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Key Performance Indicators Part 2

Tuesday 3 February 2009 | 16:13

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In my last post, I covered the importance of using key performance indicators and shared some ideas for building a KPI list. It's good to think about what metrics you need to run your online business. The question remains though: how does this translate into reports you can access in Analytics, and data you and your team can act on? Today, we're going to take a look at a sample company and scenario to delve into using KPIs, and Analytics data, in practice.

usiness Objectives and KPI List
Let's take the example of a small company that sells car parts for vintage cars online. The site also has an active user community. The Google Analytics manager from this example company wants to put a set of KPIs together for the person who runs their online marketing campaigns. Together they set the following business objective:

Get more quality visitors to the site.

They want to attract more people to the site but also want to ensure they attract 'the right people'. They define 'the right people' as ones who will buy parts from them, but will also engage and interact on the site. They were able to break their overall objective into the following sub-objectives and map these to KPIs in their Google Analytics account.

Report in Google Analytics
Have more people visit the website Number of unique visitors Visitors > Visitor Trending > Absolute Unique Visitors
Ensure there's a return on marketing efforts ROI of online campaigns Traffic Sources > AdWords > AdWords Campaigns (Clicks tab)
Have more people buy car parts from the website Ecommerce conversion rate E-commerce > Conversion Rate
Have more people register to be a user on the site Goal completion rate of 'new registrations' Goals > Conversion Rate
Increase the number of interactions people have on the site Goal completion rate of 'new comment posts' Goals > Conversion Rate
Increase the percentage of returning visitors Percentage of returning visitors Visitors > New Vs Returning
Increase the number of 'branded visits ' Percentage of visits that come from direct or branded keywords Visitors > Visitor Trending > Visits (apply branded visitors segment )

As I mentioned in my last post it's important to know who you are giving your KPI update to and give them the context and detail they require to do their job. To provide context to his KPI report their Google Analytics manager is going to do a few things. Firstly he is going to compare each of the metrics he has accessed to a previous time period. Secondly he is going to provide more detail and value by breaking down each of the metrics by their traffic source. If overall conversion rate goes down there's not much the marketing person can do with that data. But if they know that a lower conversion rate is tied to a specific advertising campaign they can take action to optimise the campaign.

KPI report with actions
The next week the Google Analytics manager emails marketing with a status update on each of their KPIs. This week he has highlighted three areas for special attention.

The number of unique visitors is down 21% this week. This figure has dropped every week since December. A drop in unique visitors is expected in January due to seasonality. However, the Analytics data shows the drop had been less severe in previous years, about 15% for the month of January. They now seem to be heading for a drop of 40% for the month. The drop is pretty similar across all traffic sources.

Secondly the number of branded visits has increased. Although overall visitors are down there has been an increase in branded visits to the site.

Finally the ROI of their online campaigns is down. Specifically the AdWords campaign 'new registrations' has had a drop in ROI of 56% for the previous week. This seems to be due an increase in its average cost per click along with a reduction in conversions.
As the rest of the KPIs have remained pretty stable, marketing decide to take action on the above items.

After consideration their marketing contact decides the first two points are related. Unique visitors are down as in the poor economic climate users are not likely to buy cars. However they feel that their site should not be badly affected by this trend: many vintage cars are relatively inexpensive and repairing them yourself as their users do adds value to the cars.
Perhaps the positioning of their campaigns needs adjusting - up until now, they've focused on the luxury and prestige of vintage cars, but this positioning may be less appealing now. They decide to create new ad texts in their AdWords account focusing on the more prudent aspects of their offering to see how this performs against the current ads.

The fact that branded visits are up is encouraging. The visitors they are attracting like the site and are returning. This vindicates their decision that the messaging in the campaigns attracting new visitors is what needs to be adjusted. They then investigate the ROI of the 'new registrations' AdWords campaign. The increase in costs has been down to a few keywords that are slightly too general. The 'vintage cars' keyword has cost them $568 this week but only led to one new registration. They know from historical Analytics data that on average a registered user spends $440 over the course of the year. Based on this they decide they are paying too high a price for this keyword, as they are likely to be competing with ads that actually sell vintage cars, rather than just vintage car parts (their own offering). They reduce the keyword's cost per click so it moves below the average revenue per click. They also create some more specific variations on this keyword. They add 'vintage car community' and 'vintage car accessories' to their keyword list in AdWords.

The vintage car parts company have now a) identified KPIs that are important to them, b) put those KPIs in context of trends over time, c) identified focus points and actions to address problems. The likely result? Website performance in areas most important to the company's success should improve, as the company tests new strategies.

Hopefully this example gives you some practical ideas for moving forward with your analysis and web performance. Feel free to email us with any feedback or suggestions.