What Is a Key Performance Indicator?

A key performance indicator (KPI) is a specific, measurable value that a business uses to track progress towards desired goals. 

What Is a Key Performance Indicator and Why Is it Important?

Key Performance Indicators (KPI) are values used to measure progress toward a goal. KPIs should be specific, timely, critical to the success of a project, and used to drive informed decisions. 

Many businesses rely on progress towards goals as a means of success. To reach those goals, businesses must know their strengths and weaknesses and plan accordingly. KPIs can help define areas to improve, creating clear and measurable data that a business can refer to. 

Search engine optimization (SEO) requires very specific goals. There are many variables in an SEO campaign, and it’s important to have a system in place to show the results of a campaign. KPIs can communicate these successes as well as provide alerts to any areas that need improvement.

KPI vs. Target vs. Goal

Too often, people confuse KPIs with targets or goals. A goal is an objective that a business tries to achieve. For example, “improving sales” is a goal because it is generic and may be defined in many different ways, yet it is attainable. 

A KPI is used to measure progress toward a goal. To improve sales, a business might look at lead conversion on their website to see how many customers they are converting. The KPI (lead conversion) is measurable, specific, and helps guide the business in the direction of improving sales.

A target is a benchmark that KPIs need to achieve. Continuing with the example, the lead-conversion KPI needs to reach an industry benchmark of a certain percentage to be successful.

SEO is a relatively small part of marketing, and it is hard to know if any part of an SEO campaign is contributing to increased sales. However, there are several KPIs to determine if SEO is working.

Benefits of KPIs

Besides generating and interpreting data related to success, there are many benefits to using KPIs in SEO. Some common are: 

  • Improved tracking and monitoring;
  • Early problem solving;
  • Improved flexibility;
  • Better communication.

The benefits of KPIs in SEO mainly revolve around measuring success and effectiveness. For example, a business could dominate the Search Engine Results Page (SERP), but that doesn’t mean the business has lead conversions.

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How to Create a KPI

Businesses have different KPIs because they all have different goals. However, they can all start at the same place — identifying the correct metrics to track. An SEO audit can help prioritize a website’s assets and can be the start of building KPIs. 

KPI Metrics 

A KPI must correspond to a specific, discrete goal. In SEO, common goals include:

It’s important to select metrics relevant to your goal/goals. Many businesses will pick general metrics that others use, only to discover that the KPIs are not helping their strategies. Common KPIs include:

  • Organic search traffic;
  • Leads or conversions;
  • Bounce rate;
  • Google indexed pages;
  • How many pages a user visits during a session;
  • Average session duration;
  • Page load time;
  • Crawling errors;
  • An increase in links to a certain page;
  • Click-through rate (CTR).

Leading vs. Lagging Indicators

To create an effective KPI, a company must determine what kind of indicators to monitor. There are two categories of indicators:

  • Lagging indicators usually measure past performance or results. They are easy to measure because they’ve already happened, but hard to improve. An example of a lagging indicator could be a company’s return on investment. 
  • Leading indicators measure future performance, which is harder to measure, but can be improved easily. An example of a leading indicator could be time spent on a website. 

Both types of indicators can influence one another. A leading indicator, like time spent on a website, could create higher conversion rates, which is a lagging indicator. Knowing the difference between these two indicators can help track the right metrics and ultimately reach specific SEO goals.

SMART Strategy

One way to ensure KPIs are as effective as possible is to use the SMART strategy. This acronym stands for “Specific, Measurable, Attainable, Relevant, and Timely.” An example of a SMART KPI could be:

“A successful SEO campaign will indicate a 4% CTR through organic search in three months.”

This KPI displays a specific metric to track, a target to hit, and the period within which to attain it. It is also relevant because a 4% CTR is the industry benchmark, according to Google Adwords.

Measuring KPIs

Measuring the performance of a KPI is an important step. Each KPI must have specific parameters, such as a time frame and quantifiable objectives. In the example above, if the KPI didn’t have a time frame, it can’t be measured accurately. It could have a 4% CTR, but that could be in a year instead of three months. 

The same goes for the objective. If instead it read, “a successful SEO campaign will indicate a good CTR in three months,” there is no measure of success. Technically, a 1% CTR is successful. Setting parameters ensures that KPIs will meet goals in a timely manner.

Maintaining KPIs

Tracking and monitoring KPIs is important since they are one of the most effective measures of success. Depending on the KPI and the time-period, monitoring could happen daily, weekly, or monthly. Whichever route a business takes, consistency must be a priority. 

Reviewing KPIs often will also help determine if they need to be changed. SEO is always evolving, as are its goals. A KPI’s flexibility allows it to pivot as needs change. Instead of measuring website conversions, the real success factor could be the click-through rate on social media. Analyzing KPIs regularly could lead to new insights, like shifting focus to a new SEO goal, or updating processes to create better outcomes.