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#21 Decide in advance how you want to present your data. If you are an individual, department and/or a company and you have set up clearly defined goals for yourself then you should use KPIs to measure your performance in achieving your goals. This is possible only when your chosen KPI has the ability to provide recommendation(s) for action which can highly impact your internal goal. For example, if one of your core business goals is to acquire more customers then your business KPI can be ‘Customers Growth Rate’ (a measure of the percentage increase in customers between two time periods.). Without short term goals in place, your long term goal is not a goal but just some obscure direction, wishful thinking. This book focuses solely on the ‘analytics’ that power your email marketing optimization program and will help you dramatically reduce your cost per acquisition and increase marketing ROI by tracking the performance of the various KPIs and metrics used for email marketing. Not long after I started my career in FP&A, I became interested in KPI development. For example, for the business goal ‘Acquire new customers‘, the following can be your external goals: For the business goal ‘Retain existing customers‘, the following can be your external goals: For the business goal ‘Increase website sales‘, the following can be your external goals: Similarly, for the business goal ‘Decrease acquisition cost‘, the following can be your external goals: External goals are department/function specific. You go to any organization; it is important to analyses based on their Key Performance Indicators (KPI). #29 If your analysis doesn’t include recommendations then it is not an analysis. External KPI is the KPI set up for measuring the performance of an external goal. Note(2): External KPIs can also be used as internal KPIs. For example, if one of your internal goals is to improve the quality of your outreach emails, you can then choose ‘response rate’ as an internal KPI. Remember 2 months don’t make a, #7  Skip lame KPIs. What should be the time frame for achieving this goal? Then start working on achieving your daily goals. Decide what you want to highlight. Macedonian / македонски For example, if one of your core business goals is to increase customers acquisition, then your KPQs can be: You can ask yourself following KPQs, in order to set up core business goals: Note: KPQs are the building blocks of goals, strategies, and KPIs. Thai / ภาษาไทย It will teach you how to leverage the knowledge of attribution modelling in order to allocate marketing budget and understand buying behaviour. Romanian / Română Don’t make the insight obvious. The following are examples of number metrics because they are in the form of numbers: The following are examples of ratio metrics because they are in the form of ratio: Since KPI is a ‘metric’ and a metric can be a number or ratio, we can have KPIs in the form of numbers and ratios. (Number of DART … They may or may not be directly tied to your core business goals. Example of SMARTER business goal – increase website sales by 100% in the next 6 months by improving organic search traffic through SEO. #40 Write your commentary on what the reports tell your decision-makers. KPQs are the building blocks of goals, strategies and KPIs. #28 Whenever you do competitive analysis always compare it with your business. The best time to use KPI is when you have set up clearly defined goals & strategies and you are now ready to measure your performance in achieving those goals. Formula to calculate P/E – Current Stock Price/EPS. What I am trying to achieve as an organization? – increase website sales by 100% in the next 6 months by improving organic search traffic through SEO. An Internal KPI is one of the most important indicators of the current performance level of an individual in achieving internal goals. Operating Profit = Sales – Operating Cost. You should now amend your WAMM (Web analytics measurement model) and begin your analysis again. For example, ‘Customers happiness’ can not be your goal unless you have a mechanism in place through which you can quantify and differentiate between different human emotions (happiness, frustration, etc). The more page views you get, the more you can charge for every thousand impressions (CPM) from your advertisers. Your core business objectives need to be crystal clear before you can find business KPIs. For example, ‘generating more’ sales is not a specific goal. IBM Knowledge Center uses JavaScript. An organization should use KPIs at multiple levels (organizational level, department level, individual level). #34 Figure out in advance that the analysis which you are planning to do is worth doing in the first place. Increase the quality of your email outreach. Finnish / Suomi So make sure it conveys everything of importance and yet can be read quickly and easily. That is as the value of your KPI increases or decreases there should be a significant positive or negative impact on the core business objective. Italian / Italiano Your goal must have a deadline (target date) attached to it. This is because it does not correlate well with conversions. 2) It highly impacts its corresponding goal. Ever evolving, always innovating to become a better version of ourselves. Fix website crawlability and indexing issues. As the value of your external KPI increases or decreases, there should be a corresponding positive or negative impact on the external goal and this impact should be significant. An external KPI is also known as department/function/team specific KPI. If it is possible then what do we need to change/adopt in order to achieve this goal? This is possible only when the metric has the ability to provide recommendation(s) for action which can have a high impact on the business bottom-line. Korean / 한국어 #3 Show key trends and insights (first in words format and then in graphical format). Ecommerce Conversion Rate = (Total E-commerce transactions/ total visits) *100. Support and maintain the company’s core values. What problem you are trying to solve? So the cost per acquisition (CPA) can be the ‘cost per conversion’ or the average cost of acquiring a customer. If you are an external consultant/agency then you determine core business goals with the help of the people who actually run the business and not from the website or Google Analytics reports. Evaluate where you are with achieving your goals. You must be able to measure it. Norwegian / Norsk ‘Where’ denotes the ‘direction’ in which your strategy should move so that you can get the highest possible return on your investment. Your ‘key performance questions must help you in setting up SMARTER external goals. If this KPI … However, it needs an accompanying goal in order to be effective. Here you can copy the formulas we used the other KPI metrics and paste it for your new KPI metric. Individuals who directly work on optimization tasks must be involved in setting up and monitoring SMARTER internal goals. Average order value = Total Revenue/Total ecommerce transactions, It is the percentage of people who came to your website and answered ‘yes’ to this survey question: “Were you able to complete the task for which you came to the website?”, Task completion rate = (number of people said ‘yes’ to the survey question/ Total number of survey responses) *100. So that ever time you achieve a short term goal, you come one step closer to achieving your long term goal. Do you know how to calculate OEE or MTBF? P/E is most useful as a comparison metric. Why doubling the rate of acquiring customers is important to the business? ROAS = (Sales from investment – cost of investment)/cost of investment. By aligning/re-aligning your external and internal goals on a daily/weekly basis, you and your team can stay focused and productive and achieve the organizational goals (core business objectives) in the most effective manner. transactions in the summary event processed straight through or not. If you are an external consultant/agency then you determine core business goals with the help of the people who actually run the business and not from the website or Google Analytics reports. Earnings per share is quite meaningless if analyzed on its own. So when we talk about a goal that is attainable, we refer only to the short term goals. Following is an example of a tactical KPI dashboard: The goal of a Strategic KPI dashboard is to help key stakeholders (often top management executives) better understand the performance of their core business objectives. Individuals who directly work on optimization tasks must be involved in setting up and monitoring internal KPIs. Chinese Simplified / 简体中文 For example ‘Bounce Rate’ is a good Internal KPI for optimizing landing pages. Acquire customers through organic search traffic. (Average order value) X (Number of Repeat Transactions) X (Average customer lifespan in months/years). Prioritize your list of recommendations on the basis of their impact on the business bottomline. There is no hard and fast rule here. #7  Skip lame KPIs. Avoid reporting such data as it is unlikely to be statistically significant. A metric can be a number or a ratio. External KPIs are set at the department/team/function level and focus on measuring the overall performance of a department/team. You should be able to achieve your goal within the area of your responsibility and expertise. It is the average value of an ecommerce transaction. More information about Net Promoter Score. Note: Without setting up goals and strategies beforehand, you will have a hard time coming up with KPIs. Can we acquire two times more customers than last year? Danish / Dansk When you do not achieve your target, it is considered as failure. Spell it out. Czech / Čeština If one approach is not working then you may need a different approach to achieve your goals. If you do not know your goals as an individual, as a member of your department and/or as a member of your company then you don’t need to use any KPI. Before you can set up external goals, you need to know your core business goals. Key Performance Question or KPQ are those questions which help you in setting up your goals and strategies. You must be able to quantify your goal. Your goal needs to be measurable. It is like a compass which, when used daily, keeps your organization in the right direction. ‘What’ denotes what is involved in implementing your strategy. For example, if you sell ‘display banner ad space’ on your website and ‘display advertising’ is the main source of revenue for you then ‘pageviews’ can be used as a KPI. Catalan / Català Copyright © 2021 OptimizeSmart.com All rights reserved. You can find your internal goals through ‘Key Performance Questions’. So when you are finding your KPIs, you need to be 100% sure that there is a mechanism/tool available, to measure and report your KPI in the first place. Consequently, you need to interview your client. #37 If your written and/or spoken words just repeat what is mentioned in the graphs and tables then it means ‘analysis’ is missing and only ‘reporting’ has been done. The following are examples of number metrics because they are in the form of numbers: Visits, Pageviews, Revenue etc. #10 Return on Ad Spend (ROAS)It is used to evaluate the efficiency of investment in an ad campaign. #18 Avoid using screenshots from Google Analytics reports for your strategic dashboard. This includes coming up with a certain set of tasks. Maths and Stats for Web Analytics and Conversion Optimization A target is a metric through which you define success and failure in achieving your goals. #42 Dashboards are not reports. #8 Remove the cluttering of metrics from your dashboard. Sure your company needs to make money to survive but there needs to be an added mission that serves others and at the same time positively impacts your business bottom-line. It is the projected revenue (repeat business) a customer will generate during his lifetime. Swedish / Svenska English / English #2 External KPI (also known as ‘low level’ KPI) – It is the KPI set up for measuring the performance of an external goal. To create a formula select the KPI you would like to use in your calculation; Click the '/' divide operator from the operator menu; Select the second KPI you wish to divide by; Finally select how you would like the KPI to be aggregated: Sum Total: Will sum the KPI … ‘Why’ denotes the objective and reasoning of your strategy. Slovenian / Slovenščina KPI is used to measure your performance (as an individual, department and/or a company) in achieving key goals. Manufacturing is one of the areas of business that typically leads the way with KPIs. This sample provides a generic procedure for computing common KPIs.The input is a sequence of events labeled with the following five State KPIs:. 3) It is relevant to its corresponding goal. They are not the one and the same thing. So we can have number metrics and we can also have ratio metrics. You should be able to measure the results and progress of each goal. There is virtually no limit to the number of good KPIs you can find and use. External KPIs can also be used as internal KPIs. Although the higher the number the better for shareholders themselves. at multiple levels (organizational level, department level, individual level). Note: Most recorded and quoted EPS values are trailing. Following are examples of core values of a business: The core business goals are the results you want to achieve, improve or maintain as an organization in the short term and in the long run. Now once the SEO improved the quality of his outreach emails, he can earn more high-quality backlinks for his website. Search When you have achieved your target, it is considered a success. Following are examples of good KPIs: gross profit, gross profit margin, operating profit, operating profit margin, net profit, net profit margin, sales growth rate, total economic value, return on investment (ROI), return on ad spend (ROAS), net promoter score, customer lifetime value, customer retention rate, customer profitability score, cost per lead, cost per acquisition, goal conversion rate, ecommerce conversion rate etc. It is the measure of the percentage increase in sales between two time periods. This is the only way to ensure maximum productivity and profitability. These goals could be business goals, external goals or internal goals. For example, if one of your external goals is to improve website sales then you can use ‘Average Order Value’ as an external KPI because it can highly impact the website sales. #30 If your data involves ‘low numbers’ then don’t include them in your analysis. So whenever you achieve one of your internal goals, you get one step closer to achieving your corresponding external goal. Higher the operating profit margin, the more the money is left over for net profit. #27 The actual number of slides/KPI dashboards in each category (acquisition, behavior, and outcomes) would depend upon your ‘Web Analytics Measurement Model’. Portuguese/Brazil/Brazil / Português/Brasil But not every metric can be used as a KPI. Your goal needs to be clear and specific. So whenever you achieve one of your external goals, you get one step closer to achieving your corresponding business goal. For example, your KPI could be ‘percentage decrease in CPA in the last month‘. Before you can set up core business goals, you need to have mission and vision statements + well-defined core values in place. A business KPI is the KPI set up for measuring the performance of a core business goal. It only tells you whether you are on track to decrease your acquisition cost. Cost of delaying the implementation: 1-month delay can result in $___ of lost revenue. 2. Thus there are no standard set of core business objectives which should be adopted/copied. They may or may not be directly tied to core business objectives. Attribution Modelling in Google Analytics and Beyond The KPI’s Low attribute is defined as <[target]-20>. It is calculated as the number of hits divided by the official number of at-bats and is expressed as a decimal to three places of accuracy. Also known as profit margin, net margin, net profit ratio. 5) It is available in a timely manner. The goal of a tactical KPI dashboard is to help team leaders better understand the performance of their team/department/function. The following are examples of ratio metrics because they are in the form of ratio: Bounce rate, Conversion rate, Average order value, etc, Since KPI is a ‘metric’ and a metric can be a number or ratio, we can have KPIs in the form of numbers and ratios. #26 If you can’t organize a dashboard created for each KPI into acquisition, behavior, and outcomes then make sure that you have some KPI dashboards which cover acquisition, some KPI dashboards which cover ‘behavior’ and some dashboards which cover ‘outcomes’. It is used to evaluate the efficiency of your investment or to compare the efficiency of different investments. Internal KPIs are set at an individual level and focus on measuring the overall performance of an individual. 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