

The indicator is used by service owners who provide subscription services.

Customer Value (LTV)

LTV is the profit from all customer purchases.

Conclusions

We have reviewed the key metrics and KPIs. They allow us to evaluate the effectiveness of business processes and identify the strengths and weaknesses of a strategy.
Marketers track metrics based on the results of their work — for example, to evaluate the effectiveness of an advertising campaign.

Metrics show actual results but do not define future goals. KPIs, on the other hand, help establish benchmarks for growth, assess the achievement of set objectives, and compare the results of business processes with planned targets.

Most metrics can be tracked using web analytics tools, such as Google Analytics.
In short, KPIs are indicators that are defined as goals before work begins, while key metrics are an assessment of actual results and the costs incurred to achieve them.