WTF is a website KPI?

KPIs or Key Performance Indicators are supposed to help you check that you’re doing the right things on your website. This ‘help’ hinges on you understanding just what a KPI is when it comes to your website. Modern website analytics tools like Google Analytics give us the chance to track and measure everything that is happening on our websites. That used to be the hard part; the real challenge now is understanding what the numbers mean for your website and your business.

Use Google Chrome to measure your website KPIs

Before digging in to KPIs, we need to understand two other, related, terms – Objectives and Goals.

Put simply, your Objective is the reason your business exists. Make money, save the rain forest, eradicate tawny pygmy worms, whatever. It’s the one thing you live for.

Goals are related to objectives in that they are stepping stones on the way to completing your objective.

Here’s what I mean.

Objective: Make Money

  • Goal: Increase Average Order Amount
  • Understanding Your Website KPI

    KPIs are metrics that help you measure whether or not your goals are on track to help you achieve your objective. A KPI is generally expressed either as a number or a ratio. Let’s look at our previous example and this time we’ll include a website KPI.

    Objective: Make Money

  • Goal: Increase Average Order Amount
  • KPI: % of recommended items added to cart
  • In this scenario, if your KPI is not met and your customer does not add items you recommend to their cart, you know where you need to direct your energy: give better recommendations. If you do, the customer will add more stuff to their cart (Goal met) and you will Make More Money (Objective Met).

    It is deceptively simple. The trick is to extract meaningful KPIs that will actually help you analyse whether or not your goals are met, so you can tell whether or not it’s time to break out the bubbly or burn the midnight oil.

    e.g. If your KPI was “Time spent on checkout page”

    This is an example of a bad KPI for this specific goal. If the results swing one way or the other, the order size will not increase, so the goal will not be met. If, however the goal was to Improve Usability of Checkout Pages, then this KPI might have significance.

    Objective: Make Money

  • Goal: Optimize Checkout process
  • KPI: Time spent on checkout page
  • In this example, the time spent on the checkout page has significance in that it gives you information about whether or not your goals are being met. If the time on page goes up, your goal is not met. If the time on page goes down, you are closer to achieving your goals.

    Here’s another example:

    Objective: Increase advertising revenue generated by website

    Goal: Get more people to read posts (increase impressions)
    KPI: Social Media conversion rate

    By getting more traffic from your social media efforts, you will get more reads and display more ad impressions and achieve your goal. There is more than one way to achieve your goal though, let’s have a look.

    Objective: Increase advertising revenue generated by website

  • Goal: Find position for 468×60 banner with best conversion.
  • KPI: Click through rate
  • In this scenario, when you find the best placement for your banner, you get more clicks and in this way increase your advertising revenue. Same objective, but different goals to achieve it.

    As you can see, it is important to understand both your business and website strategies in order to effectively decide what your KPIs should be. Once you can determine the KPIs for your website, it’s easier to evaluate decisions based on data and take out a lot of the ‘gut feel’ and guesswork. The numbers don’t lie