In our second Analytics class, Sofia introduced the value of Key Performance Indicators (KPIs) and Metrics to a project’s success.
My understanding from the class is that KPIs are like signposts. That is, they are: important measures that show how your project is progressing toward achieving its SMART goals with business implications and can inform course corrective actions, where required. We also learned that KPIs are specific to the project and as such, the number of KPIs varies but should be enough ‘to do the job.’ This is a good way to assess if you have enough KPIs but still challenging, as I think it’s easy to be over zealous when you’re just starting.
An important KPI criteria that stood out to me is that they should deliver useful information in a timely manner, ideally in less than two months, unless you’re in a slower industry. For example, if you have an established, broad appeal, social network that promotes and sells premium services, a KPI might be your cost per order/sale and can be attained within a month. In contrast, if you have a new social network in a niche market, (e.g. the social network for caregivers of senior citizen family member I’m considering for my senior project), it may take two to three months to attain this KPI.
Depending on the KPIs selected, I thought it noteworthy that part of the task may include defining key components, such as valuable exits or successful events, tailored to your project. For each example, you need to define ‘what’ a user needs to do before they leave the site, to assess whether the visit exit is valuable or the event successful.
Since KPIs have a major impact on the business, such as impacting revenue, costs or conversions, it makes sense to reference them when reporting up to internal executives or clients. To this end, Sofia discussed the importance of segmenting your selected KPIs into custom reports, possibly separate ones, for reporting to executives, as well as project team members.
I also found it interesting to learn about KPI’s various categories, including: Actionable Outcome KPIs; Calculated KPIs; Engagement KPIs; and Business KPIs. There are also Social Media KPIs and Conversion KPIs but many of these measures are ‘Metrics’ and not KPIs. Metrics, Sofia explained, are timely qualitative or quantitative data points that help inform your strategy but don’t directly impact the business. They remind me of footprints.
We discussed social media measures, such as the number of people accessing a site via a social network, and while important, they’re rarely KPIs. The reason is visits via social links just offer more ‘opportunity’ for people to consider a service/product/offer. This opportunity may prompt some to sign-up or make a purchase. Since the second action directly impacts the business, its associated measures (e.g. orders per social acquisitions) would be the KPI. The exception might be a campaign where a key goal is to have an advertiser’s hashtag mentioned 100 times a week. In this case, hashtag mentions might be a KPI.
If I pursue a social network for seniors’ caregivers as my senior project, one KPI might be: engagements that include a successful event, defined as ‘joining’ the network,’ compared to overall site visits. Metrics could include specific pages visited and abandonments during registration. Sofia also suggested you should move from macro to micro insights to figure out why users are behaving a specific way online. In following this, these metrics for my project could be used to learn which pages are compelling or need improvement and how well the registration process is working.