Key Performance Indicators are the most important metric for your online Business. It shows how well you are doing against your Business Objectives. The type of Business defines your objective.
If you are in a B2C Business then selling your product is one of the key Business objectives.
If you are in a B2B Business then downloading case study, downloading whitepapers, subscribing to your newsletter, signing up for a webinar and signing up for a free demonstration that will eventually lead to sales are some of the Business objectives.
If you are a content site then then interaction with advertisers’ Ads and content would be one of the key Business objectives.
Key Performance Indicators would help Businesses measure how close they are in reaching their Business objectives. For example:
B2C (Business to Consumer)
For an e-commerce site (B2C) the key performance indicators would be:
Conversion rate: The rate of sales to visits is a key metric in e-commerce sites.
If for every 1000 visits 10 visitors buy a product then the conversion rate is (10/1000)x 100 = 1%
To measure where the conversion is getting affected, other metrics like shopping cart abandonment rate can also be used.
Average Order Value: This metric is the ratio of total revenue by total orders
If on Mondays an e-commerce site earns $50000 with 100 orders, then the average order value is $50000/100 = $500
Revenue per Visitor: Another important metric for e-commerce sites is the revenue per visitor.
If for every 100 visitors you are earning $500 then revenue per visitor would be $500/100 = $5
B2B (Business to Business)
For a B2B Business lead generation is an important activity. Metrics that would help Businesses measure this activity are crucial. The key performance indicators for B2B Business would be:
Subscription (Sign-Up) Rate: This metric is the rate of subscribers (Sign-Up) to visits
If for every 100 visits 4 subscribes to your newsletter/ sign-ups to your webinar or product demonstration then the subscription(sign-up) rate is (4/100)x100 = 4%
Effective Subscription (Sign-Up) Rate: This metric is the ratio of active subscribers to total subscribers. This rate is an important metric as only active subscribers would eventually buy. Cleaning your lead database by validating the leads and evaluating whether the leads find your services relevant for their Business is crucial. Some leads might no longer be associated with the organization. For such cases, cleaning up invalid e-mail addresses (e-mails that have bounced) is crucial.
If for 100 subscribers, only 40 are active then the Effective Subscription Rate is 40%. An active subscriber opens your communication on a regular basis. If you are confused with what “regular” means then don’t worry. Mailing clients like Mail Chimp has a feature to rate the subscriber. Any subscriber having 4/5 rating is an active subscriber.
Effective Purchase Rate: Even for B2B Business the eventual goal is sales. Out of the active subscribers how many have purchased your product/service over the past 1 year. This means that after 1 year of regular communication, how many subscribers bought your service? For B2B Business, a one year time horizon is a standard time frame to measure the purchase rate. But remember, different Businesses have different buying cycles. You have to measure accordingly.
For 100 active subscribers you have communicated over the past 1 year, if 3 subscribers purchased your service, then the effective purchase rate is 3%
Content Sites/Blogs
In content sites, the interaction of the visitor with advertiser’s assets is a key performance indicator. The assets can include content or ads.
Click through Rate: For Banner Ads, the rate of clicks to visits on your advertiser’s ads is a metric that would help you measure the success of the ad campaign.
Video Views: Video has become an integral part of content. The brand reach can be measured with the number of times your advertiser’s video has been viewed. The number of full video view is another metric that help you find the effective number of video views.
Time Spent on Page: The time spent on your advertiser’s news release or sponsored content is an indication of your ability to bring a qualified lead to the advertiser’s message. Depending on the length of the article, anything above 3 minutes is an indication that your advertiser’s message has been well received.
Scroll Rate: Another metric that adds validity to the time spent on the page is the scroll rate. Scroll rate measures how far the visitors have scrolled the advertiser’s pages. A scroll rate above 85 %( we expect a 15% footer in websites) is a measure of how effective the content was in engaging the visitor to the very end of the article.
If the one of the Business objectives of the content site is to capture leads then subscription rate are also considered as Key Performance Indicators.
Remember, Key Performance indicators for your Business will vary from the general KPIs mentioned above. It is important that you have a clear definition of what your Business Objectives are. Key Performance Indicators depends on that.
If you want expert help in translating Business Objectives to Key Performance Indicators, contact us or you can call us at: India (Ph): +91 9497189032, UK (Ph): +44 (0)20-3371-9976 or US (Ph): +1 650-491-0004
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