The importance of understanding and defining the correct KPIs

Imagine yourself as a stockholder and learning that the project you put money into has become the Fastest-Growing App Ever, reaching 100M users in a week (AKA Threads).

Woohoo!! Next step, google what yacht to buy.

But what if I told you that the number of daily active users fell by 70% in less than a month. Not everything is rosy anymore, right?

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This is just one of countless instances when choosing the wrong KPIs can lead to poor judgment or a skewed perception of a project or organization.

Knowing how to read the information correctly allows us to make decisions with deeper knowledge.

Any initiative, campaign, or business must begin with clear goals in mind. It is impossible to determine whether we are doing it well, poorly, or meh without specific objectives. We will only continue to rely on our perception.

After the goals, come the Key Performance Indicators (in another article we will talk about the differences between metrics and KPIs).

Albert Einstein said "Everybody is a genius.

But if you judge a fish by its ability to climb a tree, it will spend its whole life believing that it is stupid." A good way to understand the importance of how we measure and analyze things.

More often than I'd care to admit, I've seen all campaigns measured using the same KPIs. This is a significant error that leads to poor choices, which means wasted money.

Speaking specifically of the digital industry, I have seen Fortune 500 companies applying the same KPIs for all their campaigns, huge mistake!

Imagine measuring the success of a Brand Awareness campaign by ROAS, CPA, or Revenue.

Or the other way around, I have seen hundreds of times marketing agencies focusing on metrics like Reach, Impressions, CPM, or CPC for Performance campaigns.

If you are a client who does not know how to define the correct KPIs, they could sweeten your ear by showing you these numbers in green and you would leave the meeting delighted. But deep diving a little more, if the goal of the campaign is to increase sales, how significant is it that they have decreased the cost per click or CPM? Most likely none or very little.

One crucial step in the process where many executives frequently fail is the proper formulation of KPIs, both to comprehend tasks that are internal and external.

To sum up, the first stage is to identify and comprehend the project's or company's objectives.

Based on these objectives, define the goals that will dictate its success.

After defining the goals, we must ask ourselves "What are the metrics that will allow me to better measure these goals?" Voila, those are your KPIs!

I hope that this brief explanation has given you a better understanding of the significance of accurate data analysis and realize if it is necessary to restructure the way you were measuring your projects.

Correct KPIs lead to better choices!