Advanced Web Metrics

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?

Finally after 18 months I am excited to announce that the book has been published by John Wiley & Sons, Inc and is now available from Amazon and other outlets. The book started shipping on March 17th (coincidentally my birthday!) and just made the SES New York conference. Lucky for me as it sold out on the first day thanks to Sharon Preiss of Mobile Libris for her promotional work there.

Note, I will be hosting a launch party on Thursday April 24th in London. If you are interest in web analytics, and of course Google Analytics specifically, it would be great to meet my potential audience. If you would like to attend, please email me at: .

Why should I buy the book?

If you have an interest in measuring the success of your web site and you have heard of Google Analytics, then this book is aimed at you. The purpose is to help you drive your business and help you make money from your web site. The content covers the whole spectrum of web analytics using Google Analytics - from initial measurement planning considerations, to GA best practice implementation, advanced configuration, hacks (workarounds), KPIs and real world usage, including analyst tasks such as identifying poor performing pages and funnel optimisation.

Who is the book aimed at?

The book is aimed at a broad audience - essentially anyone with an interest in making their web site successful. That includes website owners, marketers, web designers, developers, content creators, PR departments and all the various intermediaries. It’s about measuring for success (the title of the first section) and applies best practice techniques on how to do so using Google Analytics.

It’s a jumpstart for any business to get up to speed on web measurement but is also for experienced marketers and webmasters to go deep into understanding how to track engagements and how to optimise a website using Google Analytics. There are approximately 178 images to illustrate ideas, analysis and to show example reports from real-world sites. Where possible I have been consistent with example images in order to maintain a coherent story for the reader to follow.

OK, so give me some details on the content…

Spanning over 353 pages across 11 chapters, the content of the book is written entirely for the latest Google Analytics tracking code (ga.js) and is split into four key sections:

• Part I - Measuring Success, is an overview of why understanding your web traffic is important to your business and covers different data collection methodologies (page tags and log analysers), data accuracy considerations and where exactly Google Analytics fits in.
• Part II - Using Google Analytics Reports, explains how to navigate and use the Google Analytics interface and includes 10 Top reports to whet your appetite and begin the analysis of your website.
• Part III - Implementing Google Analytics, is the best practice installation and configuration guide detailing how to track all online marketing channels, Flash events, banners, file downloads and more. There is also an advanced section entitled Google Analytics Hacks featuring implementation techniques not documented elsewhere.
• Part IV - Using Visitor Data to Drive Website Improvement, is the largest section of the book. It describes how to build a culture of measurement in your organisation from objectives and key results, to key performance indicators. This is followed by a chapter dedicated to real-world tasks that covers optimising checkout systems, pay-per-click campaigns (including AdWords), SEO, and e-mail marketing efforts. There is also an introduction to multi variate testing.

Downloads

You can download the Table of Contents, Chapter 1 and the book Index from here or order directly from Wiley (US and Canada only) or Amazon.com. If you use a different Amazon country, simply edit the .com part of the domain from the link accordingly.

Have you read the book?

If you have already had a chance to read the book, please share your own perspective via comments below. I would be deeply appreciative if you could consider writing a review for the book on Amazon. Books like this live and die by their Amazon reviews and I am prepared to take the risk - I hope I don’t regret saying that!

Some background information…

Often web analytics data can be extremely revealing - I have seen conversion rates increase ten fold as a result of web site changes brought about by such data. However as the analyst, you will know that interpreting the data is only half the story. You also need to communicate this story effectively across your organisation in order to get the buy-in required for the wholesale changes you may be proposing. You do this by creating internal “stakeholder” reports. The report is a very abridged version of your web analytics reports, usually summarised in Powerpoint and/or Excel and known as a Key Performance Indicator report (KPI Report).

There are literally dozens (if not tens of dozens) of possible KPI values to include in such reports and Eric T. Peterson’s The Big Book of KPIs lists just about all of them. The trick is to only select a handful relevant to each of your particular stakeholders i .e. don’t show all stakholders, all the KPIs - its too much information that will result in a loss of impact.

An example KPI report may include:
• Average conversion rate
• Average order value
• Average per visit value
• Average ROI
• Percentage revenue from new visitors

Note there are only 5 KPIs in this report, which is entirely acceptable and even desirable.

New Customer on First Visit Index KPI

Definition: What is the likelihood of a new visitor becoming a new customer on their first visit?

This is a key question many Marketers and E-commerce Managers (usually the same person!) are asking themselves. For example, should they be investing their time and effort in attempting to get their new visitors to convert first time i.e. emphasizing calls to action in their marketing efforts and page content? Or should more engagement and relationship building methods be employed?

Figure 1 - revenue by visitor type

Figure 1 is an example web site that shows a high proportion of its revenue is generated by first time visitors. But how does that relate to the number of first time visitors to the web site? The New Customer on First Visit Index KPI can tell us this:

Figure 2 - %transactions from new visitors (click for new window)		Figure 3 - %visits from new visitors (click for new window)

For this web site, the numerator is taken from Figure 2 and denominator from Figure 3, the value is calculated as:

New Customer on First Visit Index = 62.50 / 77.20
New Customer on First Visit Index = 0.81

Interpretation for the New Customer Index KPI

• A value of 1.0 tells us that a new visitor is equally likely to become a customer as a returning visitor.
• A value of less than 1.0 indicates a new visitor is less likely to become a customer than a returning visitor.
• A value of greater than 1.0 indicates a new visitor is more likely to become a customer than a returning visitor.

For the example web site (New Customer on First Visit Index = 0.81), a new visitor is less likely to purchase than a returning visitor. This is not surprising as the average order value KPI is high (£1,315.99). Considering this, it is therefore surprising is that the New Customer on First Visit Index is so high. This indicates that the value proposition and other on-site factors such as trust, page content quality etc. is very high for this web site.

Conclusions

Q: What is the likelihood of a new visitor becoming a new customer on their first visit?
A: For this example web site, a visitor is slightly less likely to purchase on their first visit.

However, the emphasis is on slightly. Conventional thought would be that such a high value item would require multiple visits for the potential customer to be convinced to purchase. In this example, it appears the visitor has already made up their mind they are ready to purchase (perhaps there is a strong brand influence) - they just need a quick, easy and trustful source to purchase from.

So the Marketers and E-commerce Managers should indeed invest their time and efforts in emphasizing calls to action in their marketing efforts and page content.

What do you think? Do you have a KPI for your organisation that has not been documented elsewhere? Please share your thoughts via comments.