Meaning of KPI’s and Conversion metrics

Which Kpi’s and conversion metrics to track?

What is the meaning of KPI? It stands for Key Performance Indicators. So, if you focus and monitor Conversion Metrics and KPI’s, improvement in your marketing performance will be almost immediately notable. Effortlessly, as a natural by-product of this practice – increased revenue will follow automatically.

Revenue and KPI’s

As all marketers know, there’s no lack of data to track.

The struggle is not with not having enough data but which insights to pull from the information already provided and how to determine the best KPI’s to track.

Revenue should be a Holly Trinity thread that holds Marketing, Sales and Customer Care teams together. Surprisingly, this is rarely the case – still, most business people welcome the 80′ mantra – “Marketing doesn’t drive revenue. Sales do.”  

Synchronising several KPIs and Metrics to track and analyse trends will increase profits and improve retention and brand image. 

Here we compiled a list of metrics we think are essential to track for success and profit margin.

Conversion Rate

Many studies have looked into the average conversion rate per industry. Results state that the average conversion rate across search networks in most industries is 2.50 -4 per cent. Some industries have a standard of 10 per cent conversion rate. Whatever your current percentile, you can continually improve, and this is why it is so essential to understand the meaning of KPI’s in business fully. 

Conversion rate indicates visitors who have completed an intended goal on your site. Naturally, the higher the conversion rate, the more successful the marketing campaign.

The conversion rate is interchangeable with conversion rate optimisation (CRO). Marketing tactics like A/B testing to optimise service pages or special offers to entice existing customer base are handy tools that help increase conversions. 

How to track:

Follow this is the formula to measure your conversion rate:

Conversion rate = (conversions divided with total visitors) * 100%

Conversion rate

Leads Generated

For example – your website had 100,000 visitors and 6,000 conversions last month; your conversion rate is 6 per cent.

Leads are generated when you attract and convert users interested in your company at the beginning of the buyer’s journey. 

It would be best to have traffic and an exciting way to motivate users to subscribe to your sites, like a newsletter or a special offer in exchange for their email and personal information. Because the general public is becoming increasingly wary and hesitant to reveal personal information, content creators have to continuously endeavour and create higher quality content in the hope to inspire visitors to connect. 

How to track:

To track lead generation, setting up goals in Google Analytics. Google Analytics is a mighty tool that offers many insights into your user.

Understanding what motivates and drives visitors to take action is essential for digital marketing success.


The KPI that directly measures the impact of marketing on revenue is known as Cost Per Acquisition. CPA method is helpful as a determining factor for campaign direction. 

How to track:

The formula used to calculate Cost Per Acquisition: 

Total marketing costs (MCC) / Total customers acquired (CA) = CPA

Order Value

Average order value (AOV) is the average amount spent each time a customer orders and accounts for the sales per order, not per customer. 

It is always easier to sell an extra item per visit than to convert new customers, and with clever marketing, you can also maximise repeat sales.

Another KPI in retail is called UPT, Unit Per Transaction, and sometimes is known as – link selling. A good example for online retailers – If you are an online shop that sells shoes, you can sell a pair of shoes, shoe insoles and leather care cream together and, in this way, effortlessly increase your turnover. 

How to track:

To track Average Order Value: 

Revenue divided by Number of Orders = Average Order Value 

For example, daily revenue is 300 euros, and the site had 30 orders; your AOV is 10 euros.

Customer Loyalty/Retention

Depending on the industry you are in and on which study you believe, obtaining a new customer is more costly – anywhere from 5 to 25 times -than holding on to an existing one. 

Because it makes a lot of sense not to spend time and resources finding a new client – you have to focus your energy on keeping the one you already have happy. Frederick Reichheld of Bain & Company (the inventor of the net promoter score) shows an astonishing statistic – increasing customer retention rates by 5%, profits increase by 25% to 95%.

Peter Drucker famously said:

Because the purpose of business is to create a customer, the business enterprise has two – and only two – basic functions: marketing and innovation.

Loyal customers spend more money and establish long-lasting relationships with the customer base, which is why we’re seeing loyalty programs taking centre stage as we are entering 2022.

Customer retention

How to track:

The way to measure customer retention is Customer Churn Rate. A high Churn Rate indicates that your product or service does not meet customers’ needs and will be looking elsewhere. So, applying the CCR is a straightforward method to understand if your customers are happy.

Use this formula: 

Lost quantity / Number of “x” at the beginning of time = Churn

Lifetime Value (LTV)

Lifetime value is the revenue business makes from a customer for the duration of the relationship. So, this KPI is crucial to track monitor for any subscription business.

Netflix is a perfect example of lifetime value. The Netflix subscriber stays with them for 25 months on average. With a monthly subscription rate of 10 euros, we can calculate a lifetime value of 250 euros. 

How to track:

This formula to calculate LTV, use :

LTV = Average Revenue Per User (ARPU) x 1/Churn


ROI stands for Return on Investment. It is an excellent way to determine what to spend on your marketing budget and a good way for marketers to prove that marketing contributes to the company’s bottom line. 

For instance, It is well known that there are several challenges in calculating ROI in marketing. But, not to complicate things, we will present the basic formula here.

How to track:

Tracking ROA:

(Gross Profit – Marketing Investment) / Marketing Investment

For example, if you buy 1000 euros worth of Facebook ads and generate 2000 euros in sales, your return on investment is 100 %

Media Mentions

In a world where customer service is the new marketing, media mentions are becoming a significant KPI. So this is an excellent new skill for marketers to develop.

It is not enough to understand how to find the mentions. But also how to monitor and respond adequately.

Because media mentions can be positive or negative, tracking them and responding is essential for maintaining brand reputation. If your company or your service is mentioned in a news article, you can post it on your social media, for example. Or suppose you had customers review.

In that case, use an opportunity to engage directly with the customer – either thanking them or rectifying the shortcomings.

media mentions

How to track:

Standardise and track your mentions weekly or monthly. Tools like Moz, BuzzSumo or SEMrush Brand Monitoring will automate your tracking task.

Google Alerts is a good choice for more minor operations on a tight budget. Setting up recipes on IFTTT is free. Some of our favourite applets include tracking mentions on Twitter and Reddit.

Total Traffic

Total traffic is a significant parameter as it gives a panoramic view of the health of your website, and being able to observe more extensive picture patterns will emerge – enabling you to fine-tune your business performance. 

How to track:

Log in to Google Analytics > Acquisition > All Traffic > Channels to measure total traffic.

Email Subscribers

Email subscribers are the bread and butter for any company. Not only that, but subscribers are often the most engaged users.

Increasing your email subscribers will lead to higher engagement, and higher engagement always leads to higher sales.

How to track:

Create form submissions in Google Analytics. 

Behavior > Events > Overview

Event Category – click on Form, and you can view the number of impressions and conversions.

We understand tracking and analysing KPI’s is complex, overwhelming and time-demanding. So if you prefer to focus on other aspects of running your business, you can engage us to help you grow! Get in touch 

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