Return on Investment (ROI) and Key Performance Indicators (KPI) are two colloquial terms that are most commonly bandied about by digital marketers to indicate the performance of marketing campaigns. In this blog, we will strive to understand both these factors, how they are determined and what makes them so important in digital marketing.

Key Performance Indicators (KPIs)

As the name suggests KPI collectively refers to all the metrics which determine the efficacy, reach, and engagement generated by a marketing campaign or an advertisement. In the days preceding digital marketing; these metrics were gleaned through marketing surveys and used to be quite inaccurate. But now we have a more sophisticated system at hand with digital marketing; where the measurement of performance is instantaneous, detailed, and accurate.

Different marketing models and platforms have a different approach to determining and calculating KPIs. Thus, the key performance indicators for an Instagram ad campaign could be completely different from an e-commerce website. But there could be commonalities as well.

To understand it simply; just go through the google analytics page of your website or insights of your Instagram posts. You will come across data, charts, and comparisons pertaining to various activities being performed on the website by customers like page clicks, subscriptions, unique views, bounce rates, etc. These metrics let you know how well your marketing and outreach plan is doing in specific, measurable areas and all of them can be termed under Key Performance Indicators.

Some of these KPIs can be used collectively to determine what is known as Return on Investments (ROIs). Thus, we can say that Return on Investment (ROI) is also a key performance indicator; and one of the most important at that

Return on Investment (ROI) basically tells you whether you’re getting your money’s worth from your marketing campaigns on the basis of various performance metrics which could be cost-related or otherwise.

Here are some of the most important KPIs you need to understand while figuring out your ROI and its effectiveness:-

• Cost per lead means how much you’re paying for each lead you collect from your various marketing channels.
• Cost per acquisition is calculated by learning how much you spend to generate leads versus how many leads you convert. Simply dividing marketing costs per lead by total sales will let you calculate your cost per acquisition.
• Lead close rate- Another important factor to determine Return on investment it determines the fraction of leads which are finally closed and cause engagement.
• Average order value– Knowing how much your customers are spending on each order is very important . Is this number going up, staying flat, or declining, and why? Answering this question can tell you a lot about the performance of your marketing campaigns
• Conversion rates through various marketing channels– As discussed ,digital marketing is a multi-platform activity. In order to determine the ROI of your digital marketing campaigns,  you need to know which marketing channels  is most effective for your content to reach your intended target group. Sometimes, the organic reach may not equate to good performance. You need to calculate how much of that engagement has actually converted for more accurate results.
• Conversion by device- Currently, the most common device accessing digital content is the mobile phones, while PCS and Tablets remain distant but considerable favourites. You need to optimize your content accordingly by carefully calculating the ROI for each kind of device.
• Click-through rates– This key performance indicator reveals a lot about audience engagement. Click-through let you know about the  traffic on your page,how long the audience spends there and what are they doing while they’re there. Theis data is compared with and against many  other metrics like which platform is bringing the most engagement or which device is. You can easily find such complex data on your google analytics page- for example, your Google Analytics can tell you if the customers from Instagram are spending more average time on your website VS those who have been redirected there through search engines. You can compare all the other metrics based on click-through rate.

Your interpretation of this data will determine your content creation, your SEO strategy, your favored platforms for marketing, your tonality and language, etc., etc,

• Landing page performance-Your landing page is often the first point of customer interaction. It is like the digital shop window. The landing page performance is very important as it determines the first impression customers get about your website or your campaign.

Thus, we can conclude that Key performance indicators and especially the Return on Investment are two factors that are important, not just to understand the health of your business but also to determine your future plans and planning your marketing campaigns.

Are you looking for digital marketing solutions? Do you wish to see a marked improvement in your KPI and ROI numbers? Do you need help with planning your marketing strategies and campaigns?

Design Pundit, the top digital marketing agency in Gurgaon and Delhi has something for everyone. Get in touch with the best Digital marketing strategists for your brand.