A KPI Ladder: A Powerful Tool for Aligning and Measuring Marketing Programs
Many strategies and marketing plans include business goals and media metrics. Depending on the team that is authoring the strategy, the metrics tend to almost exclusively focus on the activations they are delivering, such as impressions, CPMs, and click-through rates. Sometimes, with the right relationship, business level metrics might be included. However, there is often a gap between the media program and the business outcome it is intended to influence. Program level KPIs are often missing.
A well-authored measurement strategy should also include the program level measures of success. These Program KPIs are key performance indicators that answer the question: "did the program work?" and provide a bridge between the media activations and the business outcomes. The most effective way to address these metrics is by developing a clear and comprehensive KPI ladder as a core feature of the measurement strategy.
What is a KPI Ladder?
A KPI ladder is a way of organizing and prioritizing the key performance indicators (KPIs) that measure the progress and success of a marketing campaign or program. A KPI ladder consists of different levels of KPIs that align with the strategic and operational goals of the organization. For example:
A business-level KPI might be revenue growth.
A local sales push supporting this would have a program-level KPI of sales volume by location.
A paid search campaign supporting the local reps could have a leads-created KPI.
In this ladder, marketing-driven leads contribute to local sales which contributes to overall revenue growth. A KPI ladder helps to create a clear and comprehensive picture of the performance and impact of the business or project.
Unfortunately, KPI ladders are often overlooked in the planning process, and may even be absent from the measurement strategy. This can lead to missed opportunities, wasted resources, and poor results.
Program-Level KPIs and the KPI Ladder
Program-level KPIs are the key performance indicators that measure the effectiveness of a specific marketing program or campaign. They are different from channel metrics, which measure the performance of individual activations within the program.
Many times program reporting focuses on channel metrics and has a hard time answering if the program holistically was effective. The inability to answer a simple question like "was this program effective?" is a problem that many agencies do not tackle. However, it is a great benefit to build a measurement strategy that includes a KPI ladder that features program-level metrics.
When thinking about program level KPIs generally, programs can be measured in two ways: tactical aggregations and unique metrics.
Tactical Aggregations. Tactical aggregations are the sum of the parts. If you're running a lead generation campaign, it's total leads created. If you're running an engagement campaign, it's total high-value actions completed. These aggregations need to speak to the core purpose of the campaign and not simply reflect diagnostic metrics. It's important to take time and clearly communicate what the end result of the campaign needs to be and find aggregations that sum up to that.
Unique Metrics. Unique metrics frequently come from other data sources than the channel platforms themselves. Unique metrics seek to show that a program or campaign made a "splash" and produced positive ripple effects. Many times, these are measured as "echoes".
A good example are awareness campaigns that are intended to improve brand affinity. Many channels might run media, but in the end, it's really the affinity scores that need to improve. These affinity scores are the program KPI, and they might be collected in a totally different way than the channel metrics.
Another example could be a member communications campaign that's designed to improve customer satisfaction will need unique metrics at the program level because the media metrics themselves won't tell the story of if customer satisfaction was actually improved.
A KPI ladder is an essential component of a measurement strategy. It helps to align the program with the business goals, prioritize the most important indicators, and evaluate the overall impact of the program on the business objectives. By using tactical aggregations and unique metrics at the program level, marketing practitioners can go beyond channel metrics and answer the critical question every marketing director wants to know: did the program work?