Volume 93: 6/1/04

The Nitty Gritty Behind the Glamour

It's time we had a serious talk about numbers. Data. Metrics. Web analytics. Doesn't matter what you call the stuff, you simply must stay on top of how your Web site is doing. And the only way you can do that is by looking at those digits. Are you making money or losing it hand over fist? Do you know which parts of your site are humming along like a perfectly tuned engine and which stand in need of a complete overhaul? If you do something one way and then decide to make a change, are you evaluating the effect of that change?

What's a body to do? Look ... up in the sky (cue music) ... it's a bird ... it's a plane ... it's a KPI!

A whaaaattt?

Maybe it's fear of numbers - the ubiquitous math phobia - or maybe it's just an excess of misguided enthusiasm mingled with a sense that the Internet should be an easy-money conduit, but too many businesses out there in Cyberville are not giving their numbers proper attention.

A Jupiter Research study revealed that only 27% of surveyed online businesses don't have a single dedicated techie on staff. But 63% don't have a dedicated analytics person!! There are folks to fix the problems, but no way to identify the problems that need fixing. Cart before the horse stuff!

And yet, folks are aware of the problem. Jupiter Research asked executives to identify the top challenges facing their Web sites: four of the top six challenges related to the need to collect, understand and be able to act on useful data.

All Data is Not Created Equal

We can all go swimming in the massive quantities of data we are able to collect online. But not just any old data will do. In fact, most of what you can collect is fundamentally useless. However, ebusiness does have its own meaningful set of relationships that can be measured and evaluated to advantage. Analytics dudes and dudettes call them Key Performance Indicators, or KPIs. These are the babies that are going to mean the most to your online efforts.

If you've heard the acronym and scratched your head before, now's the time to listen up.

Characteristics of a Good KPI

Eric T. Peterson, at Jupiter Research elaborates on the qualities that make up a useful Key Performance Indicator:

  • It has a succinct definition that summarizes the nature of the relationship between the data that are being compared (meaningfully compared, naturally!)

  • It establishes an expectation for performance by using business-relevant comparisons over time

  • It is capable of revealing a meaningful change in activity for a selected period of time

  • It is capable of influencing remedial action

KPI ReportKPIs need to be the backbone of your ongoing optimization efforts. Depending on what sort of business you operate (hang tight, I'll get to that part), you will use different indicators, or define them differently for your own reasons. But you keep these indictors, their definitions and exactly how you measure them. If you change your definition or how you measure, then you risk comparing apples to oranges.

The advantages of KPI reporting? It's really the only meaningful link between the numbers you generate and the goals of your business. As Eric says, it allows you to "democratize the data and bring more minds to bear on critical business problems."

Most important, you no longer need to guess at what you should be doing to improve your return on investment (ROI). KPIs give you information that can inform and shape your actions.

Actionable - not in the legal sense - metrics. It may be what you've been missing out on up until now.

Train to Increase Your Conversion Rates

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Help Yourself to a KPI!

Oooo ... cookies. And the real kind at that! Hmmm. Chocolate chip or maybe one of those oatmeal raisin ones? Or what about those almondy things? Oh, it's murder to have to decide which to pick.

You might think the same is true when you try to figure out what you want to measure on your Web site. But actually, all choices are not equal when it comes to your ebusiness data and the metrics that transform it into meaningful information. To be blunt, most data you don't want.

But don't worry. I'm about to pass the plate. Except I'm going to point out which Key Performance Indicators (KPIs) should comprise the basics of your online measuring, testing and optimization activities. So, please, help yourself to a KPI!

I figure it goes without saying that the actions you are trying to motivate your visitors to take should be intimately related to your business goals. But I'll say it anyway, just in case. I want you to be clear about what you are trying to do, so you'll know how to go about doing it.

Let me say here, though, that after the almighty Conversion Rate, one of the most important indicators you can keep an eye on, regardless of your line of business, is your Page Rejection/Abandonment Rates. Whenever you see high values for this metric, you immediately want to examine that page with a fine-toothed comb for persuasion architecture issues! You're getting a wake-up call that the page isn't working!

Ecommerce and Retail Sites

Here the basic objective is to increase sales and decrease marketing expenses. KPI should include:

  • Conversion Rate: the likelihood of successfully driving a visitor to purchase

  • Cost Per Visitor: the cost of each site visitor to your business

  • Average Order Value: changes in the overall audience makeup and the affect on the online revenue patterns

  • Percent New Visitors: the number of potential new customers landing on your site

  • Ratio of New to Returning Visitors: the ratio of new to previously acquired visitors

  • Page "Stickiness": the likelihood of successfully retaining a visitor who arrives at a key landing page

Once you've got these under your belt, you'll want to take a more advanced examination: measure inventory mix, trend reporting, satisfaction, recency and frequency, and other predictive modeling techniques.

Lead-Generation Sites

The objective is to increase and segment a business's ability to generate leads and close the transaction. When you examine your Page Rejection/Abandonment Rates, play close attention to your critical contact pages.

  • Conversion Rates: the likelihood visitors will download white papers, sign up for mailings, subscribe to a newsletter

  • Ratio of Leads to Close: the likelihood a lead will complete the transaction

  • Percent New Visitors: the number of potential new customers landing on your site

  • Length of Visit: the amount of time a visitor spends on your site in a given visit

  • Ratio of New to Returning Visitors: the ratio of new to previously acquired visitors

  • Page "Stickiness": the likelihood of successfully retaining a visitor who arrives at a key landing page

  • Percent of Visits by Entry Page: efficacy of marketing messages at driving visitors to the site

Content Sites

The objective of most content sites is to increase readership, the level of interest and the amount of time your visitor spends on the site. Toward that end you will want to measure:

  • Conversion Rates: the likelihood folks will sign up with you, subscribe, register or ask to receive information

  • Length of Visit: the amount of time a visitor spends on your site in a given visit

  • Average Page Views: the number of pages the visitor visited can indicate the strength of your visitor's connection to the stuff you provide

  • Heavy User Share: percentage of your overall audience that consumes the largest volume of content

  • Percent Returning Visitors: percentage of retained visitors returning to your site

  • Cancellations: the likelihood your subscriber will bid you farewell through unsubscribing

Self-Service and Support Sites

Here you want to increase customer satisfaction and decrease your support inquiries. Measure decreases in visit length, inbound call-center metrics, and customer satisfaction metrics.

  • Conversion Rate: the likelihood that a user will successfully locate the information needed

  • Length of Visit: in this instance, a decreasing number is a good thing. You want to make the process of using your site efficient.

  • Percent of Visits Under 90 Seconds: you want to make the site efficient, but not difficult to use. Measure the percent of your audience that is unlikely to have found the information they sought

  • Percent Returning Visitors: percentage of retained visitors returning to your site

  • Percentage of Visits by Entry Page: top entry points into support content, many of which may be driven from external searches

  • Top Internal Search Phrases: not a KPI in the "traditional" sense, but very important to identifying new trends in support needs

  • Customer Satisfaction Metrics: you also want to determine if the site is successfully handling problems previously directed to your inbound call-center

Are there more indicators? Yep, but they are not necessarily critical to managing your online efforts. Can you make up your own? Absolutely. You can measure whatever you please if you think it helps you achieve your business goals.

The thing is, start measuring. Through your numbers, you possess powerful information. You don't need to grope in the dark or drown in an overwhelming ocean of digits. It doesn't even require genius to work with this stuff. It just requires that you do it. Just like brushing your teeth after you eat.

Another K ... cookie, perhaps?

A Special Thank You ...

. . . to Eric T. Peterson, of Jupiter Research and the author of the fab (and my fave) book on emetrics, Web Analytics Demystified, for allowing me to use material from his presentation "Making Analytics Actionable" in creating this volume of GrokDotCom.

Eric, you rock!

Volume 93: 6/1/04

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