How to approach measurement strategies and KPI’s
November 19, 2013 at 2:15 PM
by Mikul PatelDigital Marketing Consultant at Matraxis
This year’s Webtrends Engage event brought together a variety of marketing professionals across EMEA and one of the key topics discussed during the afternoon breakout sessions was on how organisations should approach measurement strategies and KPI’s. In this article I will summarise some of the key points raised and the importance of developing a strong measurement strategy.
What is a KPI?
In layman’s terms, Key Performance Indicators (KPI), also known as Key Success Indicators (KSI), are used to measure progression towards achieving business goals; often displayed through performance dashboards. It is a term that is often thrown around in business conversations, but you will be surprised by the number of organisations that incorrectly define their KPI’s, or even don’t have any at all!
What makes a good KPI?
KPI’s are quantifiable measurements that need to actionable. As a business, if you are unsure if you have correctly set up your KPI’s, the following 4 definitions should be present otherwise you are not measuring a KPI:
Time – the KPI should be measurable over a period of time e.g. daily, weekly, and monthly
Target – set thresholds to your KPI (these should not be loosely or strictly set)
Action – when thresholds are met, what are the next steps to meet that KPI’s business objective?
Owner – who is in charge for monitoring the KPI and who do they report to?
Businesses should remember that defining KPI’s can take time and they should not be afraid to amend thresholds and actions over time if they are not contributing towards meeting business objectives.
Tips for identifying and measuring KPI’s
When defining a new KPI, a business should aim to get as many different stakeholders together. By understanding what these different users expect from the business can help to nail down specific KPI’s. For example, for an ecommerce site selling computers, a business goal may be to become the most trusted place to buy computing equipment. One business objective towards achieving this could be to increase the average customer rating of the sales support team. A KPI needed to monitor this may include measuring the daily average ratings of the live chat support team (setting a min target of 4/5 stars).
Using standard deviation charts to graphically represent your KPI’s over time can help to focus on points outside the deviation area – as a business, you would then need to go away and answer what caused spikes or falls.
Aggregated KPI’s are not meaningful for businesses. You can get real value by segmenting your data and drilling down for better insights e.g. comparing the KPI results of visitors from different countries if you are an ecommerce site – are you exceeding KPI thresholds for a particular region? What are you going to do to solve that?
Getting the right measurement strategy
When it comes to setting a measurement strategy, businesses may fall into the trap of reporting on ‘bad metrics’. These are those standard metrics (bounce rate, visits etc) that everyone knows but in-fact actually fail to provide any meaningful value to the business.
A marketing analyst should always ask “why?” in response to report requirements given from a business user. By understanding how they will that metric, and whether it is meaningful, an analyst can ensure they are not delivering ‘bad metrics’. This is easier said than done, especially when peer pressure from higher management comes into play, but by supporting ideas with proof, a analyst can show their worth to a business by being the ‘storyteller’ to offer real useful insights.
Finally, it is critical to have a measurement plan that is aligned to business objectives. Simple steps to keep on track may include creating a plan spreadsheet and openly sharing that with various business users. By educating these users on the importance and benefits of setting a solid measurement strategy, you can make everyone’s job easier and actually achieve your business goals.
Matraxis is the leading independent UK company specialising in digital marketing analytics and associated consultancy services. Matraxis have a broad range of expertise in delivering web analytics as the foundation for acquiring visitors, maximising the number of conversions and securing visitor retention.
To learn how to develop a measurement and KPI strategy for your digital channels, get in contact with us today.
blog comments powered by Disqus