A Few Good KPI's Can Make A Brand Healthy, Wealthy and Wise
It wasn't that long ago that I would overhear marketers boasting about their stellar website performance metrics:
"Our site visits are up 13%," a junior web analyst would boast.
"Visitors spend more time on our website than time spent on any of our competitor's sites," said the proud CMO.
More recently, social marketers can be heard across coffee shops around the world making statements such as "We're doing great — we have 346,987 Facebook likes," and "Twenty-three percent of our website traffic now comes from social media."
We all love positive metrics; who wouldn't want a lot of Facebook likes? But metrics are merely numbers. And I would argue that upwards of 80% of the web metrics that are being tracked and reported by marketers today are of little business value.
Why is that?
Perhaps it's because metrics don't really help you understand how you're doing against your business objectives. They're just numbers.
Many marketers present web performance metrics via regular reports to their management and they honestly believe they're delivering value. Truth be told, many of these marketers are not working for companies that have laid out clear web business objectives and goals. So the value that these metrics provide to a business is questionable.
You know what they say...if you don't know where you're going, any path will take you there.
If a brand has no clear business objectives or goals in place, any positive web metric can be considered to be "good" for the company and worth including in a monthly report.
A better indicator of web marketing success might be the use of key performance indicators (KPI's). These are specialized metrics that tell brands how they're performing against their business objectives and goals.
For example, if a brand has clear business objectives/goals, such as "generate more website sales without spending additional money to drive traffic to our website," then using KPI's become paramount. A CMO tasked with boosting website sales might want to measure KPI such as "visit-to-sale ratio" and "shortest paths to sale."
Transforming Metrics into KPI's
Here are some sample web performance KPI's a business might want to consider, along with the standard metrics they might replace:
Like-to-loyalty ratio — instead of "monthly site traffic"
Likelihood to convert by visitor type — instead of “number of unique visitors”
Shortest paths to sale — instead of “top click streams”
Top conversion obstacles — instead of "top exit pages"
Daily revenue gap — instead of "daily bounce rate" (maximum revenue potential of a website minus actual revenue)
Page elements most interacted with — instead of "time on site"
Can you see the subtle difference between a metric and a KPI?
You may need to work with your web analytics staff, IT teams, and tool vendors to alter what you're measuring so that your KPI's can be monitored, but this can be achieved and it's not as hard as it sounds. Besides, you can justify the set up requirements because KPI's can be acted upon to bring immediate, tangible business value.
Let's take a moment to look at how a business like yours might take a KPI and turn it into a business decision that can move the needle.
By measuring like-to-loyalty ratio, a brand manager can justify the ROI for social media marketing initiatives by showing concrete evidence that building relationships translates into loyal customers and raving fans. Every marketer knows that it's easier to sell to happy, satisfied consumer than it is to cold prospects, and there are new research findings that show a direct correlation between "Facebook likes" and a propensity to purchase due to the virtual loyalty effect (being connected to a brand online).
If businesses measure likelihood to convert by visitor type they can tailor their onsite ads to match their visitor demographics and needs. This is done through a combination of matching visitor attributes with real-time ad serving technology. The result? Personalized offers will boost response rates and sales.
Firms who track KPI's such as shortest paths to sale are in a wonderful position to identify what's not working so they can remove clutter and unused navigational paths from their websites. They result? More visitors will be traveling down transactive paths versus dead ends. Done right, this can not only improve the user experience on your website, but it can widening your sales funnel to boot!
Similar to the KPI above, monitoring top conversion obstacles can help marketers identify broken links, streamline lead forms, clarify instructions, and more. The result? Less obstacles mean more visitors will complete your website tasks or respond to your calls to action — making them happy and more likely to try or buy your products and services.
Daily revenue gap is an interesting KPI. It's based on knowing the maximum revenue potential of a website — a concept Heardable has blogged about in the past. Imagine if every website visitor purchased your highest value product or service during a 30-day period. Yes, it's unrealistic but it does speak to a website's highest potential as a revenue generator.
This concept was sparked by a story about how Gamal Aziz helped the MGM Grand casino resort dramatically increase its revenue by restructuring its foot traffic by re-aligning high revenue retail outlets throughout its Las Vegas property. Imagine if website design was looked at through this lens and a web marketer first asked, “What is the maximum revenue potential of my website and can we design an experience that produces the highest possible revenue and still delivers a quality experience to our visitors?”
By monitoring how much revenue was being left on the table each day, businesses zoom in on, and resolve, hundreds of tiny performance issues that can transform a mediocre online destination into a emerging profit center.
Page elements most interacted with is another neat KPI because it can be tied to a corporate goal such as increasing consumer engagement. By knowing which website features cause various types of actions, the best content and tools can be promoted. For example, your site visitors may not subscribe to your RSS feeds or listen to the 12 podcasts you posted 5 years ago. But they might really enjoy using that interactive calculator, watching videos, commenting about a recent purchase, or sharing one of your product pages with their Twitter followers.
Okay, now that you've been pounded over the head with the benefits of using KPI's versus standard metrics, you may be wondering what's next. How do you take these principles and apply them to your world?
5 Quick KPI Action Steps
1. Establish an objective: Become the top performing brand in our industry on Facebook.
2. Establish a goal: Close the Facebook velocity gap between us and our top competitor from 18:1 to 3:1 within 6 months.
3. Take action: Augment our social media tactics and realign our online marketing budget with 75% of our budget, time and effort focused on Facebook page optimization, testing new promotional offers, publishing 50% new and original content, and engaging in same- day correspondence to all Facebook posts.
4. Measure progress: Use your web analytics dashboard, try tools such as Heardable, pour through Google Analytics or test something new to get a feel for what tools are best to track your KPI's.
5. Optimize: It may take several tries before you get the results you hope for, so don't give up! Even when you do perform well, over time, your KPI's may suffer if you don't continually make improvements. Optimization is about increasing the value of your web properties by making continuous minor changes that have a dramatic impact on your business when they are compounded over time.
About Jon
Being Heardable, the Heardable Blog, is curated by Heardable co-founder and digital marketing veteran, Jon Samsel. Jon is based in Los Angeles, and Singapore.