Understanding KPIs – Part 1

In this series, I am going to explain KPIs to you, what they are for and how to help your Google Analytics clients or internal teams in your corporation to understand metrics and KPIs the right way. At the end of this post, you will find a list of all parts in that series as soon as there are more parts available for you.

The basics of KPIs

Definition of a KPI

A Key Performance Indicator, or short KPI, is a measured value that evaluates the success of an organization or particular activity. A KPI has to have a specific target or range in which the score must fall in. Usually, KPIs vary depending on specific business models they aim to measure. There are many different kinds of KPIs like for example Financial KPIs, Business KPIs, SLA KPIs which are important of Service Level Agreements, KPIs for the Service Quality, Efficiency and others. I am concentrating first of all on all KPIs that are measurable in Google Analytics, to help you understand Google Analytics and certain numbers even better than before. I hope this might even help you with explaining KPIs and their business value to your clients.

Always ask these questions

It’s important to make sure that KPIs meet a certain standard. That’s the reason why I keep asking myself or clients these questions to make sure that we do have all the information for defining a KPI for tracking.

• Are your objectives specific enough?
• Is your progress measurable towards the goal?
• Is the goal you’d like to set really attainable?
• Can you define the relevancy of the goal for your business?
• Is there a specific time-frame in which the goal should be achieved?
• Does that KPI help to justify business investments?

The difference between Key Figures / Metrics and Key Performance Indicators

Key Figures / Metrics are the numbers that are shown in Google Analytics. The numbers have shown there are only values collected from your website. Typical Metrics are Conversions, Conversion Rate, Users, Sessions and so on. Key Performance Indicators, or KPIs, are not measurable values. They usually combine Metrics and a certain amount of time. For example, a KPI can be a rise of conversions on a website within a year by 20%. While Key Figures are giving a short impression of the performance of a website, a Key Performance Indicator helps management, marketing or sales to understand the overall performance of a website. It is not uncommon to collect data from different sources to get all the necessary information for measuring success.

Collect your data

Google Analytics is one of the easiest options when you’d like to gather (user specific) data from your website or webshop. In combination with Google Tag Manager, it becomes a mighty tool to gather and save information for later analysis or defining KPIs. To visualize your KPIs in Google Analytics, you might often need to create a custom report or rely on one of the prebuilt reports in the Google Analytics Solutions Galery. In my personal opinion – which is what I recommend clients to do – it is better to collect as many data as possible as long as you are not exceeding the capabilities of Google Analytics. But, in most cases, it’s not necessary to track everything like scroll behavior, weather data and so on in Google Analytics, even so, there are rare cases, where information like that makes totally sense.

Common KPIs

Here is a short list of KPIs that should usually be defined if you’d like to monitor your business properly.

Website Goals	Key Performance Indicators	Metrics in Google Analytics
Sales increase by X %	An increasing number of sales across channels by X % Number of sales of a product Average order value Conversions / Transactions	Transactions Sales Average order value Conversion-Rate
Increase of Conversion-Rate by X %	Increase the Conversion-Rate by X % within the next 6 month Lowering Cart Abandonment Rate by X %	Conversion-Rate Overall Exit-Rate
Increase Visitors by X %	Increase of Visitors by X % via a specific traffic source or campaign Gain new Visitors by a certain campaign Lower Bounce Rate for specific URLs	Number of Sessions by traffic sources CTR of specific campaigns Bounce Rate per campaign Conversion-Rate by campaign Number of new and recurring users
Increase the number of newsletter subscribers	Number of newsletter subscribers within a specific time frame Increase link clicks within the newsletter by X %	Newsletter subscriptions Conversion Rate within the newsletter
Increasing Brand Awareness	Number of Visits (especially via Search Engines and Social Media) Number of Brand Searches and Visits Increase of New Visitors to the website by X %	Number of Sessions (Organic and Social Media) Bounce Rate Time per Session Page Visits Visits with Brand Keywords
Increase interaction with the website	Number of Visitors coming from Social Media Sessions on Blog-Pages	Bounce Rate Time per Session Page Visits Average Time Spent on Site

These are some very basic KPIs many of you should watch when having an online shop or a conversion-oriented website.