What are KPIs and Why do I Need Them?

January 5, 2012

What are KPI's

KPI’s or Key Performance Indicators are a set of performance statistics (in this case we are talking about website/online campaign statistics) specific to your business. They offer an insight into how you are performing against your organisations goals. Why do you need KPI’s? Without some sort of regular baseline of information, you will find it difficult to understand the impact of your marketing campaigns, form strategies or move your business forward. Which KPI’s should I use? This is not a straightforward question to answer, as every organisation has its own set of objectives and therefore KPI’s will differ. What they should be is useful. For each measurement, does it highlight a success or failure against your organisational objectives? Can you use that information to identify opportunities? One of the most common KPI’s you see is visits, but really what does that data tell you? You had more visits last month than this month but less that three months ago? More useful KPIs could include:
  • Conversion rate – whether this is goal conversion or sales conversion, this KPI focuses on outcomes and therefore organisational goals (and probably the reason your website exists.)
  • Average Order Value (AOV) – If you have an ecommerce website, this is a key KPI as there are a number of marketing strategies which impact your basket value. For example, if your AOV is £45 and the boss suggests a free delivery offer, rather than offer free delivery for all orders over £40, you could set free delivery at all orders over £50 to increase AOV. This is also a good metric for testing cross-sells on the basket pages.
  • Return on Investment (ROI) – This needs to measured several times over a period of a campaign, as sales can be generated weeks after a campaign has finished. True ROI should include all your costs eg. Agency fees as well as set up/send/advertising fees.
  • Vistor Loyalty & Recency – an excellent metric for content websites where you need to measure engagement ie. How frequently do people visit your site and within what period.
  • Task Completion – different from conversion rate because this relies on an exit survey rather than analytics. If only 3-4% of your visitors ever buy or contact you on your website, why don’t the rest of them? By using a simple exit survey (in the form of a pop up), you can gain useful information on why people didn’t buy from you and use that information to improve your site/offering.
  • Search Exit Rate – the usefulness of this KPI varies depending on your customer eg. More technically adept users tend to use keyword search over other navigation methods. This would also be something to follow up with an exit survey.
If your organisation relies heavily on social media, there is a whole other set of KPI’s you should be using to measure the effectiveness of this online medium, that however is a whole other blog post! If you would like more information on putting KPIs in place for your organisation, why not get in touch with us now.





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