Key Performance Indicators

By Jody Nimetz – May 30, 2006

Every organization needs them, has them, and measures them. Or do they?

No matter what your industry, competitive marketplace, or target market, the only way to assure success is to make informed decisions from quantifiable data. The stronger the data, the more likely you will make the right decision. So what is the “them” that I am referring to above? Key Performance Indicators.

Key Performance Indicators (KPI) are what separate the “winners” from the “try agains;” and knowing not only what to measure, but also how to measure it and what it all means, is what separates and defines levels of success.

First of all, let’s define a KPI. A KPI is:

  • a metric that an organization measures to help determine its progress towards a goal;
  • a reflection of the tactical performance of an organization;
  • and, is used to substantiate an organization’s objectives.

Basically, a KPI is a quantifiable measurement that can be tracked and evaluated, and that is harmonious with what you want to achieve. KPIs will change depending on the industry that you are in and depending on the type of site that you have; they cannot be universally applied.

In the world of search engine marketing, there are numerous metrics that can be measured. The trick is to determine which ones are the correct ones for your online campaign. On occasion, clients will come to us with a goal of ranking #1 in Google or Yahoo! for a particular phrase or group of phrases. This isn’t always possible – sometimes the competitive nature of a keyword and the available budget make ranking #1 an impossible goal. But more often than not that same client is absolutely determined that the chief KPI is that ranking on the SERP (Search Engine Results Page), but is it?

The real goal is more qualified traffic, increased conversions, and a larger profit margin, not an increased SERP ranking. Sure higher page ranking will bring more traffic, but without improving conversion paths, content, and landing pages, it doesn’t matter if your ranked #1 or #100, business will not improve.

As is often the case, these clients don’t consider the marketplace or their audience when deriving the right KPI, and instead confuse a symptom with a goal. Sure, it is important to be aware of positioning, but it is not the key metric to determine and gauge success in that particular market. Wouldn’t it be better, in that particular case, to measure page views, time spent on the site, or navigation paths from landing pages? Wouldn’t these be better indicators of your proximity to the real goal? You could also measure the number of times that a user filled out a specific information request form (a possible conversion that is more of a lead than a sale), repeat visitors, or when a visitor completes an actual online purchase. This kind of data would allow you to make informed strategic decisions to increase overall ROI, more so than just measuring your SERP ranking, which is much more difficult to forecast and change because it is tied to so many external forces.

So how do you choose the right KPI? Follow these three cardinal rules.

Key Performance Indicators Must Haves1. They must reflect your business or organization’s goals.

2. They must be measurable.

3. They must be a key factor for the success of your company or organization.

Tracking Your KPIs

Once you have decided on the right KPIs, with the numerous analytics packages out there, tracking them should be no problem, right? Well, you may be surprised to find out that there are a high percentage of site owners that have not only picked the wrong metrics to track, but are also tracking the wrong data. Even with advanced analytics, site owners often have difficulty in tracking the proper KPIs to achieve their goals.

Stay tuned to upcoming articles to learn more on tracking KPIs correctly and effectively.

My next article will deal with determining the proper Key Performance Indicators for specific online goals. Have you defined the proper KPIs for your online campaign?

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