Vlad and Gus, forensic web analysts from the Web Detective Agency, are in the office working out how to create some KPIs that will match their clients’ business objectives.
Gus: Hey Vlad, we have been helping our clients work out what’s been going on on their website for ages now, but how many of them have actually got a clear set of website KPIs for their business?
Vlad: Most have, but some haven’t. But each business will have different objectives
Gus: Correct, but there are some common business models, like e-commerce, lead generation, advertising, and customer support, where the KPIs are likely to be similar.
Vlad: So for e-commerce sites, what would the KPIs you’d look at be?
Gus: The list would go something like this:-
- % of new to returning visitors
- Bounce rates on key pages
- Referring websites
- Search keywords and phrases
- Conversion rates
- Average order value
- Sales per visitor
Vlad: OK, OK, but I don’t believe that each business, whatever model they fall into, would want to use exactly the same set of reports.
Gus: No, you’re right, and that is why if we are going to help these guys, we need to show what they should be measuring, specific to their business
Vlad: I think I may have seen a few models that could help us, like those that Petersen, Jackson, Sterne and Kaushik have come up with
Gus: What can these models show us?
Vlad: Well, before looking at that we need to understand what is involved in the creation of a KPI.
I remember Jackson talking about a “core score” – you know, a measure of the whole organisation’s efforts. He talked about the positive effect on the UK Prison Service when it moved from measuring itself on the number of escapees to judging its effectiveness in terms of number of repeat offenders.
That switch meant that the organisation considered itself as part of a system, rather its role within the system.
Gus: That’s a good example, but most of our clients are in the private sector where being judged on their revenues and share price is the *only* number they care about.
Vlad: Yes, of course, somewill see the success in those terms, but think about a goal like “the creation of happy customer”. Creating lots of happy customers creates great financial results for the organisation, but also if you unpack the term ‘happy customers’ you’ll see there are lots of hard measures a client would need to monitor and manage – levels of repeat business, customer satisfaction, loyalty and so on.
And that’s my point, you might have a strategic goal, but in order to succeed at that objective you need to have a good number of operational or intermediate goals as well.
Gus: And what type of operational goals could those be ?
Vlad: Well, according to Jackson and the others, it’s all a variation on this theme
- How well are we doing at reaching our target audience (or visitor acquisition)?
- How well are we engaging our audience (or converting them to the opportunity)?
- How well are we doing at activating them, or turning them into a customer?
- And how well are we doing at retaining them or nurturing them?
But the important thing is how each business defines this ‘core score’ as well as these operational goals.
In the past I have used a KPI workshop to generate these goals, and out of these come measures for the website.
Gus: Who do you get to come to this workshop?
Vlad: I think there are three important sets of people to have come along
- People who run departments and manage budgets
- Those that are responsible for what appears on the site – whether that is product, or service description, or editorial
- And finally, the detectives, us analysts who can help them with evidence - you know analysis and reports and, and so on.
Gus: Lock in the room and let them thrash it out then ?
Vlad: Not at all. I have always played the facilitator – you know armed with a the marker pens and the flipcharts.
The first thing you do is explain the Reach, Engage, Activate, Nurture model (I prefer Jackson’s model over the others). I always draw four boxes on a flipchart
Second, you ask everyone to brainstorm the questions they need the answers to to allow them to do a better job.
Gus: For example?
- Where are the visitors coming from ?
- What do people search on the site ?
- Which products convert the highest ?
- Why do people buy our products?
- What is most profitable way to acquire new customers ?
Questions will be a mix of Reach, Engage, Activate and Nurture
Gus: Then, I am guessing, you read out each question from your workshop people and put them into the correct box on the flipchart
Vlad: Absolutely, and then you jointly agree a measure how that goal will be measured. Here, have a look at this sketch I have done.
So for example, looking at most profitable way to acquire new customers, you would generate a report on different forms of traffic segmented by ROI.
Gus: Aren’t you forgetting a couple of things
Vlad: Like what?.
Gus: Firstly, you need to what action will be taken as a result of this KPI. There’s no point getting people to produce reports if no action will be taken.
Vlad: Agreed, 100%. And your second poist.
Gus: You should have some form of benchmark.
Vlad: What type of benchmark?
Gus: Well, I know there’s a lot of benchmark data on the web, but at least you should benchmark your own performance. As well as benchmarking your performance against previous results you need to set a target for improving each metric over a period of time.
Vlad: Agreed. The last point is that you need to really embed this process, and ensure you’re doing this on a continuous basis
Gus: And what about how the reports look, isn't that important?
Vlad: Too important for a brief conversation, let’s come back to that one another time
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