A KPI is not always an average, ratio or percentage – sometimes raw numbers are betterMetrics understanding June 22nd, 2008
Key Performance Indicators (KPIs) are used throughout organisations for defining success. They are particularly essential in web analytics due to the plethora of data collected. In fact without KPIs, it is easy to become overwhelmed. So once you have set your overall web site objectives, use KPIs as the metrics to benchmark your progress. By definition, these are a small subset of “key” information points taken from your web analytics reports.
A prerequisite for benchmarking is having KPIs that are in context and temporal. So for example, saying “we receive 10,500 visitors” is a piece of underlying data that raises more questions than answers. However saying “our new visitor acquisition was up 10% week on week” is a powerful KPI placing the metric in context (new visitors have increased) and is temporal (over the past 7 days).
While most KPIs will be averages, ratios or percentages for this very purpose, it is sometimes more insightful to use raw numbers. Why? Because the primary purpose of a KPI is to drive change. So if your KPI conveys the message more clearly and has more impact as a raw number, use it. A good example of this is when money is involved. Everyone understands $$$ and this is always a powerful rationale to change something. However, always keep your KPIs temporal.
Even if your web site is a non-transactional site i.e. you don’t directly sell anything from it, you should always monetise your goals. This enables you to estimate what your web site is worth but also put into context how much it costs you to maintain it.
Example raw number KPIs include:
- Our web site lost 15 orders yesterday because our e-commerce server was down for 34 minutes
- We lost $10,000 in potential revenue last week because our booking system does not work for visitors that use Firefox
- We spent $36,000 last month on PPC keywords that did not convert.
Clearly knowing if any of these numbers are increasing/decreasing as a percentage, or what fraction of the total they represent is important. However, the impact of these raw numbers, particularly when in monetary terms, is far greater at obtaining action and therefore should be the KPI.
What KPIs drive change in your business?
Beyond the obvious use of sales data, form submission and banner click throughs, most organisations struggle with defining their KPIs. Those listed are clearly imporant metrics but they are also very black and white – a visitor either converts or not and so this tells you nothing about how close that visitor came to converting or what level of engagement they achieved whilst on your web site. Therefore, what other KPIs do you consider the most effective at driving change within your organisation?