How to Set Marketing KPIs in 8 Steps
As marketers and marketing leaders, KPIs are critical but are not always easy to set.
Why are KPIs important?
You’ll use KPIs to:
- Assess the success of your marketing plan
- Ensure that your marketing plan is sufficient for driving the necessary business growth
- Align leadership and cross-functional stakeholders on dependencies and their role in driving impact
Here’s an eight step process for setting Marketing KPIs:
1️⃣ Start with your business objectives
What are your business goals? These are usually the most top-line goals: total revenue or bookings and total customers.
2️⃣ Identify what marketing’s contribution needs to be to the business to derive your “revenue target”
Maybe this is unlimited. 🙂
More likely, though, you have an allocation for how much marketing is expected to influence or contribute to the business. 30–40% influenced or driven by marketing is a common benchmark.
3️⃣ Design your high-level marketing plan to deliver on your top-line target
Determine your full-funnel channel strategy and initiative plan since each contributes to your goal achievement:
- Top of funnel for awareness
- Mid-funnel for trial, leads and interest
- Bottom of the funnel for conversion, sales, retention and advocacy
4️⃣ Calculate the KPIs needed for each channel and initiative in order to reach your targets
For example, if your ultimate target is 150K new customers, and you have a 30% trial to paid rate, you need 500K trials.
And if you have a 5% trial rate from your website, that means you need 10M visitors (or re-visitors).
6️⃣ Assess the right acquisition mix
For example, how will you get those 10M visitors (via organic or paid). And from that, you’ll determine your KPIs per channel as well as associated CAC or CPA.
7️⃣ Revisit your channel and initiative plan to determine whether you have enough in your plan to reach your targets.
If not, you may need to augment your plan by focusing on higher impact initiatives and/or asking for more budget to achieve the targets.
8️⃣ Get buy-in from your leadership and stakeholders on your KPIs.
Ensure everyone understands the assumptions, dependencies, and their role in achieving this success. Marketing is a team sport so ensure that everyone is aligned in driving this success for the overall business.
Typically, marketing directly owns KPIs closer to mid- and top-of the funnel. You’ll likely co-own KPIs related to feature usage, renewal rate, and advocacy with product management, account management and other teams.
This is a top-down approach. You may also take a bottom-up approach where you start with marketing budget and resources and then project forward how much revenue you can drive or influence from there.
From your experience, what’s easy or hard about setting KPIs?
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