Friday, January 18, 2013

Keeping your metrics in check

         There is no doubt that whether you are a large firm with a widespread consumer base or a small business struggling to acquire just a few more customers, seeking to build your brand by investing in your web presence will expand the customers’ ability to access to your products and service offerings and will drive future growth and consumer loyalty. In order to maximize value on investments you make in websites, search engine optimizations, etc. it is paramount that you understand the behavior of the potential customer and how to motivate them to actually do what you want them to do. Web analytics platforms provide you with vast amounts of consumer data that can be used to learn how potential and repeat customers navigate through your website, when they make purchases, when they leave your site, when they return, and so on. This data can be a marketing goldmine, but one of the biggest challenges many companies face with this wealth of information is in determining the right web analytics data metrics to focus on. 

         What is “right” can vary from business to business depending on business goals and objectives, but the right metrics will be those key performance indicators (KPIs) that consistently give you factual insight into customer behavior as they interact with your online presence/website and should leave you with enough information to take action

        So what metrics should you focus on and how do you know if you’re wasting your time on measurements that really don’t have any meaningful impact? One way for any small business or large firm to consistently keep these metrics in check is to validate their actionablility . Avinash Kaushik recommends that companies can begin  by asking a series of the repeated question “So What?” He says that “each question provides an answer that in turn raises another question (a ‘so what’ again). If at the third ‘so what’ you don't get a recommendation for an action you should take, you have the wrong metric. Kill it.” 

          You may determine, for example, that you want to track the checkout abandonment rate as a KPI because it directly impacts the number of website sales in a given month. One month, the data from the reports might indicate that the checkout abandonment rate has increased by 15% and is trending upward. So you ask “So what?” Answer: “This is worrisome because fewer customers are actually completing a purchase and will impact our revenue.” Then you ask again “So What?” Answer: “So we have been hearing that the checkout process is too cumbersome and should probably do XXXXX or YYYYY to make the checkout page more simple…. see if that makes a difference in the checkout rate”

         In this example because you are able to quickly respond with an actionable goal from the data you receive from that metric within three “so whats”, this is a good indication that it’s a valuable metric to focus on. It gives you something tangible and meaningful that you can take away and then do something with to either begin to provide solutions to an identified problem or to enhance your web services to achieve a greater number or desired results. Although many KPIs may seem valuable to your firm, if they don’t give you enough data that you can do something with, your focus should be elsewhere. Having lots of data is good, but having data that can be acted upon is more valuable! 

         When determining which KPIs to focus on, consider a few of the many common metrics that are widely used across many firm sizes: Click-through Rate (CTR), Checkout Abandonment Rate, Bounce Rate, Conversion Rate, Days to Conversion, etc. These metrics will generally result in data that can be used to scrutinize the effectiveness of your website or marketing targets. Another KPI that should be considered that is highly important, but less obvious through web analytic tools is the Cost Per Acquisition (CPA) that can be determined by taking internal financial calculations and combining it with web analytics data. To fully understand your ROI in the world wide web, you should also be keenly aware of what your spending to acquire these customers in the first place.

        Whether you are a small firm that is new to web analytics or a large corporate enterprise already seasoned in best practice, consider a small subset of metrics and KPIs you currently use or would like to test to evaluate their “rightness” for your business. Based on the data you glean from them and by what you’re able to do with it, ask yourself “So what” to ensure that you’re tracking the right metrics so you can you maximize the value you get from your web investments and that will help you ultimately get closer to achieving your corporate goals; otherwise, you could be just wasting valuable time.