Finding the Right KPIs for Your Business Type Tutorial

3.2 Introduction

So what I wanted to do today is talk about best business metrics. And it's, it's a very complicated process, and it's a very non-simple way to figure out what is right for our business. And, and the other thing that has always baffled me is that we, we just tend to log into Google Analytics, or pick your favorite tool and, and simply just start reporting whatever we have access to from the front interface. In fact, not only do we just jump into Google Analytics, but we pick things that we see on the first possible screen, and start the process of data puking, if you will, right? And so you know, page views and new visits, or time on-site, or whatever. And I really think that we can do a lot better when it comes to figuring out what the metrics are that are right for our business. And we're going to touch at this at the very end. We know ideally the process starts with a digital marketing measurement model, right. There's, there's a model, there's a framework. But even if you have no access to any sort of business person, leader or your client just refuses to work with you, it is still possible to figure out what are the best ways that we can report success. And a lot of this comes by not sort of, opening Google Analytics and having a go at it. But actually trying to think about the type of business, the size of business, the problems the client might be trying to address. And kind of putting yourself into their shoes, and then trying to figure out what might be best for them. And, and in fact, not even logging into any Web Analytics tool, you know? Ignoring site catalyst. But just forcing yourself to think about the business, and the priorities of the business, and things like that. Now I have to say that when you go in blind, and choose metrics without talking to the business person or the business leader, and understanding the strategy of the company. It is a bit like jumping off a cliff, right? I mean, even if you have a parachute strapped on, you have only 50% idea that it's going to open and you're going to be fine and not dead by the time you land. So it is a dangerous exercise to undertake. But, nonetheless, I personally believe that it is entirely possible to figure out how to help a business with Web Analytics, and help them in very tremendously powerful ways.

3.3 Goals for Small Business

So what I want to do in this particular video is sort of cluster into three different groups, small, medium, and large-sized businesses. And can I explain to you my thought process? As like how would I go evaluating what is important for a business. And without knowing what they're doing, without having ever talked to them, without knowing if they're B2B, B2C whatever monkey to dogs. It's like without knowing any of those things, I can still figure out how to add value instantly. And so if you are at a new job or you have a new client, you can still without even talking to them for a second, do some tremendous good for them. So,I'm going to walk through the thought process that goes into it. And the metrics that I think that will be powerful and the thing that I want you to pay attention to is how these metrics forced companies to behave in the right way. Different from if we just jumped in and started data-puking the number of visits and page views to the site, which is our normal tendency. And so you have to put sort of your small business hat on. What are you trying to do as a small business, what might you be worried about? What data can you get, what data can you action. And so going into a small business and articulating the immense value of multi-channel attribution analysis is a complete waste of time. I mean, it's a waste of time for you because you are going to waste your time. But it is a huge waste of time for the business owner because it is just so far beyond anything that they can actually execute on. That telling them something astonishingly complex is is just ends up being not a productive exercise to undertake. So the way I used to think about is sort of, as a small business owner, so John and I are running a small business. So what, what do we do, what is kind of the defining principle of our lives? And, and I sort of articulate into this goal that you see on top of this screen, right, which is make money, survive, save money, make more money. As a small business owner, you could distill the entire existence into this goal, right? [LAUGH] Figure out how to make money and survive and make some more money. [LAUGH]

3.4 Three Crucially Important Metrics

And with that in mind like if you think that that's the goal and you've got 20 million metrics and web trends that you would report on. What are the couple different things this is a small number of metrics that just from day one awakened the business owner into doing something extremely powerful. And, and for that I'll, I'll sort of pick the metrics. And, and I wanted to put this legend at the bottom right in, in front of you, because one of the ways in which I execute these things is always keep frameworks in my mind. And so in this case, now, just to remind myself not to go down a rabbit hole, or, or just report link building, link building, link building, because all I know is link building. I keep these three things in mind, right? Is that when I am going to go and do business analysis, I want to focus on three important buckets of things, which is acquisition, behavior, outcomes, what am I doing to attract traffic into my site? What am I doing to improve their experience once they land on my website, and if they leave what was the outcome for the business and the person who came? So, three important things to focus on. And the legend at the bottom is just a reminder to me. As it should be to you as to what you should not forget.

3.5 Cost Per Acquisition

And so the first metric I choose in terms of acquisition, given the context of the goal that you see on top, is cost per acquisition, right? Which is that the most important thing is to make a lot of money. And the most important way to make a lot of money is not to waste the precious money you actually have, right. So the most important acquisition API to have is to figure out if we are spending money on acquiring traffic. If we're spending $10 on SEO, we're spending $1000 on Facebook, we're spending a $100 on Google. The most important acquisition metric is not the number of impressions, not the number of clicks, not the number of any other thing except that the goal in mind, right? What was the efficiency with which we were able to attract the traffic to convert on our website? because he was so obsessed with survival to business, and so you will create a spreadsheets like this, not even Google Analytics reports like this. I wanted to deliberately use these two channels as representative of this KPI because for both of these channels the row that you see with cost. In fact the, even the click-through rate to some extent might not even be available to you in Google Analytics, or SiteCatalyst, or Webtrends, or Yandex Analytics. Because the Clicks and CTR and Impressions will come from your email vendors. The social media impressions clicks will come from Facebook, and then you have to pull all the data together with data from Google Analytics or I'm not sure, or WebTrends, where you will get conversions, etc. The cost may come from somebody in your finance department who cut a check. Now if you are doing this for AdWords, it's all in Google Analytics, right. It's all in amateur, unless it's not there. And what a small business owner wants to know is how much cId it cost for me to acquire one persons to convert on email. What was the cost to acquire one person social media, and this is the KPI that will define the way in which they will spend money. It's like, considered to be supremely important. All of the other stuff on the top, completely irrelevant, right? Because you're try to save money and be efficient as marketers.

3.6 Bounce Rate

When it comes to behavior for small business owner, again with the context of the goal in mind, the metric that I would choose first is Bounce Rate. And Bounce Rate is a tactical metric, but the thing that is, is astonishingly good at is helping you find problems with ad targeting, where might your ads, or your links, or your messages, or your tweets, or whatever, be showing up where it's not reaching the right audience, because these come and puke and leave right away. Or it is very good at figuring out inefficiency in your landing pages. So I'm, as, as a small business owner you want to keep tweaking these two things very, very fast, because you can't afford to lose even one person who visits your website instantly. Because you are going to get so few conversions, you gotta figure out how to get everybody to come and stay on your website. So one of the great things is that you just log into SiteCatalyst now, if you have the latest version of SiteCatalyst, not the old versions. Just log into Webtrends, and this metric is easily available to you. In order to figure out what landing pages to improve, what ad targeting to improve. And again you can see how that instantly gives you a fighting chance to convert people on your site, and improve ad targeting on, on behalf of your tiny little marketing budget and drive constant efficiency. And a second metric that I will choose for them is the one that I just love and adore. Is the fastest way to make money for any size business, is Checkout Abandonment Rate, right. So as an example, I'm a big fan of cupcakes made by Melissa. The shop is called Baked by Melissa. It's in New York. If you're ever in New York, these things are about as small as what you see on your screen. They're just tiny little cupcakes, delicious, this is [SOUND] so gourmet. Aah, awesome. Now the sad thing is it's like $1 a cupcake, and it's the size of a penny, but it's to die for. But now, if Melissa was running a website which she is right? And which for her, everything that happens after add to cart is so important, right? because you've already taken out your wallet, you want to give Melissa money and now you gotta figure out that you should not lose any single person after that button on your screen gets clicked, right. After you click the check out button, you want to take money from the people. And so I'm a big fan of accessing our go funnel reports, right? And try and figure out how many people you lose, and if you're losing, you know, we've only survived 26% of the people of the first page in the checkout. You, you should stop doing everything and you should fix that one problem, because it's the fastest way for you to get money. The person's already there and convinced to buy from you. So I'm a big fan of using Checkout and Bounce Rate as as a behavior metric for the small business.

3.7 Macro Conversion Rate

And the outcome metric is simple, right. You, you once you see the goal. I'm, I'm sure you all guessed instantly what the metric would be like, which is the macro conversion rate because we want to stay in business. And, and the nice thing is it doesn't matter what web analytics tool you use. This is available instantly to every single person and you are able to report revenue and average value, and number of people, unique purchasers that came through, etc, etc, etc. You can easily segment the people who buy more than one product in an older people who do X, Y and Z, and figure out how to optimize business. So that's sort of a summary of how I would pick KPIs for small businesses. I, I fundamentally believe these KPIs are wonderful, right? I mean they're fantastic KPIs. What is more important to, to be aware of, is that the thought process that went into choosing these KPIs, why that goal gets you set into the right mental model and then across the three most important bucket, the driving force is to keep saving money, surviving as a business, and making money. And because that gives us a fighting chance to move from being a small business to a large business. And there were hundreds of other metrics I could possibly have chosen but this cluster of, of metrics I believe will, will force the business to do the right thing and force the analyst to find the right kinds of insights. And they're not easy to do, right? Or except for perhaps bounce rate, I suppose. All the other three metrics actually are hard and require immense amount of effort on your part. But as a small business, as an analyst in a small business, the owner of the small business, who is a part-time analyst, it is the fastest way to figure out how to improve your business using data.

3.8 Goals for Medium-Sized Business

When it comes to medium size businesses, one of the most important things, measure everything that a small business does, so you don't get a free ride, right? So you measure all of the four metrics that small businesses are measuring. In fact, that's probably, by measuring these things is probably how you became a medium size business. But when it comes to the goal of a medium size business, and we put your hat on, right? You're good at surviving, you're good at saving money, good at making money, you optimize the card etc, etc, right? And so that three more interesting things that you would focus on as a medium sized business is, how can you take things up to the next level when it comes to optimizing your campaigns? So initially maybe you were just doing AdWords and now you're doing AdWords and Facebook and Bing, right? And then, so how do you optimize these campaigns? And, and so you can sort of step up, up from CPA. You've optimized CPA already but, but now you want to improve other things connected to the reason your ads are working or not, right? And the you want to deeper engagement to the website so people don't bounce. That's fabulous, right? Everybody is happy. But what is it going to get them to do more things on your website? And so we want to focus on that as a medium sized business. And then, and then now that we've optimized our business, our own macro conversion rate, what are the other things that we could get so we're solving both for the short term and the long term? And that sort of the thing that every medium sized business thinks about, right.

3.9 Click Through Rate

And so per meaning size regulator, you remember the anchor at the bottom right, right, the framework is still exactly the same and this is a reminder for us about how to pick the right set of metrics. And the way that you would add to the, to the four you already have are, are for acquisition, you would focus on a metric like click-through rate. And then actually, click-through rate is a vastly underrated metric, I think. We obsess about impressions and clicks, I've seen those in lots of reports. But somehow adding the division and putting it click-through rate allows people to go in and, and figure out what about my ad copy? What is, what about my match type options, broad and, and broad match, and phrase match and exact match? And, and what about retargeting options? And, and what about using demographic and psychographic targeting better, so that I can tweak my Facebook ads, to ensure they're showing up at the, in front of the right people, and the copy is right? What about experimenting with different AB options of display ads, when I'm running them on AOL or Yahoo or using AdMobile mobile platforms? So it is very easy to create a custom report in Google Analytics, as you can see here, and a custom report in Omniture and Webtrends. And, and initially as a medium sized business, if you just focus on those two metrics, right, ignore the other. I make it through CPA easily there, for when you have it. But key two rates, unique visitors, campaign, as I mentioned, boom, right? And, and, and the idea is to, is to give it to the person spending your media, and forcing them to figure out how to improve copy, how to improve targeting options, and, and get them to optimize the campaigns that they are running. And, and that of course will be tied on the other end with CPA. And, and, and that helps you understand if, if you're delivering the right kinds of outcomes for your company.

3.10 Page Depth

The second metric for behavior in terms of deeper engagement is page depth. Again, a very standard metric available in all web analytics tool, but I encourage you to think about it in more creative ways, like in the spreadsheet that I've created. And you can see how in this case, I have taken people who fall into these three different buckets. I'm tracking them over time and I'm understanding how many people fall into each bucket. And, and I'm, I'm trying to understand if the efforts that I'm putting to improve the information architecture of the website. The left navigation, the top navigation, the cross sells and upsells and the promotions and other ways I'm improving the pages is improving the number of people in each of these four rows. The last row is there just for context, but the other three rows, and if you were indeed running this business, you could see that slowly as you're improving the website, you're actually sucking more, just, just look at the first row. And again, this data put in that kind of context, outside of web analytics tool, is really important in helping you figure out, as a medium-sized business, how to create a deeper engagement with people, and if it is working, right?

3.11 Loyalty

The second metric that I have chosen for behavior again, remember this goal of deeper engagement, is loyalty, right? And, it's not just important that we have a one night stand with people who come to our site, but given that, most considered purchases anything over $10 might require people to come back more than one time. Well if I'm a B2B business where primarily I'm serving up non-converting content on the website or if find purely content website. This standard report in web trends and other tools will help you understand if you're creating increased loyalty as you work on improving your website experience. And the nice thing is look at the strip at the very bottom is that it's easy to segment this so you can work with your medium sized business owner or the person who's setting the goal and say, well given the amount of money we're investing, what is a good amount of loyalty to achieve? In this case we said, well, loyalty is that in a given month people should visit a website four times or more. It's like fabulous, right? That's an advanced segment you end up creating. And now you've saved the segment you can go back and apply to your traffic sources report. You can apply to your social media tweets. You can apply to your campaigns. You can say, hey, what is the kind of work we're doing in terms of advertising that is getting the right loyal people to come to our site? And you can apply to content and see if certain kinds of content and dangers increase loyalty, and yes or no, right? So, that's a very, very good metric to understand behavior at a next level and try a deeper level of engagement for a medium-sized business.

3.12 Micro Conversion Rate

And the last one, again for people who've seen or read anything that I said or written are aware of, is the Micro Conversion Rate, right. So we're getting good at the macro. We're good at solving that one thing. But what about solving for multiple outcomes? So so if only 2% of the type traffic is going to convert, what about the other 98%? Can we give them a little lollipop? Can we give them a little something, so that they sign up for a newsletter, they said. They, they, they download something, or, or, or get a trial version or, or something. A micro conversion and again these are easy things to find. At the bottom on this screen, you're seeing the six different micro conversions for a very large B2B website that doesn't actually sell anything. And you can see the videos watched, completed designs, selection guides and other downloads, outbound clicks to distributors who do then sell the product for this company, new website accounts, sample orders. All of these things end up being a robust cluster of micro conversions. For a site that doesn't sell anything at all, you can see how we can create a cluster of micro conversions. We're then able to track them in our Web analytics tool just as we would track conversions. On the top right, you're seeing data for photo sharing website that belongs to one of my friends in Spain and you can see the registrations, you can see the publications of the photos. You can see the number of premium subscriptions he's getting. And I forget what the last one was, oh anyway, his track is micro conversions. And of course, we have a goal value assigned to these micro conversions and, and that helps us understand completions, our conversion rate, and, and the goal value. Not revenue, goal value, you accomplished, so. So I'm a big fan for medium sized businesses, forcing them to think about this marketing strategy of focusing on the 98% of the people who won't convert. And then, and then understanding what those micro conversions are quantifying the value.

3.13 Per Visit Goal Value

And the last one again in context of that, because they don't have revenue is to focus on a metric called per visit goal value. Because while we're a medium sized business we're not in imminent threat of dying overnight like every small business is. But we're much more established and so if we don't have any e-commerce outcomes or why don't we not focus only on our e-commerce outcomes? But also focus on these micro conversions and it begin to optimize the experience on the website or the acquisition strategy we have, purely based on these prior visit goal values. So you can see at the very top of the score card one might get from a two live Google Analytics and at the bottom of table, that is available in every Web Analytics tool you have access to. Look at the very right most of this custom report and you can see how now I can ignore the e-commerce part of two it, the 2% conversions and revenue if I were in e-commerce side and focus on the 98% of the people in the last column. Figure out which sources are sending me highest per visit goal value, I can see the differences between traffic that comes from Google and let's say people that come from social media. Look at the traffic that comes from Facebook.com. And their per visit goal value even if there are only 1600 of them and contrast that with for example Bing which is right below it or other social media sites which are right on top of it, right so it really helps you understand for the 98% that did not convert or I found a B2B site where there will be zero conversion rate. How can you optimize your campaigns? How can you optimize your pages? How can you optimize these other things in order to ensure you're adding long and short term value to the business, because most of the things that you're going to track as goals for this goal value are all long term things. So this is sort of a summary of what a medium sized business would do and you can see how the sophistication greatly ramped up as you went from small business to a medium sized business and remember you do all of these things as a medium sized business. You don't get a pass, you don't say, I'm a medium sized business but by my co, conversion rate. Oh, I don't care about CPA anymore. No, no, no ,no, no, no, no, you actually track all of those things plus these things and then notice how the KPIs that we chose are focused really, really well on optimized campaigns, deeper engagement, multiple outcomes because that's how a medium sized business will become a large sized business, right? And it's the thought process there when you focus on, and how, by measuring loyalty, and measuring purpose goal value, you are solving these problems that so many people ignore. And that's why these KPIs are important for them.

3.14 Goals for Large Business

So that gets us to our most beloved BFFs, the people who run the world's large-sized businesses. And, and we have to figure out as a large-sized business, not only do we have to measure all of these things that are, we used to measure when we were small and medium-sized, but we've gotta figure out what is unique about us and our size that we can measure that will help us truly, truly take our business to the next level. And, and so, the goal when you think about it for large size business would fall into these three buckets. And again, all of these things are big, hard problems to solve, right? And if you're a large sized business you've already licked the things that small, that fall in the small bucket, you've already mastered the things in small with a medium sized bucket. So the large sized business that is still struggling and reporting only macro conversion rate, you're going to die. You're not going to go anywhere, right? And so we're going to think about key performance indicators metrics. That will really deliver against those three goals, so we can truly increase our world domination. Once again, remember at the bottom. Three buckets, never, never forget those three buckets. Because it is a crime against humanity to only focus on the purple, or only the greens, or only the reds. Gotta do all three of them. You have no choice.

3.15 Percent of New Visits

The first one that we'll choose is, is the percent of new visits. And we've gone sort of back and forth on this a lot, and sometimes I'm like, percent of new visits, you're killing me! But the reality is that this is a wonderful metric for, for that first goal that we've highlighted, we use to grow our audience. You know, just focus on people who we already know but figure out where to find these new people and of course present them new visits in easy metric defined in every single Web Analytics tool. So focusing on sources where you're getting a higher percent of new visits and figuring out how to get those new visits to, to, to stay longer in your website and not leave and, and, and having already optimized the checkout abandonment rate. You can see how this big red metric will flow into the green metric of the medium sized business and immediately flow into the ladder of the green metric for the medium sized business and the macro and micro conversion rate. We can see how immediate it was. You figure out how to improve the click-through rate of new visitors, and you have a deeply engaging website, it delivers the right outcome. So you can see how all these things play together with each other.

3.16 Events Per Visit

The second metric to report for a large size business is events per visit. And all of us know event tracking and very few of us use it, but go to any decent sized large business and you'll notice the website is full of Flash demos, interactive quizzes, and all of these are custom car configurators. And all of these other things that are not web page driven experiences, but are dynamic experiences created by a website. So one of the most interesting behavioral metrics I want to know, because I've already mastered bounce, I've already mastered page depth, I've already mastered loyalty, is to figure out what these dynamic experiences are that we've created. And if those dynamic experience, see the 2.24 events per visit, if those experiences are actually being engaged with on my website, and if those experiences are driving outcomes. because what's the point of creating lots of videos and uploading them to your website if nobody's watching them, right? Or if they don't drive any conversions, macro or micro. So I'm a big fan of identifying these rich experiences and then holding them accountable using event tracking.

3.17 Days to Conversion

The outcome metric that I have chosen are two, right? The first one is days to conversion and my hidden agenda here is quite simple, right? On many websites, the profile doesn't look like the one that here you see on your screen. And there are two places where you can find this metric, the first one is the Time to Purchase report under eCommerce. What I like to use is the Time Lag report in Multi-Channel Funnels. You can see that's the report that's highlighted, not the time to purchase. And it's simply because the Time Lag report will work for eCommerce and non-eCommerce website. And the Time Lag report is superior in some ways to the time to purchase, just take my word for it. The Time Lag report in Multi-Channel Funnels is the best way to figure out days and visits to conversion. And this is a fabulous way to understand how can you improve your campaigns, your calls to actions, your landing pages to ensure that if people are not going to buy in the first visit, how you should improve merchandising on your website. How can you create read micro-conversions that will cause them to come back again to your website. Because it does take 3 visits to conversion or 10 visits to conversion or 2 visits to conversion. So, I'm a big fan of understanding consumer the experience on your website through this data. So you can create a great, relevant marketing experience and great, relevant consumer experience on your website. And so I'm a big fan of using this metric.

3.18 Percent of Assisted Conversions

And the last one is called percent of assisted conversions. And again, as you think about what I was trying to drive at with days to conversion, it takes many days for people to convert. And during that time they're going to be exposed to multiple media channels. They might have seen a Facebook ad. They might have seen a Google AdWords ad. You might have seen a display ad on Microsoft, and then etc., etc., etc. And it takes them a while to convert. So you want to know as, as a large sophisticated business is how do you optimize a media spend when it comes to conversion if you don't want to just stay with the last click conversion thing. And so, tools like Google Analytics now easily provide this data. And so you just see the standard report, you don't have to do anything as long as you have an e-commerce tag implemented or you have a single goal identified. So the data you're looking for is actually for a non-ecommerce website. I just wanted to show you for non-ecommerce website just to show you that you can get this data for anybody. And what I want to notice at the very top is the total number of conversions that we had. And of the ones that were assisted conversions. So you could see that there were 59,476 total conversions. Of those 25,072 were actually assisted. So more than half of the people actually were touched by multiple ad exposure on your part before they converted. So that's a fabulous thing for you to know. And then look at the table, it's just fantastic. because it not only helps you understand the last touch conversions. Just look at the first row organic search, right? 23,721 were the total number of conversions that will be reported in Google Analytics standard reports for organic search. And yet, for those, out of the 23,721 conversions, 13,483 had come to your website prior to that last click from the other channels. Right? The assist or last interaction conversion is 0.57. Right? And you can even see that for e-mail campaigns it's 0.95. And it's, it's astonishing when you think of, of the implications on how you spend media. How you're going to create experiences? How you're going to figure out who gets how much money? Etc, etc, etc. So this phone is like a nice, cold water on your face. As a large business, think about all this, in a much more sophisticated way. And it forces a large business to do the kind of analysis and optimization that they deserve, to go from large to magnificently large businesses.

3.19 Review: Best Web Metrics, Digital Marketing & Measurement Model

That's the summary of what a large business would do, when I say grow audience, which are engagements, sophisticated media optimization, you can see how by picking metrics like event per visit or percentages to conversions. All of these are standard, by the way. You just get them out of here with you actually change the fundamental behavior of the company and force them through the metrics. Now, remember that while the best web metrics, this cluster of metrics are available to you, and I hope provide you with brilliant thought starters, the best way for you to execute for a business is to take inspiration from this. Remember, the thing I want you to focus on is the thought process that went into this, not just that i used this metrics but why I chose this metric. But the very best way to do this is to focus on strategy first, figuring out what the objectives are for the business, figuring out what the goals are, figuring out then what the key performance indicators are, setting targets for those, and identifying segments. The row that you see that is identified with KPIs, I hope that you find inspiration from this video to pick really great KPIs. And in the framework of large, small, and medium and acquisition bnehavior outcomes will get you to be more imaginative when you choose these KPIs. But without focusing on a digital marketing measuring model, you will be like the buy at the very beginning of our video today jumping off a cliff. You'd probably land because your picking at KPIs but it's still a sense of danger going on there. I hope that you will find this framework to be valuable, so thank you very much.

  • Disclaimer
  • PMP, PMI, PMBOK, CAPM, PgMP, PfMP, ACP, PBA, RMP, SP, and OPM3 are registered marks of the Project Management Institute, Inc.

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