Posts Tagged ‘KPI’

Key Performance Indicators and Website Goals

September 25, 2008

 September 25, 2008

“Key Performance Indicators & Website Goals”

Key performance indicators (KPI’s) of a website are important; they help build, determine and analyze the effectiveness of a website relative to the websites goals. In other words, you need a way to measure if what you are doing with your website is helping your firm achieve its goals (KPI’s are those measurements). How do you use these measurements appropriately based on your firm’s goals? What KPI do you use?  Here we will explore, some of the guidelines surrounding key performance indicators in relation to a firms objectives.

In order for KPI to work effectively in relation to firms goals, the KPI’s should be quantifiable and reflect the firm’s goals, and secondly the firm’s goals should be specific.  An article found at Management.about.com, (http://management.about.com/cs/generalmanagement/a/keyperfindic_2.htm), distinguishes a good key performance indicator from a bad one by using real business based examples. Overall, the findings suggest that, any goal set, must be specific, “increased sales” is too broad a goal. There are a number of smaller yet just as imperative goals that lead up to increased sales such as: increased website traffic, returned visitors, reduced complaints, or maintaining web presence and user availability.  Similarly, if a KPI is to be of any value, they must be quantifiable. The article also, (http://management.about.com/cs/generalmanagement/a/keyperfindic.htm) explores poorly set key performance indicators and effective ones. It suggests that “Being the most popular web-based company” will be useless as a KPI unless there is a way to measure the company’s popularity or compare it to others.  It is important to remember that what you are measuring can actually be measured numerically.

Julie Mason is the General Manager for Kellysearch.com, a comprehensive online buyers’ guide and vertical search engine, with over 2 million companies listed worldwide. In her blog, (http://www.searchenginejournal.com/practical-guide-to-website-key-performance-indicators-kpis/5692/), she gives some direction as to how a company can determine what KPI’s it should be using.  She also advised that if certain KPI numbers don’t add up with your websites goals, there are areas of your site that need improving. 

Certain KPI’s will be used to measure certain goals, based on the firm’s purpose, size and scope. Let us observe just some of the more commonly used measurements that are available.

          Visitors per Conversion, Lead or Order: This is a basic calculation: leads divided by site visits. This is a primary metric to watch as changes are made to the site (http://www.clickz.com/showPage.html?page=3382981)

          Cost per Lead (CPL): CPL defines how much revenue a publisher receives when he creates a lead for an advertiser. For example, the publisher may place an ad for an investment site on his website. If a user clicks on the advertisement link, she is directed to the advertiser’s website where she can sign up for an investment account. If she chooses to sign up, a lead has been created and the publisher is paid a certain amount based on the CPL. (http://www.techterms.com/definition/cpl)

          Stickiness: measures the  level of involvement and length of time a visitor spends in a specific content area ( http://www.searchenginejournal.com/practical-guide-to-website-key-performance-indicators-kpis/5692/)

          Percentage of New Visitors: this ratio tells you how many people out of all your prospects were new to visiting your site, it is calculated by the equation

New Visitors/Unique Visitors = Percentage of New Visitors

(http://books.google.ca/books?id=g3sWkbuPTQcC&pg=PA114&lpg=PA114&dq=how+do+you+measure+the+percentage+of+new+visitors+to+a+website&source=web&ots=LLo_Aiyf6N&sig=1ySXNpzO1kAFbtvzUXUNiuy-m-k&hl=en&sa=X&oi=book_result&resnum=3&ct=result)

 

Let us now put one of the KPI’s to use in an example. If for instance, you are an independent music artist and you have just set up your website, maybe one goal of your site is to get as many people as possible to join your email list. The question then raised is how would you use KPI’s to see if your website is achieving this goal?  Well, you could use the visitors per conversion measure. If 100 people visit your website but only 5 subscribe to the email list, this could indicate that there is a problem with this area of your site. Perhaps, there is content on the site that users find unappealing or invasive, or there could not be enough engaging content encouraging the user to join the list. Or possibly, this part of your site is hard to navigate or confusing, the layout could be poor, or it could require that users provide too much personal information. On a side note, as a website visitor, personally, I would want to join an email list, because by doing so I will get something in return, which I think should be taken in consideration by any organization wanting to create an email list.  

 

Those are just some of KPI measures that were found across a number of different articles and websites. One blog in particular located at http://www.kaushik.net/avinash/2008/09/rules-choosing-web-analytics-key-performance-indicators.html, is a great read concerning KPI’s. In this blog Avanish (the blog writer), posts what he thinks are the most effective KPI’s to use, eight tips to use KPI’s effectively, and accompanies his opinions and reasons with great graphs and charts. Avanish states that one of his favourite KPI’s is “Days & Visits to ‘Purchase’”. He comically compares consumer shopping habits to their dating habits.  He states whilst referring to people’s shopping habits, that, “Life rarely is about one night stands. People don’t behave that way. We like to take our time”.  The “Day’s & Visits to ‘Purchase” measure basically counts how long it takes for a person to complete and outcome on your website, with that outcome most commonly being a purchase.

 

 

Avanish also suggests the following KPI’s as most effective: average order value, visitor loyalty & recency, and task completion rate. For anyone considering the application and use of key performance indicators, Avanish’s blog is definitely insightful.

Determining which KPI’s to use will be based on the purpose and goal of your website. It is important to keep in mind that goals should be specific, and note that they will change over time as your firm gets closer to achieving its goals. Also, KPI’s should be measurable, and relevant to the firm’s goals.  Firms should start to see results if the KPI matches the goals and if the results are analyzed effectively.