Peder 5:05 am on May 27, 2009 Permalink | Reply
Tags: , csfs, , , , , measures, objectives   

 

Measure KPIs, not web traffic reports

Web analytics delivers an overwhelming amount of information by way of reports. Much of it is fascinating but the excitement of those reports wanes over time because the information is not used to affect daily business functions. And why should it?! It’s usually not relevant to the business.

Identifying what values to look for and which reports to evaluate represents the biggest single issue for organizations in obtaining real value from web analytics and the daunting array of reports. The creation of reports is often not the problem; the challenge lies in interpreting those reports and extracting the minutiae that has true meaning.

But part of the problem is that web traffic reports don’t deliver much meaning as to how your site or business is doing. Much of the information can be used but it needs to be put in context and related to other data sets or over time.

Is having more visitors to your site a sign that the web site is performing well? It may or may not be. If your business goal is the increase web site traffic, then it is. But that would not typically be a goal for a site. Instead, goals should be part of your business objectives such as generating more product interest, sales or delivering better customer service. Yes, more visitors and pages viewed may be indicators that product interest is up, but perhaps your marketing campaigns are driving unqualified people to your site instead. How they convert and better still compared to last month is a much better indicator. Now include the cost of the campaigns and we get a sense of which one is best to the bottom line.

So, measuring key events over time may be more representative of site performance as it relates to your web site business goals and objectives. Since no web analytics reports directly inform if you are meeting your goals and objectives, you need to build on the values that are given to determine if you are succeeding or not.

KPIs (Key Performance Indicators) can help us do that. Let’s examine how they assist us but first we have to understand how they are arrived at and how they relate to business goals and objectives. There are five components to measuring goals and objectives, each building on the next. They are:

Measures

Raw numbers and data points.

Examples include:KPIs are driven by business Goals BUT… KPIs are constructed from Measures

  • page views
  • visitors
  • keywords
  • pdf downloads
  • Also, non-web numbers such as cost of campaign or PPC (Price Per Click).

Metrics

They are always combinations of Measures expressed as ratios, averages, rates, or percentages.

Examples include:

  • average pages viewed per visit
  • leads per referrer compared to last period
  • conversion ratio of visitors to leads
  • percent new visitors compared to last period
  • length of visit compared to last period
  • online service completions compared to call center support calls

Key Performance Indicator (KPI)

These are simply Metrics which are important enough that they inform us how the business is doing.

Critical Success Factors (CSF)

These are a limited number of key factors or activities that an individual, department, or organization should focus on to be successful. CSFs are specific conditions that measure, or facilitate, the meeting of business goals and objectives within set timeframes.

Examples include:

  • new product development within next 12 months
  • good distribution network in place by year-end
  • new advertising campaign launched within six months.

Goals and objectives

These represent the overall objective for an organization to be viable and are usually set by senior management.

Examples include:

  • increase sales
  • improve customer service
  • optimize organizational support costs.

Creating KPI’s

Identifying which KPIs to measure remains a common problem. By definition, they provide a window into how we are doing as an organization and if we are likely to meet our stated business goals and objectives. But since KPIs aren’t typically intuitively associated with goals and objectives, they are difficult to define.

Critical to the development of KPIs is to recognize that they are driven by business goals and objectives but are constructed from Measures.

KPIs are best determined by first identifying goals and objectives, which are then associated with Critical Success Factors which in turn determine relevant KPIs. However, since the calculation of a KPI is done by using Measures, we begin with them to construct the KPI. Let’s look at an example:

Goal: Increase sales

CSF: Increase leads by 25% within three months
KPI: Conversion ratio of visitors to leads, percentage increase in Contact Us form requests

Now that KPIs have been identified, we can look at the Measures that make up the chosen KPIs. Since the first KPI is a ratio of visitors to leads, we must first find those measures and do the appropriate calculation to obtain that ratio. Secondly, we need to obtain Contact Us form requests and calculate the increase over the past period.

Measures: visitors, leads, Contact Us requests

Conclusion

Web analytics reports are themselves not very useful for determining web site success. Understanding business goals and objectives and establishing KPIs to measure them provides tangible and concrete evidence if we are on the right track and if we need to make changes to the site to improve results.