Why Do I have a Business Website and How is it Doing? Part 3: Site-Assessment - How is My Website Actually Performing?
Jun 24, 2009 2:23 pm by Jeff GibsonOnce you know what your website goals are and you have defined how much each goal is worth, the next step is to measure how well your business website is actually performing in getting visitors to complete the desired goals. To effectively measure your website performance, it is important to create and understand some Key Performance Indicators (KPI's).
Why Do I Have a Business Website and How is it Doing?
Part 1: Purpose - What is the Ultimate Goal of My Website? June 10, 2009
Part 2: Monetization - How Much are my Website Goals Worth? June 17, 2009
Part 3: Site-Assessment - How is My Website Actually Performing? June 24, 2009
Part 4: Taking Action - What Do I Do With All This Data? July 1, 2009
If you've been following this series, you should have a list of website goals and have some idea how much each goal is worth to you in dollars and cents. What you probably don't have yet is a clear understanding of how your website is actually performing. In this article I will show you some great ways to measure the performance of your website by using some powerful Key Performance Indicators (KPI's). Before you can successfully measure the performance of your website though, it is crucial that you have a clear understanding of what your website goals are and how much each goal is worth to you (if you don't know these things please stop reading this and read these two previous articles...).
Part 1: Purpose - What is the Ultimate Goal of My Website? June 10, 2009
Part 2: Monetization - How Much are my Website Goals Worth? June 17, 2009
Key Performance Indicators (KPI's):
KPI's are simply performance measurements relating to your business goals. There are many KPI's that different businesses use and there's no standard list that you need to use. I am going to outline a few common KPI's below, but first I want to emphasize one very important point about selecting and measuring KPI's:
Only pay attention to a KPI if it relates directly to your website goals, it is relatively easy to measure and understand, and it is actionable.
A Real World Example - Auto KPI's
For some reason website KPI's tend to be confusing and intimidating to people so it's important to understand why we're measuring them in the first place. Before diving into some useful business website KPI's, allow me to de-mystify the whole concept by sharing three very common KPI's that most of us use every day while driving in our cars: Miles-Per-Hour (MPH), Fuel Gauge, and Miles-Per-Gallon (MPG).
| KPI | Calculation | Importance | Action |
| Miles-Per-Hour (MPH) | Distance in Miles / # of Hours | Shows you how fast you're going. | Adjust by comparing to speed limit signs (benchmarks) |
| Fuel Gauge | Amount of Gasoline in Tank | Shows how much fuel you have left. | When the tank gets low enough, you are alerted to fill it up. |
| Miles-Per-Gallon (MPG) | Distance in Miles / Gallons of Gas | Shows the gas mileage of your vehicle. | Helps you estimate monthly fuel costs and a sudden drop would be cause for concern. |
As you can see from this simplified example, KPI's should answer important questions and should be easy to act on. These three sample driving KPI's should display nicely on your dashboard (unless you have an old car like me in which case you have to manually track your gas mileage :)) and quickly give you the answers you're looking for, and like all KPI's they are:
1. Related to Goals - (e.g., don't get a speeding ticket, avoid an accident, don't run out of gas, get good gas mileage, etc.)
2. Easy to Measure and Understand - (e.g., look at your dashboard or track your mileage and fill-ups)
3. Actionable - (e.g., slow down, fill up, turn on your radar detector, get a tune-up, etc.)
Some Powerful KPI's for Your Business Website
Now that we all clearly understand what KPI's are and how they should be selected and used, let's look at some common KPI's that you can start monitoring on your business website. Again, this is not a comprehensive list but a select list of KPI's I've found to be most helpful for the majority of business websites. Some of these KPI's can be used by all types of websites while I've selected others to apply specifically to e-commerce and lead generation business websites.
| Site Type | KPI's | Calculation | Significance |
| All Sites | Unique Visits | Unique visits to your website. | Measuring overall traffic over time will give you a high level view of your traffic trends. |
| All Sites | Conversion Rate | Goal Completions / Unique Visits | Measures how successful your website is in getting visitors to complete desired goals. |
| All Sites | Bounce Rate (BR) | Single Page Visits / Entries | Measures what percentage of your site traffic left from the first page they saw. This could indicate the quality of traffic and/or quality of your website. |
| All Sites | Cost Per Acquisition (CPA) | Marketing Costs / Goal Conversions | Measures how much it costs you to get one goal conversion. |
| All Sites | Return on Ad Spend (ROAS) | Revenue / Marketing Costs | Shows you how many revenue dollars are generated from every one dollar spent in marketing costs. |
| All Sites | Return on Investment (ROI) | Profit / Marketing Costs | Similar to ROAS (above) except it is more accurate in that it uses profit (revenue * profit margin) instead of straight revenue. |
| E-Commerce | Orders | Orders | Shows you how many orders are being submitted. |
| E-Commerce | Units | Units within an Order | Shows you how many order units are being purchased. |
| E-Commerce | Order Revenue | Order Revenue | Shows you how much revenue your orders generate. |
| E-Commerce | Average Order Value (AOL) | Order Revenue / Orders | Measures the revenue size of an average order. |
| E-Commerce | Units Per Order (UPO) | Units / Orders | Shows you how many items are included in the average order. |
| Lead Gen | Leads | Leads | Shows you how many leads are generated on your lead generation website. |
| Lead Gen | Lead Revenue | Lead Revenue | Shows you how much revenue your leads are generating (assuming you've calculated the revenue value of an average lead). |
| Lead Gen | Leads to Customer Conversion Rate | Lead Customers / Leads | Shows you the quality of your leads and/or how well you are doing in converting leads to customers. |
Putting KPI's Into Action
The above list of powerful KPI's is a good start to effectively tracking your website's performance. Come back next week for Part 4: Taking Action - What Do I Do With All This Data? July 1, 2009 and we'll discuss effective reports and methods for looking at and using all this data to make real decisions about your business website.
Key Takeaway - Key Performance Indicators (KPI's) are website performance measurements relating to your business goals. Only pay attention to a KPI if it relates directly to your website goals, it is relatively easy to measure and understand, and it is actionable.
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