Metrics are not the same as KPIs

Far too often, people spew out reports with all sorts of metrics as if they mean something. It only means something when you insert the metrics in the context of what you’re hoping to achieve on your site.   What you’re hoping to achieve does not simply equal:

  • I want to sell stuff.
  • I want people to read stuff.
  • I want visitors to x, y, or z… any number of things.

I’ve found that defining key performance indicators for the site – goals that you are measured by – are actually quite difficult for many people.  You can have an overall business goal of “I wanna sell stuff”, but it gets a bit trickier when you want to align the web metrics against it.

Say you sell banana flavored lip gloss. (That actually sounds really disgusting, but I’m sure there are people who want to buy this.)  Your business objective would be to sell this product.   To understand what your KPI should be, you would first have to understand what actions on the website would reflect whether or not your site is successful.   One way is to look how how many people are completing their purchase.  One scenario might look like this:

Shopping Cart Funnel

Yes! I want this banana flavored lip gloss.

So Conversion Rate is one of your KPIs (Key Performance Indicator).  In the above scenario, the number of people who reached the “Thank You” page divided by the number of people who visited the Shopping Cart page would equal your conversion rate.  Create a goal and work towards it.  What are some other common ecommerce KPIs?

  • Average Order Value (AOV)
  • Revenue per Visitor (RPV) – This is actually a really great metric, because it will combine your AOV and Conversion Rate into one awesome metric.
  • Products per Order.

Examples of where metrics are not KPIs:

  • Bounce Rate: Sorry. I know this is super interesting and an easy metric to throw out there.  But do you have a target bounce rate? You know 100% is not good. Is 40% good? 20%?  This is where it gets squishy.  I think this is a pretty shoddy KPI.
  • Time on site: Really? Do you want people spending an hour on your site? (Okay, I kinda do…) But seriously.  Especially if you have an ecommerce site.  If someone is spending an hour on an ecommerce site – there’s something wrong going on.  It’s tough to get a goal for this.

In a nutshell, your KPIs need to be actionable metrics.  They should align with your business objectives – DEFINED business objectives.

Every site’s unique – so the KPIs should be unique as well.   Visits, page views, time on site doesn’t tell the whole story.  You have to create the story.  You have to be an analyst!

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