If you’re focusing on growing your digital marketing agency in 2023, you probably have goals or targets you want to meet. While goals are essential to business growth, you must understand the smaller steps to meet those goals. That’s where KPIs come in.
Key performance indicators (KPIs) are quantifiable measurements of your agency’s progress toward your goals. Knowing how to utilize KPIs to your advantage can help you achieve your goals faster and continue reaching them month after month.
Let’s break down the difference between targets and KPIs and the three crucial KPIs in digital marketing to track for your agency.
Targets vs. KPIs
Many people confuse the concepts of goals or targets and key performance indicators. The main difference is that you need to measure KPIs to reach your goals.
Goals and targets are metrics that you either hit or you don’t. For example, your marketing agency may aim to onboard ten new clients each month. When you reflect on the previous month, you can evaluate whether you hit your goal — but you can’t do much else with that information.
In contrast, KPIs in digital marketing enable you to see the measurable steps you took toward your goal. Evaluating your KPIs can help you determine what to do differently to meet your goals in the future.
If your goal is to close ten new clients per month, you must consider the necessary steps to meet that goal. For example, how many strategy sessions must you schedule? Do you need to increase your conversion rate?
Before you can answer those questions, you must evaluate your existing metrics — then improve them to reach your goals.
Top 3 KPIs to Measure for Your Agency
Knowing the percentage of strategy sessions that lead to sales can help you break down your target into more measurable building blocks. Here are the three KPIs in digital marketing to help you understand the necessary measures to meet your target.
1. Number of Sales
The first KPI to measure is your sales. What is your monthly sales goal? How many sales are you currently hitting each month?
If your sales goal is ten new clients per month, and you’re currently hitting three or four, you know you have some work to do. On the other hand, if your KPIs are closer to eight or nine, you know you need to adjust your strategy slightly.
Keep your sales target in mind as we move to the next KPI.
2. Average Conversion Rate
Next, evaluate your average conversion rate.
Your conversion rate is the percentage of prospects that turn into clients. If you offer strategy sessions —which you should be doing — you can calculate your conversion rate with this formula:
Number of strategy sessions / number of new clients = conversion rate
To find the average conversion rate across six months, find the conversion rate for each month, add each figure together, and divide the total by six.
Most marketing agencies have a conversion rate in the 30%-to-35% range. You don’t need to turn every prospect into a sale to meet your sales target. But you need to understand your conversion rate to know the number of strategy sessions to be booking — which we’ll cover below.
If your average conversion rate is lower than 30%, you may want to reconfigure your sales funnel. Perhaps you could do something different during your strategy sessions to land more clients.
3. Number of Strategy Sessions
The final KPI to measure is the number of strategy sessions you conduct each month. Then, you can compare this figure to the number of sessions you should be conducting to meet your sales target.
To find your target for this KPI, use this formula:
Sales target / average conversion rate = strategy session target
For example, if you want to land ten new clients each month and you have an average conversion rate of 35%, you’ll need to conduct at least 29 strategy sessions.
Understanding your KPIs in digital marketing can help you know how to tweak them to meet your sales target. However, this is just one of the many steps in growing your agency.
Build your agency growth plan for 2023 to understand what you need to do to achieve your goals this year. Then join the Seven Figure Agency to learn valuable strategies in a growing community of agency owners striving to reach seven figures.
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