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Aug
16
2010

Choosing the Right KPIs for Your Business

By | Analytics, News & Notes, Strategy

2 Comments

I’m often asked what KPIs (key performance indicators) are the most important for understanding how a business is doing online.  My answer is always “It depends.”  There’s not a set of KPIs that works for every business.  Choosing the right KPIs for your business means understanding your business, your goals and what you’re trying to do online. KPIs are the metrics which tell you whether you’re moving closer towards your goal and objectives (see KPIs vs Metrics for more details).

Understand Your Business

This may seem simple, but truly understanding your business means knowing what benefits you offer to your customers.  Who are your customers and why should they care? Saying you’re a carpet cleaner is one thing.  But maybe what you really do is help housewives remove impossible stains so their carpets look like new.  Or help people who are selling their house get more value out of the sale.  Understanding who your customers are and the benefits to them is the first step towards choosing the right KPIs.

Know Your Goal

Unless you know exactly where you’re trying to go — what you’re trying to accomplish — it’s going to be almost impossible to craft a strategy that works with KPIs that tell you whether it’s working.  Choosing an easy-to-understand, specific, attainable and time delimited goal will help you choose KPIs that relate to that goal.

Choose Your KPIs

Now that you know what you do, who your customers are, what benefits you offer and what goal you’re trying to accomplish, you can start to think about how you can accomplish that goal online.  As you choose tools and tactics to help you with your strategy, take a look at what metrics are available for each.  Which metrics tell you whether you’re further along in reaching your goal?  (Those are your KPIs).

Thoughts?

(photo by Pink Sherbet Photography)

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  • http://www.ineedhits.com/traffic/quickhits.aspx Website Traffic

    Hi Sarah,
    Thanks for another nice article.
    Yes KPI is very useful for achieving business goal. But it is not good to simply decide on a KPI and measure it once; this will not provide useful data. Instead, we should remember that KPI monitoring is an ongoing process. So, if we are measuring average revenue per customer, we should be recording this on a weekly or monthly basis.

  • http://sazbean.com sazbean

    As you said, you don’t usually measure a KPI once — but how long you monitor it does depend on your particular goal and tactics. Once you’ve achieved your goal and set a new one, you need to re-evaluate what the best KPIs are to measure attainment of the new goal.