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February 17, 2016

The 6 Most Important KPIs for 2016

Image courtesy of ( David Castillo Dominici) / FreeDigitalPhotos.net

Year after year, Google Analytics continues to grow and improve. There’s very little debate that it’s the most valuable free analytics platform on the market. And with so many different professionals across all industries using Google Analytics, there’s a sense of community inside the platform. Each year, people gather and discuss which KPIs and metrics will be the most valuable in the coming months, and this year is no different.

6 KPIs to Keep an Eye On

As you develop KPI reports in 2016, you’ll want to narrow your focus. It’s always better to spend time studying and tracking the intricacies of a handful of KPIs than it is to broadly analyze dozens of different ones. Keeping this in mind, let’s review a few KPIs that experts believe are worth your time in 2016.

1. Sales Efficiency

Sales efficiency – which measures the value of individual sales people or sales teams – will always be one of the most important KPIs you have at your disposal. The reason is that sales efficiency provides a clear indication of which employees are worth your time and which are not.

Sales efficiency is measured by taking your annual or monthly quota and dividing it by the base annual or monthly salary of the employee being analyzed. For example, the sales efficiency of an employee who produces $10,000 in monthly sales and earns a base monthly salary of $2,500 is 4X.

Ideally, you want this number to be somewhere between 8X-10X base salary for the department to be considered efficient. In the example, this means the employee would need to produce between $20,000-$25,000 per month in order to be efficient.

2. Cost Per Acquisition (CPA)

Don’t look now, but CPA is considered the new measurement of a company’s ROI. The reason the measurement is so valuable is that it calculates and monitors spending and overall return on a single investment. It essentially tells you how much money you have to spend to gain another customer. With this information in your back pocket, you can justify increased spending.

The basic way to calculate CPA is to take your overall marketing expenses and divide this dollar amount by the number of new customers you’ve acquired during this same time period. In other words, if you’ve spent $30,000 on marketing expenses over the past three months while simultaneously picking up 500 new customers, your CPA is $60. While this isn’t a totally accurate reflection of your total cost per acquisition, it at least gives you a number to base projections on.

It’s best to evaluate your CPA each week, month, and year for a clearer picture of how much you’re spending per customer. As you scale your expenses, do your customer acquisition numbers follow suit?

3. Churn or Attrition

While it’s more fun to track the acquisition of customers, it’s also necessary to keep an eye on churn. Also known as attrition, churn refers to the measure of how many customers stop paying for your product or service over a given period of time.

For young companies and startups, it’s probably a good idea to measure churn every 30 days or less. For larger corporations and brands with established customer bases, it may only be necessary to track churn every 90 days.

Churn is totally normal – so don’t be discouraged when you see these numbers – but it’s a good idea to keep an eye on this rate of attrition so that you can determine when something is going wrong.

4. Activation

For startups in particular, measuring activation is very important. Activation refers to the conversion rate from when a visitor transitions into an active user. A high conversion rate between visitors and activation means visitors are having a good initial experience on your website. A poor conversion rate means your website is doing a sub-par job of conveying value.

To measure activation, you have to first create a definition for what it means to be an active user. For some, this will mean simply signing up for an e-mail list or downloading a white paper. For other companies, activation is determined by purchasing a product or signing up for a service.

5. Landing Page Conversion Rate

Conversion rates are important for every page, but it’s especially important that you begin tracking landing page conversion rates, since these are generally considered the most valuable pages on your website.

By tracking conversion rates for landing pages, you can determine if your pages are properly designed. When tracked with A/B split testing techniques, you can pinpoint the exact features that work. Ideally, conversion rates should be above 20 or 25 percent to be considered healthy.

6. Mobile Conversion Rates

As the majority of Web traffic transitions from desktop browsers to mobile devices, tracking mobile conversion rates is no longer optional. To understand exactly what your users are doing, mobile KPIs must be activated.

Specifically, you’ll want to follow the number of lead conversions you’re getting from mobile devices, the conversion rates of mobile optimized landing pages, and the bounce rates from different mobile devices. This will tell you exactly how – and if – mobile users are converting. The more mobile KPIs you put in place now, the less work you’ll have to do in the future.

And One to Avoid

While the previously mentioned KPIs are worthy of your time – there’s one that no longer holds much value. In 2016, experts are suggesting that follower count is no longer an accurate KPI for social media success. Instead, you need to look at engagement. The reason is that so many people have started buying fake followers that it’s it challenging to accurately understand the value of follower count.

Instead, you want to know how many people are actually engaging with your content, posting comments, and clicking on the links you post. It should also be noted that retweets, reposts, shares, and clicks are more valuable than the casual “like.”

The like is known as the laziest of the social media engagements. If you’re building your social media efforts around getting more likes, then you’re establishing a pretty soft foundation for future growth.

“It’s easy to confuse quantity with quality, but as any ecommerce business person knows, the two are not the same. In the world of Facebook likes, one must be especially aware,” industry expert Neil Patel reminds readers.

While virality is something many marketers pursue as they produce eye-popping content with share-worthy features, Patel is pretty adamant about the fact that “the power of Facebook is no longer in its spread, but rather in the way it provides a platform for interaction.”

Marshall Manson, managing director of Social@Ogilvy, agrees with this theory. In his opinion, “The power in Facebook remains its potency to generate earned conversation and engagement.” In other words, Facebook is a great resource because it provides a method of engaging with users in a one-on-one manner.

Focus on the Right KPIs

In 2016, make sure you focus on the aforementioned KPIs and hone in on the metrics that allow you to grow and improve. Cut out the rest of the noise and don’t worry about measurements that are irrelevant to your business goals or core values.


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Larry Alton is an independent business consultant specializing in social media trends, business, and entrepreneurship. Follow him on Twitter and LinkedIn.

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