Win more business with better KPIs
It’s no secret that your Web site can turn visitor data in competitive advantage. Web analytics supports this effort this by effortlessly collecting the data you need.
As Avinash Kaushik, publisher of Occam’s Razor wrote: “In its simplest form, Web analytics can be defined as one of the ways to help hone and transform online experiences to help accomplish organizational goals.”
So, which Web site data should you monitor for business success?
Key Performance Indicators (KPIs)
Web analysis professionals use this term often, but we’ve found many business people are not familiar with it. Simply stated, Key Performance Indicators (KPIs) are data-driven measurements that assess whether a business is reaching its organizational goals.
Let’s use the analogy of an afternoon fishing trip to illustrate.
To begin, you know there are some good fish in the lake. You also know that trying different lures and making frequent casts improves your chances of catching the Big One.
So, you’re enjoying a relaxing afternoon on the lake when, suddenly – WHAM – you hook the Big One! You net it, measure it and weigh it, and even take a selfie before you release it to the watery depths. You’re feeling good!
Later, you’re swapping tales with two good friends who also fish the lake. One friend says, “The biggest fish I ever caught was 17″ from tip to tail.” Alas, yours was only 16.5″. The other friend says, “The biggest fish I ever caught weighed 7 lbs.”
The Big One weighed in at 7 1/2 lbs. … and you win!
Tip #1: KPIs won’t work without benchmarks.
If we apply the angler’s tale to the topic of this article:
- KPIs are the measurements of the Big One you caught.
- Benchmarks are your friends’ anecdotal stories.
- Performance compares KPIs to benchmarks and reveals how well you did.
Different business functions have different benchmarks. Production has its quotas. Quality control has its regulations. Finance has its GAAP. What makes these different benchmarks alike is they are agreed-upon goals that everyone in the organization can understand and contribute to.
Tip #2: KPIs must be specific.
The KPIs you use to measure performance should be data-driven indicators of success. Do not succumb to the warm and fuzzy allure of a ‘false positive” KPI.
Here’s an example: You just signed a contract to promote your Web site and attract new prospects. A ‘false positive’ KPI would be: “We need more traffic to our Web site because last year we had a lot of visitors, and last year was our best sales year ever.”
Too warm, too fuzzy.
A better, data-driven KPI would be: “Last year, five out of every 100 Web site visitors completed our contact form. If we increase the number of site visitors by 30%, we’ll increase our prospect count by 150 … and raise our revenue by $75,000.”
Specific, meaningful, and measurable — that’s the difference.
Which KPIs should you use?
There are many types of KPIs you can use. Mapping the wrong KPIs (or too many) is just as detrimental as not mapping them at all.
The result is lots of lovely data but no clear indication if something is really working. Often referred to as noise, this phenomenon was the subject of a 2016 article in the Harvard Business Review:
“Noise is often insidious: It causes even successful companies to lose substantial amounts of money without realizing it. How substantial? Aggregated over the assessments made every year, the cost of noise was measured in billions—an unacceptable number even for a large global firm.”
Web sites serve a myriad of markets … yet all can be grouped into four types:
- Lead generation sites
- Content sites
- Service sites
- Commerce sites
Paying attention to the metrics that are most appropriate to your Web site’s purpose (and ignoring those that don’t) will allow you to create and measure KPIs that matter most to your success.
We’ll explore those different Web site KPIs in another article.
Why is this important to you?
KPIs give business owners the means to communicate and assess an organization’s success to managers, clients, and investors.
To achieve this KPIs must be 1) measurable and 2) applicable to all those stakeholders who can positively affect their outcome.
Finally, KPIs must reduce the amount of noise you experience throughout day. This will allow you to focus on the tasks that truly matter for your professional and personal success.