The info-glut in web analytics is enormous. So much data. Companies report that 69% of all people who consume the data don’t understand it. How does a business go about making sense of it all? Formulating a comprehensive KPI (Key Performance Indicator) strategy is a big part of differentiating signal from noise and directing appropriate tool usage. We’ve all heard about KPI’s before. They are ratios or derivatives of metrics that pinpoint critical, business relevant web performance.
The process of moving an organization through KPI Change Management starts with a well formulated plan for doing so. Here are some tips for formulating your KPI plan:
- Educate senior management and get managerial buy-in. Education and buy-in can take shape via a number of methods. Maybe you publish and circulate an internal-only white paper about the importance of KPI’s measurement. Maybe you leave Eric’s book on the chair of your C-level executives. Perhaps you hold a meeting and present the web site optimization process and how measurement via KPI’s provides the foundational informational on which to make site optimization decisions. Perhaps you take your boss out to lunch and explain that basic reporting and tool access is helpful, but “Web analytics is hard” and that KPI’s give context to the data to staff that’s otherwise somewhat confused about what they pull for the tool. You explain that KPI’s provide a focal point for centering analysis around business goals. Whatever the method, the goal is managerial approval that “yes, you can do KPI’s.”
- Determine the audience for the KPI’s and train them. The importance of KPI’s will vary by stakeholder, and your KPI strategy needs to take that into account. Different segments of stakeholders will be interested in specific KPI’s, and you must accommodate that need. As an analyst, you should identify the functional roles and job responsibilities of the people who are going to receive KPI reports. Everyone may not be the right choice (though it could be), and it may make sense to concentrate a KPI rollout on the needs of the few or it may make sense to “go broad.” Follow up with comprehensive training about your KPI project and how KPI’s can most effectively be used.
- Start with simple, well-qualified, highly relevant KPI’s. While some folks with want to throw a “kitchen sink” strategy at KPI’s. That’s a mistake. If you report more than 5 to 10 KPI’s (imho) per stake-holding group you may end up with a set of unworkable, confusing, and neglected reports. It’s better to report just a few, well qualified, highly relevant KPI’s. How do you qualify them? By mapping KPI’s to important business objectives. How do you know they are highly-relevant? Because you’ve compelled management to buy-in and to agree that they are critical indicators of site success.
- Elicit the business goals for the KPI’s, compare KPI’s to goals, and report associated variances (i.e. deviations). Make sure you have determined business performance goals for KPI’s. Goals give context for performance. It’s that simple. Without goals, you have no context for determining what’s good and what’s bad. If your conversion rate KPI is 5%. Great! So what though? If you know your goal is 3%. Awesome job. If you know your goal is 10%. Stop reading now, and get back to work – you have much work cut out for you.
Identify the frequency and format for reporting. You need to determine a frequency that is timely and sustainable, and the format in which you present KPI reports needs to common enough that people can easily examine the data. Perhaps you deliver the reporting in Excel, make it available directly in your tool, use Xcellius, or create reports using a BI tool.
- Automate the delivery of the reporting. Without automation, you may put on the Report Monkey suit and enter Excel hell. Critical to the successful roll-out of any KPI reporting is an automation plan. Do you email reports, put them in a shared directory, create a set of reports in the tool and provide access, or deliver them in weekly presentations? The best choice is the option that gets people to use them, listen, and understand what you are trying to do with KPI’s.
- Following the reporting up with analysis and guidance. Depending on the size and scale or your organization and the resources you have to work with, it may not be possible to provide every stakeholder with detailed analysis. But you need to do your best to follow up KPI reporting with true analysis and guidance. Why are KPI’s going up or down? What are the drivers of the changes?
- Segment, segment, segment. Site level KPI’s are helpful in understanding overall audience and customer behavior, but they hide important details. When you slice a KPI by a specific segment, you will realize insights that help you conclude what action to take next. Overall site repeat visit rate is 37%, but the repeat visit rate for customers who use your “product lookup tool” is 96%. What does that data indicate about how you market the site, or about why people are coming to the site?
- Test, test, test. As you measure > report > analyze > guide based on KPI’s you will undoubtedly determine actions to take on the site. You should be testing the hypothesis behind these actions via controlled experimentation.
There’s obviously a lot more to talk about here – from what constitutes a good KPI, to what types of KPI’s different stakeholders should examine, to what are the best KPI’s for particular site types and more. I guess there’s more blog posts for that, but in the meantime I hope you’ve found this blogviation useful ;). Let me know if you have any thoughts to share.