Tell me: Have you ever tried playing darts blindfolded?
Even if you were the world champion of darts, you’d still have a tough time hitting the target, don’t you think?
After all, when you don’t know where your targets are, you can hardly expect to hit them.
Trying to market your IT business effectively without measuring the right metrics is just as difficult.
KPIs, “key performance indicators” are metrics that help you track whether or not you’re achieving your business goals.
When you measure KPIs, you know which marketing efforts are working well and which ones you need to revisit.
And if you’re wondering what KPIs you should track in 2018, you’re going to love this post.
We’ve put together a list of the most important KPIs to measure for your MSP company.
So, let’s not waste any more time.
#1 Sales Revenue
What is it?
Your company’s sales revenue is all of the money you bring in through selling your MSP services.
Why does it matter?
The obvious reason to measure sales revenue is so you’ll know how much money your services are bringing in. But what you may not realize is that you’ll use sales revenue as a foundation for measuring many other figures such as gross profit, operating profit, net profit, and revenue growth rate.
If you aren’t carefully tracking your sales revenue, understanding the profitability of your company as well as your marketing efforts is impossible.
How do I measure it?
At its core, tracking sales revenue involves identifying the actual price per each service you offer, and multiplying it by the number of times you’ve sold the particular service. But naturally there’s more to it. For more information on tracking sales revenue, check here.
#2 Cost Per Acquisition
What is it?
The cost per acquisition is the cost of attracting and converting a new client for your IT business.
Why does it matter?
While each client brings in revenue, the efforts to attract those clients cost money as well. And if those efforts cost more than what revenue the customer will bring in, your business will eventually fail.
Measuring this marketing KPI allows you to make informed, data-driven decisions about how to attract, convert, and service new clients.
For simple numbers, we’ll say a direct mailer campaign will cost $100 to carry out and it will attract 10 new clients. The cost per acquisition (CAC in the image below) would be $10 per client. If these clients don’t offer at least $10 of value (LTV in the image below) to your company, then that direct mailer campaign wouldn’t be worth the cost.
How do I measure it?
To figure out the cost per acquisition of a particular campaign, you total the cost of the sales and marketing efforts then divide that number by the number of new customers acquired. Check out our article here to learn more.
#3 Customer Lifetime Value
What is it?
The lifetime value of a customer is how much he or she will contribute to your company’s revenue over the entire time that he or she is your customer.
Why does it matter?
We already mentioned lifetime value above as it relates to cost per acquisition. It’s important for you to know how much value each client offers so you can determine how much to spend on marketing efforts to win new customers.
Of course, converting a new client costs much more than retaining a current one. If you know your average customer lifetime value, you can start working on increasing it—whether by adjusting your prices, improving your client onboarding process, or making your services more valuable.
How do I measure it?
To calculate a customer’s lifetime value, you can use both historical and predictive data. How much has that client spent so far? How much do you anticipate he or she will spend? For a deeper dive on how to measure customer lifetime value, check out this infographic.
#4 Lead Value
What is it?
Another foundational marketing KPI is the value of a lead referring to how much revenue a single lead is worth, on average.
Why does it matter?
You gather leads every day from a variety of sources, be it email campaigns, direct mailers, trade shows, and more. Perhaps you strike on a goldmine of leads from your latest email campaign. Should you count that campaign as successful?
Well, the number of leads is important. But more important is how much value they provide.
If that email campaign generates a ton of super valuable leads, then you should count it as successful. On the other hand, if all of those leads are poorly qualified and offer very little value, then you might be attracting the wrong audience with that campaign.
How do I measure it?
At the most basic level, you can calculate lead value by dividing the number of leads you have by the revenue those leads bring in. Other factors such as how old the lead is may also factor in. To learn more, read this article.
#5 Traffic-to-Lead Ratio
What is it?
This KPI is the percentage of your website visitors that turn into leads during a set period of time.
Why does it matter?
Measuring your traffic-to-lead ratio is the best way to find out if your website is doing its job and bringing in new leads.
By tracking this marketing KPI over time, you can determine if the changes you make to different pages are effective. Did that new red button encourage visitors to click? Or did the hard sell drive them away?
You can also gauge the quality of traffic that comes to your website. Perhaps that new Google ad you placed isn’t bringing in the right audience for your MSP website.
Understanding your traffic-to-lead ratio will empower you to make real improvements to your website and strategy rather than blind guesses.
How do I measure it?
Choose a timeframe, then find the total number of website visits and divide it by the total number of website leads generated. For example, if 10,000 people visited your website in a month, and you gained 500 new leads, your ratio would be 5%. For more information on this, click here.
#6 Online Marketing ROI
What is it?
Online marketing ROI (return on investment) is a broad KPI; it refers to the return value of each of your online advertising campaigns. Some of the most common types include video ads, native ads (ads that look and feel like the content on the site where they appear), and programmatic ads (banners and sidebars that change each time the page loads). You’ll see an example of programmatic advertising in the image below (highlighted in yellow).
Why does it matter?
Return on investment is the principal metric for measuring any marketing campaign—online or otherwise. But measuring your online marketing ROI specifically can help you figure out which marketing channels are the most successful for your IT business.
If you start off spending $100 each on programmatic ads, native ads, and video ads, you can use the ROI of each online marketing campaign to determine where to put your money. Let’s say the video ads turn out to have the best ROI for the measured period of time.
Instead of spreading your money evenly across channels, you can subtract from less effective campaigns and invest further in more promising campaigns.
How do I measure it?
At a basic level, you can measure your ROI by calculating the total revenue of an online marketing campaign then subtracting the total cost of running the campaign. From there, divide by the total cost of the campaign, and you’ll have your ROI percentage.
To learn more about measuring this marketing KPI, read here and here.
#7 Organic Search Rankings
What is it?
Similar to KPI of online marketing ROI, your business’s organic search rankings could include several different figures. In fact, it might be more accurate to make this its own category of SEO marketing KPIs, including rank for primary keywords, rank for secondary keywords, organic click-through-rate, and more.
Why does it matter?
When was the last time you made a major purchase without first searching online for information? Organic search is a vital channel for any MSP business—which in turn means that measuring organic search KPIs is also vital. You should have a deliberate search engine optimization strategy to help your ideal customers find you online.
And like every other marketing effort, you’ll never know how effective you are unless you measure.
How do I measure it?
Tracking your organic search rankings is its very own animal. For some great information on how to get started, check out this article.
Conclusion
This list doesn’t include all of the marketing KPIs that you might want to track within your own MSP organization—that would take all day. But starting with these foundational metrics will give you the data you need to transform your marketing efforts. No more throwing darts at a target you can’t see; it’s time to take off the blindfold and hit the bullseye.
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