Gus: Hey Vlad, we have been helping our clients work out what’s been going on on their website for ages now, but how many of them have actually got a clear set of website KPIs for their business?

Vlad: Most have, but some haven’t. But each business will have different objectives

Gus: Correct, but there are some common business models, like e-commerce, lead generation, advertising, and customer support, where the KPIs are likely to be similar.

Vlad: So for e-commerce sites, what would the KPIs you’d look at be?

Gus: The list would go something like this:-

• % of new to returning visitors
• Bounce rates on key pages
• Referring websites
• Search keywords and phrases
• Conversion rates
• Average order value
• Sales per visitor

Vlad: OK, OK, but I don’t believe that each business, whatever model they fall into, would want to use exactly the same set of reports.

Gus: No, you’re right, and that is why if we are going to help these guys, we need to show what they should be measuring, specific to their business

Vlad: I think I may have seen a few models that could help us, like those that Petersen, Jackson, Sterne and Kaushik have come up with

Gus: What can these models show us?

Vlad: Well, before looking at that we need to understand what is involved in the creation of a KPI.

I remember Jackson talking about a “core score” – you know, a measure of the whole organisation’s efforts. He talked about the positive effect on the UK Prison Service when it moved from measuring itself on the number of escapees to judging its effectiveness in terms of number of repeat offenders.

That switch meant that the organisation considered itself as part of a system, rather its role within the system.

Gus: That’s a good example, but most of our clients are in the private sector where being judged on their revenues and share price is the *only* number they care about.

Vlad: Yes, of course,  somewill see the success in those terms, but think about a goal like  “the creation of happy customer”. Creating lots of happy customers creates great financial results for the organisation, but also if you unpack the term ‘happy customers’ you’ll see there are lots of hard measures a client would need to monitor and manage – levels of repeat business, customer satisfaction, loyalty and so on.

And that’s my point, you might have a strategic goal, but in order to succeed at that objective you need to have a good number of operational or intermediate goals as well.

Gus: And what type of operational goals could those be ?

Vlad: Well, according to Jackson and the others, it’s all a variation on this theme

1. How well are we doing at reaching our target audience (or visitor acquisition)?
2. How well are we engaging our audience (or converting them to the opportunity)?
3. How well are we doing at activating them, or turning them into a customer?
4. And how well are we doing at retaining them or nurturing them?

But the important thing is how each business defines this ‘core score’ as well as these operational goals.

In the past I have used a KPI workshop to generate these goals, and out of these come measures for the website.

Gus: Who do you get to come to this workshop?

Vlad: I think there are three important sets of people to have come along

• People who run departments and manage budgets
• Those that are responsible for what appears on the site – whether that is product, or service description, or editorial
• And finally, the detectives, us analysts who can help them with evidence – you know analysis and reports and, and so on.

Gus: Lock in the room and let them thrash it out then ?

Vlad: Not at all. I have always played the facilitator – you know armed with a the marker pens and the flipcharts.

The first thing you do is explain the Reach, Engage, Activate, Nurture model (I prefer Jackson’s model over the others). I always draw four boxes on a flipchart

Second, you ask everyone to brainstorm the questions they need the answers to to allow them to do a better job.

Gus: For example?

Vlad:

• Where are the visitors coming from ?
• What do people search on the site ?
• Which products convert the highest ?
• Why do people buy our products?
• What is most profitable way to acquire new customers ?

Questions will be a mix of Reach, Engage, Activate and Nurture

Gus: Then, I am guessing, you read out each question from your workshop people and put them into the correct box on the flipchart

Vlad: Absolutely, and then you jointly agree a measure how that goal will be measured. Here, have a look at this sketch I have done.

Website KPIs

So for example, looking at most profitable way to acquire new customers,  you would generate a report on different forms of traffic segmented by ROI.

Gus: Aren’t you forgetting a couple of things

Vlad: Like what?.

Gus: Firstly, you need to what action will be taken as a result of this KPI. There’s no point getting people to produce reports if no action will be taken.

Vlad: Agreed, 100%. And your second poist.

Gus: You should have some form of benchmark.

Vlad: What type of benchmark?

Gus: Well, I know there’s a lot of benchmark data on the web, but at least you should benchmark your own performance. As well as benchmarking your performance against previous results you need to set a target for improving each metric over a period of time.

Vlad: Agreed. The last point is that you need to really embed this process, and ensure you’re doing this on a continuous basis

Gus: And what about how the reports look, isn’t that important?

Vlad: Too important for a brief conversation, let’s come back to that one another time

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Other posts you might find useful

What is web analytics?

The benefits of web analytics

Setting website goals – part 1

Setting website goals – part 2

Setting website goals – part 3

Gus: It’s that time of year I love when I spend all this money online buying stuff;  shame I am not spending it on myself. You know I always end up buying presents for people that I really want for myself. Like last year, I got my sister a pair of wearable speakers. She wasn’t impressed, I could tell.

Vlad: Hmmm.. Unlike you I hate buying presents,  I never get it right, and I never get anything I want. I  really don’t see the point.

Gus: Well, you’re cheerful! Why don’t you see it as a competition,  to see if you how close you get to the perfect present. What about Ineke ? What would she like ? Has she dropped any hints?

Vlad: She has, but I just can’t find it online.

Gus: What does she want?

Vlad: It’s something like a Daniel Fusterbucket dress.

Gus: And you saying you can’t find it online?  Well, have you thought visiting an actual store?

Vlad: Ineke is adamant that you can buy it at Bijenkorf , and she loves the packaging and the whole shop, in fact. But whenever I go into the shop I can never find anything, and on their website it just says “No matches found”.

Gus: They must be annoying so many people with that “no matches found” message. You would think they would do something about that.

Vlad: Come to think of it, one of our clients, Hema, had the same problem. Before they invested in improving their search efficiency, they wanted to understand how much “failed searches” or those with ‘no matches found’ was costing them.

Gus: How do you calculate that?

Vlad: It’s straightforward.  Hema were initially quite sceptical, but in the end found the whole process of putting a value on a failed search very useful.

Gus: But how can a failed search have a positive value?

Vlad: That’s the thing, you can’t. Quite simply, a failed search is an example of a ‘negative goal’ – it’s something you don’t want to happen because each time it does, the business loses money.

Gus: Go on then,  show me how you put a value on a failed search.

Vlad: OK, let’s say Bijenkorf has 35,000 searches made on their website each month. 20% of these searches result in ‘no match found’ or are failed searches. We know from our analytics tool that the conversion rate for those with failed search is 0.5% and those with successful search, where a match is returned, the rate is 2%. Can you work out how much money they lose for each failed search?

Gus: Not without knowing their Average Order Value ?

Vlad: AOV is 125 euros.

Gus: OK ..if there were no failed searches we would have a revenue of 35,000 x 2% x 125, is 87, 500 euros. Right?

Vlad: Yep.

Gus: And the revenue from failed searches is 35,000 x 0.5% x 125, so that is 21,875.

OK, wait a minute. If I take 21, 875 away from 87,500 I am left with the extra revenue I would have got if all searches had been successful that month.

That’s 65,625 euros.

Then if I take 65,625 and divide it by the number of failed searches that month, 7,000 (or 20% of 35,000), I can see how much failed search loses them.

And the answer is 9.375 euros.

Vlad: That’s right, if these numbers were real, Bijenkorf would be losing over 9 euros for each failed search.

Gus: Wow, and that’s discounting the repeat orders they would be getting from visitors who had used search successfully and had gone on to buy.

Vlad: Good point.

Gus: But what could can you do to reduce failed searches?

Vlad: There are several things you could do. The first is to benchmark the % of searches that fail, and then to identify which search terms are causing no matches to be found. Whilst you are doing your analysis on these search terms, the least you can do is to show your bestsellers where no match is found. Here, have a look at this sketch to see what I mean.

Vlad's sketch

Once you know which search terms are causing the problems you need to update your CMS to capture misspellings and synonyms.

Gus: There might be items visitors who are searching for items that you don’t stock anyway. I suppose if the volume of searches is pretty high then you might consider stocking these on a trial basis.

Vlad: I hadn’t thought of that. Absolutely.

Secondly, you might think about using a dedicated search systems like SLI Systems, Nextopia or Celebros. They do clever matching on search terms in the background and then returning the most relevant matches based on previous visitor searches.

Gus: Interesting. But hold on, how do you capture the search terms that appear in failed searches. I don’t think Google Analytics does that.

Vlad: Not at the moment, but it wouldn’t surprise me if they introduced in their next release. Here’s a link to a blog post I found on the Analytics Talk that explains what you need to do get failed search terms into a GA report.

Gus: Perhaps we could approach Bijenkorf and see if we could help them with their searches.

Vlad: Good idea.  Let’s finish our Christmas shopping first.

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Related Posts

Setting website goals – part 1 (catalogue request)

Setting website goals – part 2 (email newsletter subscription)