If you could only choose one KPI for a month, what would it be? A quarter? A year? Would you rush to your web analytics tool and cling to traffic KPIs? Would you hold fast to attributable revenue? Would dollar retention rate tell you everything you need to know about your business day to day? Maybe, you’d hold out by counting SQLs. Maybe you’d aspire to measure customer satisfaction. Maybe.
If you’ve just felt a mini wave of panic at the thought of giving up your myriad dashboards and mountainous reports, you’re not alone. Marketers today are swimming in data; some are downright drowning. Key performance indicators (KPIs) from the minutiae of social media sentiment to the macro of marketing-sourced-pipeline, provide endless ways to prod your programs for progress. Here’s why you need one KPI and how to set about finding it.
Why choose just one KPI?
A single KPI can’t help but tell a simple story. Day over day it’s down. Month over month it’s up. Multiple KPIs, on the other hand, tell a complex story. In either case, the individual metrics that get included communicate priority. It should come as no surprise that checking the SQL number hourly will lead to SQL-mania. Similarly, when there are ten metrics on the dashboard, or the dashboard is ten pages long, or the data gets sliced ten different ways, it is not hard to see how quickly confusion can set in. Instinctively we know this and we summarize. The big takeaway here is… but by then it is too late. Attentions lost, brainpower spent, distractions – well – distracting.
A single KPI is not meant to be exclusive. In fact, a single KPI can be an organizing principle for others. Let’s say you’re CMO of a web publisher, powered by a traditional digital ad model. Web traffic is your single KPI. What factors increase traffic? What factors increase time on site for that traffic? What causes traffic to drop? In this example, we’re not asking for more KPIs, we’re asking questions about a single KPI. We’re asking depth questions. In contrast, consider measuring an email campaign with Opens, Clicks, and Unsubscribes. None of these KPIs have intrinsic value, they are all proxies for some later, down funnel activity. Clicks lead to page views which lead to add-to-carts which lead to purchases. These are breadth questions and they can be secretly dangerous for the built-in assumptions they carry. Averages alone do not represent populations.
A single KPI communicates singular focus and organizes lines of inquiry to uncover the causal relationships to move that needle. If you don’t know your one KPI, how do you know what you’re doing? How does your team know? How does the business know?
Finding your one true KPI
Easy peasy. The business wants more revenue, less expenses, and better experiences for their customers. How do you fit in? How does your team fit in? Seriously. If your answer is that you do marketing because the company needs marketing, you might want to try again. You and your team fill a need, a critical skill that supports some combination of more revenue, less cost, and/or better CX. Your one KPI should be a reflection of that purpose to the extent that your one KPI actually measures success in pursuit of that purpose.
Short of a deep moment of professional self awareness, if you don’t know your purpose – or your team’s purpose – you can often reason it from other known quantities. For example, you’re a marketer and you have a small team: why? Sales needs leads, Ecomm team needs traffic, the competition is fierce. Why are you in the driver’s seat? Oh, right. You know how to carve out a niche in a crowded market space. Measure that. Invent the KPI that says whether or not you’re carving a niche. Check it daily. On that note, you can make KPIs up. You officially now have permission. Here’s five that might be a good fit for niche creation: revenue per market share, share of voice, market penetration, comparative revenue, raw number of customers. Why not measure them all, right? Wrong. This is the time to declutter your focus and hone in. What you do and how you do it will define success. Measure that and don’t get distracted. Get obsessed. See how everything falls into place around it. See how the distractions fade.
C’est la vie d’KPI
Data is never an end in itself, nor is it the silver bullet. Data answers questions: Mic drop. When Nate Silver founded the now famous fivethirtyeight.com his mission was to create a place for journalism where the numbers are the story. To him, that meant finding data that answered really interesting questions and writing about it. But how does he know he’s succeeding. Is it ad revenue? Is it visitor traffic? Acquisition price from ESPN / Disney? By Silver’s own admission, success means minimizing the time he procrastinates doing 538 work. If zero procrastination, then success. Anything less points him in the direction of what needs to change.
With a single measurable KPI, you’ll have a number that can become your story and your team’s story. A single KPI can be your north star. You’ll be empowered to question new initiatives: does this move my needle? Can I support this and move my needle? For those who are yet to experience a moment of deeply justified pushback – it’s powerful, calming, satisfying.
So picture yourself on a desert island – with sufficient food and water, surrounded by loved ones (or not): what does success mean? Now measure it.