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What is a Key Performance Indicator?

Learn all about digital marketing, we have built this glossary to help you understand everything to thrive in online marketing and promoting your website or business.

What is a Key Performance Indicator?
A Key Performance Indicator (KPI) is a measurable value that indicates the performance of key business objectives. Companies use KPIs at multiple levels to evaluate the success of reaching targets. High-level KPIs may focus on overall performance, while low-level KPIs may concentrate on individual or departmental initiatives.
Specifically, in a digital marketing context, KPIs will measure the effectiveness of your campaigns. Typically, it involves website hits, bounce rates, conversion rates, etc. Understanding these figures can give invaluable insights into what's working and what's not.
Every KPI should align with the company's objectives and contribute directly to the overall business goals. It is used to make informed decisions, keep the team focused, and ultimately drive growth.
KPI's Role in Digital Marketing
In the digital marketing space, KPIs play a pivotal role in understanding how well marketing strategies are performing. The measurements give a clear picture of the ROI of different marketing campaigns and initiatives.
Without proper KPIs, it's near impossible to ascertain the success of a digital marketing strategy. It is therefore essential to set relevant and measurable KPIs for each marketing channel and campaign to measure their effectiveness accurately.
Finally, by tracking KPIs, digital marketers can identify potential improvements in their strategy, maximize their online presence, and significantly boost their return on investment.
Key Performance Indicators Examples
Several KPIs are commonly used in digital marketing, each serving its purpose. Examples include Traffic Sources, which can be divided into organic, direct, referral, and social traffic, providing insights into which areas are driving the most visitors.
Another commonly used KPI is Page Views and Bounce Rate. The first indicates the number of views a particular page is getting, while the latter shows the percentage of visitors who left the site after viewing only one page.
Lastly, Conversion Rate, arguably one of the most critical KPIs, refers to the percentage of site visits that resulted in the desired action being taken (like a purchase or sign-up).