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.

Volume 93: 6/1/04


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