March 13, 2012

Active and Passive KPIs in a Data driven marketing campaign

So, yes, you probably read my post on data driven marketing strategy. If not, I suggest you start there. However, if you already read it, just continue reading. This blog post is about KPIs. Most people know about setting goals, hardly anyone sets them correctly, but they know that there are such things called goals. Goals are evaluated at the end of a certain time frame. The metrics, that generally qualify whether or not you are on the right track, are in layman’s terms called KPIs. In this blog post I would like to split the concept of KPIs into two different usage classes. Passive and active KPIs.

1. Passive KPIs for Data driven marketing campaigns

A passive KPI is the classical indicator we use in order to say whether or not we are on the right track. It might be as simple as the nominal number of visitors to a website, into being quite complicated calculations of changes in frequency of those same visitors. Regardless of what they measure exactly, they are measured and compared with a set of goals you have defined at the beginning of the project.

I like to call these passive KPIs as they actually only tells you whether or not you should do something. You do not use them for anything else than evaluation of the value you have created. The KPIs in themselves do not create value. They simply measure, and help you change whatever you are doing accordingly.

An Example of conversion optimization
In a data driven campaign this might mean you publish one set of copy sentences to your landing page. Your metrics tell you that your conversion rate (which in this example is a KPI) is 2% whilst your goal was 3%. Your metrics also tell you that you have a normal bounce rate of approximately 50%. This indicates that people are not converting, however, they seem to be interested in looking around. Regardless, you are not obtaining your goal by hanging around and so you need to start working on improving.

You think for a while and come up with the hypothesis that the page titles are the problem and that they should be tested versus a set of other sentences. You think  again, take out your notepad – yes, you are analogue for a while – yes, cause you’re an anally nostalgic copywriter with narcissistic tendencies – yes, I am getting out of line – yes, I am not writing what I should be writing – now, stop it Jesper – well, ok  – and start writing the new sentences.

You come up with a set of changes and set up your A/B test with Google websiteoptimizer. You find after a while that your conversion rate is slowly getting better with the new copy, and so you decide to implement it. You then implement changes after changes after changes until you have killed the goals you and your bosses or clients have set up and you become the company hero.! YEY.

So, that’s an example of how to use passive KPIs and what they represent in a data driven marketing campaign.

Oh… sorry… what was that? Landing page optimization is not marketing? ….

please leave – click here to exit!

2. Active KPIs in a Data driven marketing campaign

Now, whilst passive KPIs are there to help you know if you are on the right track or not, active KPIs are there to give you additional value. Whilst passive KPIs are metrics for internal use, active KPIs are there for external use.

A perfect example of an active KPI is a user rating that generates a toplist. The toplist help your users in making a decision about the service they are to choose. Another example can be how many complaints a certain product has received or how many customers choose to buy that product in a choice of three specified ones.

These KPIs help your customers and if you select them properly and display in a logic way, they can make all the difference for you.

Take the example of this statement:

“People like our products.”

and

“1 million people like our products.”

The first one lacks the Key Performance Indicator that the second one have. In comparison, I would say that the second one enables me to say that YES, your product is popular, whilst the first one still makes me wonder.

The point I am making is that by using KPIs that are changing constantly, you can create a lot better copy and thus also stories for your users to consume, believe, share or buy into.

The point I am making is that by using KPIs that are changing constantly, you can create a lot better copy and thus also stories for your users to consume, believe, share or buy into.

The example of the toplist is even better. As the data changes, the purchases in your store will change as people tend to conform to what other people do. Some marketeers use this for “evil doing” as they amend the top lists manually (expert, panel or simply made up ratings) to meet their profit desires. However, if used properly this doesn’t have to be the case.

You can compare similar products and display the active KPI that users actually have generated that meets your purposes. If all else fails and you want to sell your most expensive product then use “check-out value” as the KPI you display in the toplist. “People who have made the greatest purchases bought:” What you compare in your toplist can be changed, but please do not change the correctness of your data. That will only jump up and bite you in the butt eventually.

There are other examples of active KPIs. Let’s say you are running a Facebook page, then use the number of Likes in the previous post in the next one: “…last post was liked by 15673 people, let’s see if we can beat that.” Perhaps pointless to the message you are trying to convey, however, not to the reach of your message.

Does it sound like I am rambling on about something that is self explanatory? YES!!! I am. But why is it that we still see campaigns, communication, landing pages, websites etc. etc. from companies that turn to the creative agency instead of their inbound marketing team when they fail with yet another marketing campaign? In your metrics, data center, CRM, e-mail database, on your servers. There are thousands shapes and forms of data.

What you decide to do with the data is then limited to your own creativity.

What you decide to do with the data is then limited to your own creativity.

I would like to meet a creative director who is as interested in data mining as they are in what the company is trying to communicate, their history and their product qualities. I would like to meet a copywriter who’s first question to the client is “So, what’s your data set like? Any cool KPIs I can use to spice up my punch line?”

Still a long way to go before we are there

But no. Most companies still don’t care and most schools still don’t educate people to think about something simple as this. Thus, we are stuck with BIG IDEA marketing that either fails more or fails less. We are stuck with CTRs below 0.3% on banners. We are stuck with conversion rates on landing pages of 3%. We are stuck with creative video formats that don’t lead to sharing between users. We’re stuck.

As usual I am not sure if I made any sense or not. But please start thinking in terms of active and passive KPIs and your data sets will become a lot more dynamic and usable when creating your communication concepts.

5 Comments
  • Sara Ö, March 13, 2012 Reply

    Oh yes, he's BACK!

    A-W-E-S-O-M-E!

    • Jesper Astrom, March 13, 2012 Reply

      Ha ha... :)

      Really wish I had you in the project this year...

  • Johan Mogren, March 14, 2012 Reply

    Great post! Touching a lot of gamification with those active KPIs. Ideas are popping, like it.
    (if I still was a CD, I would be that CD...)

    • Jesper Astrom, March 14, 2012 Reply

      YEY! Found one!! :)


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