Karen Breen Vogel picks up from her last presentation to discuss how to create and use Key Performance Indicators (KPIs) for measuring the value and success of your website as an effective marketing tool. Learn the steps that will help you define KPI goals and paths that will increase revenue, reduce costs, or both and see examples of how you can use KPIs to show overall performance of your marketing campaigns (Part 3 of 5).
Thank you, Sarah. Hello everybody. We're going to pick up right where we left off in the last session. If you look at the first slide that I have here, I have repeated the funnel slide, which I think is one of the most valuable pictures you can take of a website. Here we're again showing a website as being a funnel. You can drive people to the website from a variety of sources whether they be online marketing programs, on-line campaigns, or off-line campaigns.
We have just represented a few of the possibilities here with banner ads, SEO paid search events, and email campaigns. We could also, by the way, add social media or other off-line marketing campaigns that you might be running.
But the concept is once you can message and attract the right visitors from your target market to your site, you will want to bring them to your website. Your website is really the hub of the marketing activity at this point.
Let's assume you've acquired people first of all as website visitors. You hope that they stay and engage and interact with the variety of things that you've put on your website. Eventually you hope that visitors leave some information behind or become to what is referred to as a conversion.
The information a visitor leaves may establish the fact that the visitor is ready to talk to somebody and in fact is a lead. That would move the visitor over to the right hand side, to an inside sales team or to a sales team, to qualify the visitor and move them forward in the sales process at another funnel, which would be the sales funnel.
Or perhaps the visitor just indicated that they want to receive more information from you in the future. They want to opt into a newsletter or maybe they've opted in an RSS activity or something where they're going to need some additional nurturing to actually become a lead or a qualified lead. Those types of visitors have basically moved into the bottom of the funnel to the other side, and they've moved into a database to allow you to nurture them.
So again, we're looking at the website in B2B as being a lead generation system. The question that everybody has, and should have, is, "OK, I make an investment in a great website. I make an investment in getting people there. How am I going to measure what value I'm returning to the company? What is my return on this investment and how can I calculate that?"
In particular, as we've said before, this is difficult when we don't have the commerce system on the site because we can't necessarily hear the cash register ringing.
Some companies in business to business will have an ecommerce function and sell products on-line. Others will not, and some will have a bit of both going on. Different business models will apply a website to either a commerce activity or a lead generation activity or both.
Let's talk about how we might set up a measurement system. The first thing that I think is really helpful to do is to have a vision of where we've been and where we're going to help you understand what you're doing currently and where you need to make progress.
When the web first began and people started putting up analytic systems to measure what was going on with their websites, it was primarily traffic stats.
People would say, "I've got X number of hits, or X number of hits and visits to the website, " which really wasn't all that meaningful because it didn't say anything about who was there and what kind of value was being established. It just was really, "Is the boat rising,” which can be meaningful, but can also be very misleading if the stats are not correlated to any kind of business value.
Where most people have moved since then is to having some kind of tool set up to be able to know where the visitor came from, what the source, the referring source or the beginning point of their visit was, and then what did they do once they visited? What is the visitor's path?
Most systems that you can implement in a very basic way will provide visitor path analysis. Visitor path analysis is obviously good to know because you can understand where people start, where you get most of your website visitors from, and what, in general, they typically do when they're visiting you.
The limitation of only having visitor path analysis data is it's a lot of data. It's all visitors, and all sources, but it's also just a lot of information about general website activity. Visitor path analysis doesn't really tell you if anything really meaningful is occurring and whether or not there's a business value for you.
Where you need to go from visitor path analysis is the next stage of website measurement adoption, something called key performance indicators, commonly referred to as KPIs, which by the way, are not a web or on-line specific methodology or theory.
Key performance indicators are something that businesses should apply to all aspects of their business measurement systems. KPIs help you to really identify what it is that you care about. Rather, what are the indicators that are very clearly telling you that the performance is in the area that you want it to be or moving in the direction that you want it to be. That's really what key performance indicators mean.
If we continue down even further in the evolution, the next stage (which is what we'll talk about in the next session), is how you financially value website visitors.
We're going to talk first about how we can set up KPIs, or key performance indicators, for our websites that are truly meaningful – those that will extract out just the parts of the data that will be very meaningful to us. Then we will move to finding out how we put a financial value on those visitors.
Lastly, the most sophisticated people who are doing measurements are able to take their data and actually begin to predict the future. They're able to take all the data and let it basically describe patterns that will tell us who are the best visitors, why they are the best visitors, which ones becomes sales, what were the components of visitors that become sales, and what were the sources and activities that visitors did that predict that success of revenue or sale.
For today, we're going to focus on the key performance indicator area, which is the most important next step to take if you're trying to measure your website and understand what's working and what's not working.
This is a slide that we used in a previous presentation, where I talked about businesses having one of two reasons to do just about anything -- either increase revenue or reduce costs and increase profitability. Either one of these business goals or both are the goal paths that businesses need to be on.
A website needs to be correlated with either increased revenue, reduced cost, or a combination of both. For the purpose of the discussion today, I'm creating KPI's that are meaningful. I'm going to use the revenue path, and I'm going to assume that your goal is to increase revenue.
This is another chart, and it's a bit of an eye chart. What I'm saying here is that in each one of the stacks for the leading correlations to revenue, which are awareness, prospect engagement, education, lead generation, and lead qualification, there is a set of KPI's that are meaningful.
This chart lists some key performance indicators that Clear Gauge has put together. There are other ways that you might approach this. I'm trying to give you a path that you can use, and then you can obviously customize or be creative and move in a direction that is more specific to you, but you want to identify a couple of key performance indicators for each stage of the buyer's path or of your pipeline.
If you look at some of the KPIs -- I'm going to actually explode this out a little bit for lead qualification -- you can see that we have identified the qualified lead to unqualified lead ratio, unique visitors or visits to qualified lead, cost per qualified lead, and qualified lead to sales ratios.
Again, these are examples of things that would be really meaningful for this stage of the pipeline on the web. It would be important for you to understand which one of these key performance indicators would be most meaningful to you.
You'll notice that there are mostly ratios and that is the other thing to know about key performance indicators. KPIs are typically not just one measurement. KPIs are not like visits, and leads, or qualified leads. Key performance indicators are a combination of two metrics that give you more of an efficiency rating or an effectiveness rating.
Think of key performance indicators as a ratio that you want to establish that defines success for you in a particular stage of your engagement with the buyer.
Whether you're just trying to make the buyer aware of you and educate them about you and your offerings, or you are trying to establish the buyer as a lead or a qualified lead, or actually a sale, you want to identify a couple of ratios that will tell you basically how well your process is working for you.
You want to make a dashboard for your business that tells you how you are doing on particular KPI's. Here is an example of a dashboard that we've done for a client. What we've said is that we want to increase a set of KPI's by fifteen percent. That's our goal.
The KPI is a ratio, or a number, that is very important to us. In some cases it's a cost number, and in some cases it's a value number. We set a goal that by, in this case it was by June 30, 2008, we were going to increase each one of these KPI's by fifteen percent.
Midway through the period, March 31, 2008, we established where we were at, and we looked back on the baseline that we used. Our baseline is giving us what we did last year in the second half of the year.
We want to do fifteen percent better than the second half of last year in the first half of next year. That is our goal -- fifteen percent over the baseline.
Then we look at where are we on March 31st. The final column, which is really the traffic light column, says if we're green, which means we are on target to make the goal. We are running at a pace that we will make our goal. If we are at yellow, we're a little slower than we ought to be. Our pace needs to be picked up. If we're red, it doesn't look like we're going to make our goal.
Putting out dashboards to the business really helps the business say 'these are my KPI's and this is how I'm doing relative to them.' It allows you to then focus your energy and your action on those areas where you need to take action to assure that the KPI is going to be met.
In this particular situation, starting on March 31st or shortly after that, there were a number of other data pulls that were done and other discussions that were had about how we can get better results in the increase of demos, which is the yellow number.
There was actually another KPI on paid media results that had data coming through on certain parts of the lead structure.
Dashboards are going to look different for everybody, but in general you're going to choose about five to ten key performance indicators. You need to baseline where you're at on those KPI's to start with, you need to set a goal to improve, and then you need to start picking up the data and checking it on a regular basis so you can take action in the areas where it looks like you're not going to be able to make the goal.
Obviously, over time you are going to increase your goals if you're making them. You're going to give yourself a little bit more of a tougher challenge. If you're not, you might back off a little bit and say there are reasons why I can't move at 15 or 20 percent growth'.
Where we're heading from this point, in the next session, is to talk about financial valuation, which is the next step in adopting web analytics and getting better at measuring performance and ROI.
We are then going to know how we stand on awareness and engagement and conversions and leads and things, all of which are valuable. Knowing what, financially, each one of the stages represents to the business is also very important.
You want to be able to put a financial value on a visitor, you want to be able to put a financial value on a download, or a particular activity, and you definitely want to be able to put a financial value on a conversion or a lead to the business.
The only way to put financial value on activities is to follow the money all the way through the process from the site, out of the site, into your sales activity, into your CRM system, and begin to see what the historical volumes and conversion rates are.
Following the money will give you a model for what something is worth today and if it is occurring today as a precursor event to something that is going to happen in the future.
Again, thank you very much for listening to the key performance indicator discussion. If you have any questions, I am very willing to help you out on those questions. Please feel free to contact me. I am going to turn it back to Sarah now. Thank you.
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