How would you measure the success of the park?
- by the number of visitors to the city
- the number of tickets booked online
- the number of people through the park’s gate
- total revenue
- revenue against costs
If you chose the fifth option then you can probably stop reading. While all the others measure factors impacting the business it is the only measure of the success of the park.
Imagine the you ran a campaign to increase visitors and doubled the number of people coming through the gate; but they came on discounted tickets, didn’t spend as much once in the park, but drove up service costs. If your KPI was only on gate numbers you’ll think this was a success, but on a business basis you’ve destroyed value. And in the long term these may not be the loyal customers you’re looking for (as many Groupon suppliers found to their cost).
This is a rough analogy of measuring web traffic, it’s a contributing factor to business success, but not an outright measure of success. It’s also something you don’t entirely control. Sure you can do all the SEO and banner campaigns to drive traffic but external factors also play a part; the biggest traffic drivers to our corporate site in recent years have been events around the financial crisis.
So if you’re trying to develop a set of KPI’s start with the business goal, which should relate to either increasing revenue, building your brand (which should lead to increasing revenue) or reducing/optimising costs. Look at the contributing factors, understand their impact. If you’re looking at website traffic analyse the data in depth, try to find the behaviours that contribute to your business goals. Is it a sale? a subscription? sharing content? viewing a video? Measure that. Measure the number of people who do that as a proportion of total visitors. That’s your conversion rate, that’s the interesting number. To go back to the theme park analogy those are the people signing for the all-inclusive deal.
Traffic isn’t the only thing to think about. Some years ago a Google sales person was talking to me about increasing traffic to our corporate site. At the time my concern was that we had too much traffic – because the site uses the .com domain US clients often expected it to be their “local” site. So it’s worth using surveys to analyse who is visiting your site and what their goals are – in our case we address this specific issue using IP sniffing to guess the visitor’s location, and then served them a splash page directing them to the local site (since some US visitors do want the corporate site we couldn’t just redirect US traffic). So it’s not just volume, it’s whether you’re bringing the right people to the site.
Traffic to a site or within a site should be measured, and web managers must make adjustments that make their site easier and faster to use. Increasing traffic will almost always be good for business – just don’t mistake it for a measure of business value.