Wednesday 14 January 2009 | 16:13
In the last Google Analytics post Evelyn talked about the importance of measuring your conversions in Google Analytics. I would like to build upon that post and talk about using a range of key performance indicators (KPIs) to measure how your website is doing. What matters most to you? Traffic levels? How many users convert? How much you're spending on paid search advertising, versus how much you're making in terms of sales? These are the kind of key performance indicators that can tell you how well your site is serving your business needs, and what improvements you can make.
What are KPIs?
Simply put, a KPI is a metric in Google Analytics that measures how well your website is achieving your objectives. So if for example the objective of your site is to sell online, a key metric to monitor in Google Analytics is the conversion rate in your Ecommerce report. See what proportion of visitors to your site, from what sources, go on to buy from you.What separates KPIs from every other metric is the "key" part: these metrics are critical to the performance of your site, and therefore your online business.
Why use KPIs?
KPI creation is useful for two things. Changes in your KPIs tell you when you need to take action. If the bounce rate on your homepage increases by 50% you need to figure out why and take action to reverse the trend.
Secondly KPIs help you bridge the gap between your Google Analytics account and the rest of your business. They help you understand what each stakeholder in your company wants from your Google Analytics account, and from your company's online presence. Get your colleagues engaged with how your online business is progressing, per key reports and metrics.
You can watch our Google Analytics Evangelist, Avinash Kaushik, talk about the significance of bounce rate in this YouTube video.
How should you create your KPI list?
Successful KPI creation is about translating your site's business objectives into metrics that make sense in your Google Analytics account. You know your business best, and as every business is different only you can create your KPIs. To get started you need to ask yourself and some key people in your organisation one question: From your perspective, why does your company's site exist? Write down the answers. They are likely to differ depending on who you talk to. It's important to get input from all the departments in your company and then prioritise the answers. I'd suggest you aim to keep the top 10 at most.
Once you have taken your business objectives into account, you can start creating related KPIs. For example, let's say a business objective is to have more people come to your physical shop as a result of visiting your site. Here, a good KPI in your Analytics account would be the conversion rate of people visiting the page with directions to your physical location.
Here are some ideas to help you create meaningful KPIs to monitor:
- Make sure they are important and related to the business. I mentioned this already but you really need to tie your KPIs with your business objectives. A KPI such as 'attract more visitors' may seem like a good choice but is it really tied with your business objectives? What if marketing go ahead and double your visitors but none of the new visitors buy? Attracting more quality visitors might be better, where quality is measured by conversion rate or bounce rate.
- Make them actionable. If you can't take action on one of your chosen KPIs it's not a good KPI. Ask yourself, if I come in tomorrow and this KPI has doubled or halved - what am I going to do?
- Focus on your audience and give them context. If you're sharing reports with other team members, bear in mind that not everything is relevant to everyone. If you're sharing metrics with team members, try focusing their attention on what is most important for their jobs. Example: "50% of users used the search function on our site last week. Of those that did 45% exited the site immediately after viewing search results for the top ten terms". This is useful information for the design team members working on improving site search and for their manager but it may be unnecessary information for the marketing department.