KPIs are essential in any business, but digital companies live and die by them. Following the right ones can lead to better spending and better performance. On the positive side, everything digital is trackable, leading to data overload. So understanding early in Digital Due Diligence which KPI's the business is focusing on and how they are tracking and reporting should be a key focus.
When Private Equity and Venture Capital companies are carrying out due diligence on an initial investment deck, they should check that the company is doing the basics in the first review, and if missing, how do they think about the concepts? Does the company talk about last click tracking or attribution modelling, lifetime value vs single purchase revenue?
Every company approaches data and metrics differently, and there is no one way. Still, ensuring the company has a firm grasp of data and uses it to make data-driven decisions is vital. Data should be at the centre of the company, used in acquiring customers through all touchpoints in retaining them.
Question: How are the KPIs analysed, reported, and executed, allowing the company to improve its marketing and the company continually?
KPIs in Acquisition
Methods companies can use to acquire customers digitally; PPC (pay-per-click) advertising, SEO (search engine optimisation), social media (natural and paid), affiliates, retargeting, influencers, and the list goes on. Where each channel fits in the overall conversion path, followed by understanding each channel, should be the initial focus of Digital Due Diligence.
If, for example, a company is using social media for brand awareness, the KPIs would look very different from a brand PPC campaign which is all about direct response. During digital due diligence, it is vital to understand from the company what they are focusing on: If a brand awareness campaign - (top of the funnel). KPIs should focus on the following:
Traffic to website.
The bounce rate of traffic.
Time on site.
Pages viewed.
Goals set (for example, sign-up for the newsletter and create a free account).
A direct response campaign (Retargeting or Brand PPC) would focus on conversion, knowing that the branding awareness campaigns had already built a desire for the service/product.
During Digital Due Diligence, delve into the metrics monitored and the reporting tools the target company uses to report and drill down into results that drive the actionable decisions. Understand how the team interprets these results and implements changes across the campaigns.
Tracking Channels Correctly
How is the company managing data and tracking; it can be that they track too much data (data overload), or the monitoring could be more robust and consistent. Another critical question is does the company trust the data (and can you?). Over the years, data can get dirty when mixed from different sources without a single point of data truth. Or it could be that they need to ask the right questions. We request, early in due diligence, how they track campaigns and what reporting they use daily, weekly and monthly when launching a new marketing campaign. Do they have a critical set of questions to be answered? Alternatively, they might have built a data dashboard to analyse results, but what information is focused on and what questions does this data answer?
Analysing, Reporting, Actionable Decisions
It is all about the data and the tools the company uses to analyse. Alongside this, ensure they ask the right questions and make impactful decisions to improve campaigns and business.
As well as understanding digital marketing channels, the data needs feedback on retention and loyalty models. Linking the data allows companies to optimise campaigns to lifetime value and understand which channels bring in customers, not just leads.
KPIs in Retention
Customer retention is about ensuring your acquisition marketing budgets perform. Understanding how a company retains potential leads or customers ensures that marketing money is well-spent. It also builds the stickiness of a product and offers.
Key KPIs (Note: These KPIs will be different by company. These are considered the basics of making actionable decisions).
The time between repeat visits.
How often do they visit the platform?
How often do they order/purchase?
Interaction with marketing materials - emails, ads, search, natural and direct.
Time to loyalty - At what moment does a customer become an advocate and loyal to your product - the moment they can almost stop marketing to them?
Loyalty programmes - how are they using this channel?
Customer segmentation - How do they use this to develop customers?
VIP - Do they offer different services to key clients?
Prediction - can they predict who will be a VIP client in the future.
Standard lifecycle campaigns; abandoned basket, welcome programme and lapsing customer campaigns.
Companies will be at all different stages, but during the digital due diligence audit, we look to understand where they are, their current plans and how they are thinking about these questions and do they have the capacity to develop robust KPIs, reporting and then take actions based on the data.
Technology.
KPIs for technology focus less on gaining or retaining customers but on ensuring they have a good experience and the business can scale with the available technology or have the plan to build the technology they need for growth.
KEY TECH KPIs
Uptime
Security
Redundancy planning
Tech support
Stress testing
Additionally, if you can get a view of the tech roadmap and the speed and rollout of new services, it will give an idea of the scale of the tech team and the platform's robustness.
During due diligence, the fundamental understanding of tech happens with a deep dive into the tech stack and knowledge of how its entire architecture development, the technology supporting it and the roadmap for progression.
FIND OUT MORE
As part of the work Simon Hall does in Digital Due Diligence Reports and Audits takes into account all of the above areas or can focus on critical elements. Please Email Simon Hall directly to find out more information.
To discuss a project further, don't hesitate to contact us here.