This document discusses defining business goals and key performance indicators (KPIs) for digital marketing. It explains that the conversion funnel and KPIs should be tailored to each business's goals, such as awareness, leads, or online purchases. Common KPIs are identified for ecommerce, lead generation, customer service, advertising-based content sites, subscription-based sites, and branding sites. The document stresses that KPIs should be tied to organizational goals and measured regularly to optimize performance.

1. 10/12/2009
Defining Business Goals and
KPI in Digital Marketing
A brief note on Business Goals and Key Performance Indicators in Digital
Marketing
Rahul Nambiar, Master in Digital Marketing,
Class of 2010, IE Business School

2. Rahul Nambiar, Master in Digital Marketing, Class of 2010, IE Business School
Defining Business Goals and KPI in
Digital Marketing
A brief note on Business Goals and Key Performance Indicators in Digital Marketing
Establishing the conv ersion funnel is the most critical task in Marketing and So is in Digital Marketing.
Traditionally, Conversion funnels have had 4 definite stages:
1. Awareness
2. Interest
3. Consideration
4. Purchase
In the case of Digital Marketing also the 4 stages of the typical marketing funnel exists but will vary based
on the business goals. The business has to decide what needs to go in the Conversion Funnel. So, how
does a business decide on the conversion funnel?
Establishing Business Goals for Conversion Funnel
The fundamental of establishing the conversion funnels is the same where you start from Awareness and
then close at purchase. But not all businesses have online purchase in the process of ordering the product
and so the conversion funnel for each business is separate and optimizing it for each level is critical. The
critical is to identify which part of the Conversion funnel is important for the business.
 For a certain category of busy, building awareness and product information will be critical and
hence, the optimization needs will be along the lines of getting more visitors to get a feel of the
offering, SO that at the time of buy the products are in top of mind
 Certain Businesses will have online pay ment and commerce products to promote and hence are
looking at a certain kind of awareness which can convert to quick wins and purchase and not stay
in the second and third phase for lone
 Certain business will be interested in collecting leads of a particular ty pe and will then get on to
pure capture of people interested in the product or services and May not be interested in a lot of
awareness, but awareness only in the target audience
The critical aspect is that the business needs to clearly know; what is the goal from digital? Is it Le ads? Is
it just branding and awareness? Is it to drive bottom line through online purchase? The fact is that you
cannot establish a conversion funnel unless the business model is clear on its objectiv es and what needs to
be done. There is not one box fits all model for tracking conv ersions and establishing the exact funnel.
Defining KPI’s and Different Models
KPI’s are a direct outcome from the business goal and the investment being made for the project or
campaign. KPI’s should be as below:
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3. Rahul Nambiar, Master in Digital Marketing, Class of 2010, IE Business School
 Completely tied to the organizational goals and Not the Industry Averages
 Measured on a regular basis and tweaked to make it more real , rather than keep targets that
 Rationalization of the KPI’s should be done and agreed upon by the whole business team
The KPI’s can v ary from Business to business and there are no industry standards but we can go through
some of current practices in identify ing KPI’s of v arious digital marketing initiatives. Successful
performance in a campaign comes only out of monitoring the KPI’s as closely as possible
Ecommerce
For any ecommerce based site, some of the must watch indicators are:
 Ov erall Purchase Conversion
 Average Order Size
 Items Per Order
 Step-by Step purchase Conversion and Drop Out points
 Offline V s Online Sales ratio
 First Time V s Returning Users
For an ecommerce website it is important to understand that even a small percentage change in any of the
KPI v alues can increase revenues
Lead Generation
Lead generation is one very common activity which takes place online and more and more B2B sales
vendors are looking to generate leads online. Some of the performance metrics which should be closely
tracked in this activity
 Ov erall Conversion : Total leads generated to the total site visits
 Campaign to Campaign analysis of Conversions
 Sites from where people land on the Lead Gen Page
 Step – by - Step conversion to registration analysis and Drop Outs
 Quality of Lead through analysis of percent of conv ersion from Lead to Offline Purchase
Customer Service
Nowaday s, Customer service is one area which is slowly moving online reduce s the operational costs of
businesses in a huge way and is now becoming a saving area. Online Chats and forums are now able to
resolve customer questions more easily and hence is important to understand some of the performance
indicators
 Percent of Customer Touch Points served
 Average Cost per touch
 Driv ing the Customers to other touch points, Important in customer serv ice
 Search Effectiveness of the website: People should be able to get what they want in case they
search and this should not be difficult
 Surv eying Online also helps you understand if people find what they look for in the site in terms
of customer survey
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4. Rahul Nambiar, Master in Digital Marketing, Class of 2010, IE Business School
Content Sites
As more and more websites run now using the twin business model – Subscription and Advertising. It is
important to understand that each of these things have their own performance indicators.
Advertising Based
Some of key performance indicators:
 Average Site v isits per day and Week
 Page V iews per V isit
 Average Length of V isit
 Click Ratio on Ads
 Ratio of new to returning v isitors
 Recency and Frequency
Subscription Based
Some of the key performance indicators
 Conv ersion of non subscribers to subscribers
 Active base of Subscribers
 Average Length of Subscriptions
 Un-subscription Ratio
 Average Value of Subscription( In case of Paid subscription with Slabs)
Branding Sites
Branding Sites are the really creative ones where raising engagement with brand is seen as the core
activ ity and is not linked with direct sales conversions. Some of the indicators which can be used:
 Average number of V isits
 Average Time Spent per v isit
 Drop out and Bounce rate from websites
 Comparison of Order V alues of People who have seen branding content Vs Not seen
 Surv eying on the content – Entry and ex it surveys are also some great KPI factors
 Sharing and Referrals is also a good KPI for Branding Sites.
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