Got the Right KPI Setup?
Our mantra is "business online". That's because everything we do should be worth doing, and that's why we measure all our activity. In short: we measure how well our activity performs.
However, in order to measure and evaluate online activity, each company should have a set of precise and well-defined KPI's, or Key Performance Indicators. These function as evaluation parameters for the organisation's performance.
So now we've got that straight.
How do you set KPI's for your online activity?
You can measure anything these days, but it's essential to create an overview of key evaluation parameters that are relevant to your own business. This is the foundation you should be using to build your analysis on: how your online channel is performing, and how this performance affects the business itself.
That's why we've written this article. It should help you identify, build and analyse your KPI set-up - KPI's that you can work with.
You should be particularly clear on the following:
- What are the most important KPI's for your online channel (website/online shop)? Do they support your company's overall objectives?
- Which digital activity in the channel brings your visitors closer to your most important KPI's?
The classic set-up
You probably already work with a few general KPI's. For example, how many direct sales your website generates, or how many leads it creates. You probably also have a clear idea of how much traffic you get to your site. It might look something like this:
One of the problems with the above KPI set-up is that it's very narrow. You're only focusing on a very small area: it's only data that directly contributes to the KPI and helps you achieve your overall goal for your online business. But what about all those users caught in the middle on the journey towards that KPI? What do they need to make it?
That's what we're trying to find out with a more detailed and precise KPI set-up. A KPI set-up enables you to assess both how long it takes users to implement a KPI, and which digital activity needs to be optimised to achieve this goal.
So what happens next? Next step is to lay down a strategy for the path your want the user to take to reach your KPI. In other words, it's about building a strategy for the flow of permissions you want the user to go through. This is where 'PI's' (Performance Indicators) come into the picture.
Here we refer to KPI's as macro-conversions and PI's as micro-conversions.
Let's start with the KPI's - the macro-conversions. To illustrate, let's take Novicell as an example:
KPI set-up without tracking:
In this example, the distance between what the visitor actually wants and the KPI itself is relatively long. Because all you really want them to do is read an article about a KPI set-up, so the path from there to contacting us is quite long isn't it?
So, the question is how do we get you to read the article AND to send us a contact form? This is where micro-conversions (PI's) come into play.
Micro-conversions represent the activity or event that paves the way for macro-conversion. In other words, micro-conversions are specific sub-goals that give you specific figures that you can act on to reach an overall objective for your online business.
Below is a simple example of how a line of micro-conversions could assist the macro-conversion 'Send contact form'.
KPI set-up with tracking:
In the example here, one of the micro-goals has probably already been achieved: you have read an article for more than two minutes, and your next step might be to add your e-mail address to receive our newsletter.
This might be achieved by encouraging you to sign up, so you can be one of the first to receive the next article we release.
This would then inspire you to take part in one of our free seminars about KPI's, and maybe, one day, encourage you to contact us because you need our help with e.g. creating a website that is optimised to building an online business.
Your PI's are the user's journey
The above example is naturally very simplistic, and in most cases there would be several more activities leading to the final KPI.
That's why you should consider a KPI set-up with a number of micro-conversions as a journey in which you gently lead the user towards the final macro-conversion.
Perhaps you have a online shop with videos that prepare the customer for the sale. Here a micro-goal could be that the user watches more than 50% of a product video.
Perhaps you have a B2B website where a micro-goal would be for a user to download a PDF article about one of your products.
Or perhaps you blog, and your goal is to have visitors sign up to your newsletter.
From a purely technical perspective, most micro-conversions are relatively easy to set up as targets in Google Analytics. However, this often requires access to a development resource.
That's why we often use Google Tag Manager. This can be used to send events to Google Analytics (event tracking), when a user clicks on social media icons or clicks on a mail-to-link.
Below, we have made a guide for Google Tag Manager:
How to set up Google Tag Manager and track KPI's.
How valuable are your KPI's?
Micro-conversions are interesting to analyse, but they are only valuable in relation to the overall macro-conversions (KPI's) - and not on their own.
We recommend you judge your micro-conversions according to their ability to 'guide' visitors towards your KPI and thereby the final conversion. You can also give your PI's values, to make things more practical.
An easy way to do this is to give them a score of between 0 and 100, where 100 is the value of the KPI, that is, the final conversion. In our case, the final conversion would be a sales enquiry. Below you can see a simplified example of what values we might assign certain PI's.
There are many ways of assigning values to your PI's and your KPI's. It's quite easy to add values to every goal directly in Google Analytics, but naturally you can also add values afterwards, if you export the goals in Google Sheets or in a visualisation and data treatment tool such as Klipfolio.
Here is an example we are working on with figures directly in Google Analytics, where you can use the values as index figures relatively quickly.
Figures to act on
We have picked some fictitious index figures from Google Analytics as an example of how the valued PI's should be read. In the dashboard below, you can see how they are distributed per source/medium, that is, the areas where the traffic to the site comes from.
Here we can quickly see that direct traffic (direct/none) is performing badly compared to organic traffic, for example. The number of sessions is a little higher, but when we take the quality of the traffic into account, much can be done to optimise it.
The organic traffic is performing well in the index figures. Meanwhile, it looks like the newsletter is straggling a little compared with some of the other channels. From here, we can delve into all sorts of fun red herrings in Google Analytics to find out the cause. But that's a whole other article.
With index figures on the table, your online performance becomes more transparent, and reduces the risk of acting blindly. The KPI set-up enables you to select those initiatives that give the biggest yield for your money, and thus helping your company on its way to achieving its overall goal.
This in turn makes it easier for you to show the management how working with content, conversion optimisation or SEO generates great value.