Just say "no" to KPI abuse.

Key performance indicators (KPIs) are ubiquitous in marketing. Marketers use them to track and improve their success, but many are guilty of KPI abuse by selecting and measuring the wrong metrics. This is a problem because it leads to wasted money and missed opportunities.

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1. Hold everyone accountable to your business goals
Often, KPIs are selected based on data that is easily accessible rather than metrics that support your business goals. Do not allow media partners to claim they can only be responsible for impressions and clicks. Do not allow the digital team to talk in sessions and pageviews. Every team and partner needs to be judged based on their contribution to your primary business goals. At Magic Layer, we have methods to link success back to digital and marketing experiences, no matter the end goal. Taking the easy way out is no longer a valid excuse, and more importantly, measuring the wrong KPIs can lead to wasted money and missed opportunities.

2. Isolate the critical few supporting metrics that matter
By definition, if you have a dashboard or report with dozens of KPIs, they are no longer KEY performance indicators. Instead, what you have are a bunch of metrics that may or may not be important to your business goals. At Magic Layer, we sift through thousands of potential metrics to isolate the critical few that are predictive of your business goals. This approach ensures you’re focusing your time and effort on KPIs that have business impact. Our methodology allows marketing and digital teams to identify easier-to-measure business goal proxy metrics. For example, if marketing clicks predict offline revenue, it becomes a valid KPI instead of an easy-to-measure number. Transform your KPI selection process from strategically selecting metrics you think matter to establishing your business goal KPIs and identifying the supporting KPIs that predict those goals.

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3. Keep your KPIs simple to understand and analyze
Luckily while the trend of combination KPIs has lessened over the years, we still see some organizations adopt complex formulas to make a “super KPI” or “KPI soup.” While this approach seems credible, the resulting number is impossible to troubleshoot when it goes down or truly celebrate when it goes up. Keep it simple by avoiding overly-complicated KPIs that are near impossible to unwind.

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4. Balance volume with efficiency by controlling for costs
Remember to consider costs. There will be channels and campaigns that drive success but at too high a price. Cost efficiency needs to be balanced with volume as you do not want to deprioritize a program that generates most of your leads, even if they cost more than others. This approach allows you to discuss possible ways to optimize higher-cost channels and provides a business justification for an additional budget focused on increasing spending on more efficient platforms.

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5. Ensure KPIs do not change regardless of performance
Your KPIs need to remain stable regardless of performance. Do not rob yourself of this opportunity to learn and improve. We often see marketing vendors skip past the fact that leads are down and even costing more but call out an increase in click-through rate as a “win” for the month. Changing KPIs based on poor performance is not okay. Instead, if this is a statistically relevant change, someone needs to dig into why performance declined, not change the goal post.

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Selecting and measuring the wrong metrics can lead to wasted money and missed opportunities. To avoid KPI abuse, focus on business goals, look for metrics that predict those goals, avoid complex KPIs, factor in costs, and remain consistent.

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Magic Layer has decades of experience helping clients select, measure, and improve KPIs. We go beyond these best practices and layer predictive analytics for maximum impact and clarity. This way, you know that you are keeping your eyes on what is most important in the easiest way possible. Connect with us today to discuss your needs and objectives – it would be great to meet you!

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