Introduction
The phrase Key Performance Indicator, or KPI for short, has one of the most commonly spoken words by strategists, managers and analysts in internet departments all over the world. Yet most have a very vague understanding of what a KPI really is.
The most important thing when deciding to define the KPIs for a website or online e-Commerce is to get a good understanding of what this metric is and how to use it. In this introduction I will give a quick overview of the subject. In later posts I will follow up with more in depth information on how you can define the KPIs for your site.
To the people who are looking for a top list of KPIs they can use for their website, I am sorry to disappoint you. You will not find that in this blog.
Top lists of KPIs is not the solution to find the indicators that will give real insights into the performance of your site and provide you with a tool to truly harvest the maximum results.
Winning KPIs
More than just reporting results the right KPIs are used help point the way to the right decisions. They represent the key indicators which give you insight into how your website, campaign or e-Commerce is performing and which actions can be taken to improve results. KPIs are the indicators that are so important to your website that you will want to follow them up on a daily or weekly basis.
In his book ”Key Performance Indicators”, David Parmenter differentiates between KPIs (Key Performance Indicators) and KRIs (Key Reporting Indicators). He defines the KPI as a metrics that gives us the information we need in order to correct or improve the development.
The KRI, on the other hand, looks at what has happened and which results we have achieved.
It can be debated whether or not his views on KPIs are directly applicable on web, but his definitions are useful to keep in mind when you begin your research to identify which KPIs to use for your website.
The correct set of KPIs depends a lot on the website and they do not have to be very complex. For a blogger or content website visits, bounce rate, time on site or page views can be fully functional KPIs, whereas a SEM manager at an e-Commerce site might be more interested in Average Page Rank, CPO, ROAS or CTR.
Choosing the winning KPIs for your site requires a clear understanding of the goal of your site and research into the triggers that give the results you need to achieve that goal.
In short, the first two steps into defining the right KPIs is a search into the core of your activity or website are:
- What is the goal of my website?
- Which actions do I need to take to achieve that goal?
It is always good to follow up your answer to these questions with a second question to control your answer, the question: Why?
With your answers to these questions fresh in mind you are a large step closer to defining your KPIs.
In the following posts on the subject of KPIs I will look at why it is so important to find exactly the KPIs that work for you, how to define the correct set of KPIs, how to use them and some examples of KPIs used for different types of sites.
Cheers!
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