Understanding Key Performance Indicators

By John Marshall

KPIs, or Key Performance Indicators, should be at the core of how you analyze and report your web site's effectiveness. By selecting meaningful KPIs to track, you can quickly become aware of changes in visitor behavior. And, with a bit of analysis, you can learn why the changes occurred.

A KPI expresses—in a single value—a fundamental driver of business success. It should be tracked over relatively long time periods, and used to answer questions such as 'How well are we doing compared to last month, or last year?' In other words, KPIs define the big picture: the forest itself. If the CxO at your company wants to see a web analytics report, its likely that a set of well-chosen KPIs tracked over several months would answer questions at that level.

Choosing Relevant KPIs
A suitable KPI can be tracked over a long period of time without being susceptible to unpredictable variances. It should clearly express something of fundamental importance to your business' success.

Examples of good KPIs include:

• Number of qualified visitors to the site
• Total PPC ROI
• Lead capture page completions

Examples of poor KPIs include:

• Total visitors to the site
• Total page views

The total visitor count does not express business success, because it's very easy to construct campaigns that bring a flood of unqualified visitors, spiking traffic, but not moving the sales needle at all. On the other hand, an increase in visitors who spend more than 10 seconds on the site might be a good indicator that sales will improve.

See What Happened—Find Out Why
KPIs are important also because they can free up the analyst from generating numerous individual reports, and encourage upper management to focus on a few key metrics that are tracked over time. The analyst can then move from 'What is happening?' and start addressing 'Why is it happening?'

Using ad-hoc segmentation, comparative analysis, what's changed analysis, A/B testing, and a variety of other methods, the analyst exposes the reason why a KPI has changed. For instance, a KPI might indicate that your number of qualified visitors has fallen by 10%, and the decline started on October 17th. The job of the analyst is to find out why, and recommend corrective action. The analyst examines individual trees and the entire forest at the same time.

KPIs Guide Your Analytics Efforts
KPIs have become a fundamental component of ClickTracks Pro 6.5—a new timeline feature visually displays KPIs above each report, letting you simultaneously view the big picture and more detailed information. When well planned, structuring reporting around KPIs imposes disciplined thinking about your true business goals, and provides context for what's really happening beneath the surface.