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A KPI is a metric. However, a metric is not necessarily a KPI.

kpi-vs-metrics

KPIs — key performance indicators — are intended to measure success:

If you don’t actually know what you’re trying to achieve, it’s also hard to measure success. Try it, you’ll see what I mean. – Avinash Kaushik, 12/9/14, Twitter

KPIs grow naturally from an organization’s objectives:

Once an organization has set its [objectives and key results] OKRs, it needs a way to measure progress. Key performance indicators are those measurements. [1]

A metric is simply a number. Digital analytics tools offer a lot of numbers. Web analytics reports typically include a lot of numbers. A metric appearing in a report is not necessarily a KPI:

…a metric is a quantitative measurement of statistics describing events or trends on a website. A key performance indicator (KPI) is a metric that helps you understand how you are doing against your objectives. That last word—objectives—is critical to something being called a KPI…” [2]

Most metrics I see in reports are not KPIs. Lots of times, I wonder why the metrics are in the reports at all. That doesn’t mean they shouldn’t be there, but rather that it’s not crystal clear why those metrics are there.

Good KPIs create expectations and drive action, and because of this they are a small subset of information from your reports. [3]

Too much of a good thing can make it hard to see value and drive decisions. What KPIs are the critical few that drive value for your organization?

How About an Example?

Let’s say we work on the digital marketing team for a B2B technology licensing company with a strong brand for both consumers and businesses. We sell only to businesses, but want consumers to buy products with our technology in them (think Intel Inside – though this example is not Intel).

Our business objectives are to increase profit by:

  • Creating a positive impression experience of our brand with consumers
  • Generating demand by demonstrating to consumers the value of products with our technology
  • Generating B2B sales leads
  • Providing customer support to B2B customers

Our digital initiatives support these business objectives and our KPIs determine how successful each initiative is at achieving the objective. Let’s look at how they fit together.

Objective: Creating a positive impression with consumers for our brand.

Our objective is to continually increase the number of people who use the demo.

By “increase”, we mean increase meaningfully. One more person per year is an increase. That’s not very meaningful. We want an increase that matches that of general Internet usage as measured by Google searches globally. Our research indicates that that is 7% annually.

By “use”, we mean engage with it meaningfully, i.e. not merely see it, but spend at least 3 minutes clicking through the demo or choosing 2 of 4 available options within it.

Initiative: Interactive Demonstration
Our site features one interactive demonstration that guides users in how to use the types of devices that have our technology in them in their homes. This demo can be used in all homes with these types of devices; not just those that contain our technology.

Initiative: Demo Promotional Campaigns
We actively promote this demo through PR and social media campaigns and with our customers and partners.

KPI: YoY Increase in Demo Engagement
The related KPI is: year-over-year percent increase in demo users who either spend 3 minutes on the demo or click 2 options.

Objective: Generating demand by demonstrating to consumers why they should use our product.

The objective is to continually increase the number of people who use these demos.

Each of the three demos related to this initiative take about 1 minute to complete. Our objective is to increase the number of users to complete at least 50% of each demo and toggle the on/off button at least once.

Initiative: Device Function Demos
Our site has three interactive demos that illustrate how a device functions with and without our technology in it.

Initiative: Device Function Demo Promotional Campaigns
We also actively promote these demos through PR and social media campaigns, via our customers and partners and with search and display advertising campaigns.

KPI: YoY Increase in 3 Demo Engagement
The related KPI is similar to the prior demo: year-over-year increase in demo users who reach the 50% mark and toggle on/off one time for each of the three demos.

Objective: Generating B2B sales leads.

The objective is to grow the number of newsletter recipients. Potential customer sign up for our company newsletter at various places throughout the site.

Initiative: Newsletters
Site visitors can sign up for our company newsletter from any of the customer-targeted pages on our site.

KPI: Newsletter Sign-up Conversion Rate
The related KPI would be the newsletter sign-up conversion rate, i.e. the number of newsletter sign ups divided by number of sessions. This KPI should have a target. At a minimum, we might say we have to do at least as good as last year. Or we might use the percent increase in leads our sales team is targeting.

Objective: Providing customer support to B2B customers.

Our objective is to increase the consumption of customer support content. Customer support content either helps our customers promote or use our technologies. Content is either a web page or a PDF.

Initiative: Web marketing and technical content
We provide marketing materials and technical information in the form of web pages and PDFs for our customer and potential customers.

KPI: Change in Pageviews and Document Downloads
The related KPI would be percent change in pageviews and PDF downloads for customer support content. This KPI should also have a target. At a minimum, we might say we have to do at least as good as last year.

Conclusion

In summary, from our business objectives through the initiatives we undertake, our critical few KPIs are:

  1. YoY Increase in Demo Engagement
  2. YoY Increase in 3 Demo Engagement
  3. Newsletter Sign-up Conversion Rate
  4. Change in Pageviews and Document Downloads

With this information, we can begin to know what actions to take. Do we change the tone in PR campaigns? Do we A/B or multivariate test different demos to see which are most used? Do we put the newsletter signup button on every page? Now we have a to-do list. So let’s get busy and see where our KPIs tell us we are in a week, month, quarter, or whenever is appropriate.

Homework

What metrics help us determine what to change in order to affect our KPIs? Please share with us in the comments below.


[1] Clifton, B. (2012). Advanced Web Metrics with Google Analytics, Indianapolis, In: John Wiley & Sons, Inc., page 364.
[2] Kaushik, A. (2010). Web Analytics 2.0. Indianapolis, IN: Wiley Publishing, Inc., page 37.
[3] Clifton, B. (2012). Advanced Web Metrics with Google Analytics, Indianapolis, In: John Wiley & Sons, Inc., page 364.