Measuring and improving the performance of a website by Fernando
Macia
The return on investment (ROI) for the implementation of a website is directly
related to the level by which the website is able to achieve its objectives.
Even though this concept may sound trivial to the majority of business owners,
establishing a series of objectives for a website and putting in place a
methodology for measuring how well these goals are being met typically become
more challenging tasks.
Traditional business managers and economic strategists have always had at their
disposal a variety of methods for measuring and evaluating the degree of
success of business objectives. For example, an increase in productivity, cost
reduction initiatives, meeting certain sales goals, or the impact of an
advertising campaign are all objectives that can be methodically measured and
directly linked to a quantifiable level of success within a specific timeframe.
Then, as businesses successfully accomplish their short-term goals, they are
able to establish and pursue mid or longer term initiatives.
When those same business managers and strategists that are used to operating in
traditional environments, and therefore are very familiar with managing and
classifying clients, calculating penetration ratios, measuring profitability
and forecasting sales, are now faced with the new paradigm of a virtual
business, they seem to forget that most of what they already know and do,
including the use of common sense, is equally applicable to an online economy.
However, in many cases, it is very difficult to see how a company's website
aligns with its general business strategy and in extreme cases, a website's
only purpose is to provide the company with a presence on the Internet.
This reality is even more paradoxical if one looks at the fact that the
Internet, due to its technological foundation and highly interactive nature,
provides the ideal ground for quickly testing new ideas, inexpensively
measuring their results, and effortlessly obtaining direct customer feedback to
guide future changes or improvements. Let's therefore take a look at some
factors that will allow us to measure the
performance of a website in terms of its ROI, and also at some
strategies that our traditional business managers will have to establish to
guarantee that the same level of success that they are accustomed to is also
achieved in a virtual online economy.
1. A website must be fully aligned with the corporate strategic objectives
The objectives for a website must closely follow the general strategy for the
company, as established by their executive management. Therefore, when the term
website is used, it should not be interpreted as a piece of the company's
Information Technology (IT) or computer systems. Instead, the term website
should trigger and be identified with concepts such as Marketing, Sales, Human
Subscriptions, Customer Service, Product Support, etc. In other words, if IT is the
department responsible for your company's website you should have plenty of
reasons to worry.
2. A website must establish tactical objectives
After the general strategic planning has been completed for the website, each
department must then establish the objectives for their own area of
responsibility as an integral part of the overall plan.
For example, a department responsible for customer support could help alleviate
the load of their customer-calling center by adding to their website a section
that contains frequently asked questions (FAQs), or by simply implementing an
e-mail based help page where customers' questions could be answered during
non-peak periods. As a matter of fact, many people would rather fill out an
e-mail form with their question than waiting on hold for 25 minutes listening
to the same melody or sales message.
In the above example, the objective is clear: to reduce the workload of our
customer-calling center and improve customer satisfaction. We should be able to
measure the performance of this objective by tracking the ratio between the
number of calls experienced by the call center and the number of customer
inquiries registered by the website.
As another example, the department responsible for buying pre-owned properties
in a real estate agency would like to concentrate their efforts in purchasing
those properties with the highest customer demand. The objective of that
department, in this case, would be to optimize and adapt the agency's property
portfolio to include those profiles with higher customer appeal. This objective
could be measured by calculating the percentage of successful inquiries
experienced by the website's property locator.
3. Identifying the Key Performance Indicators
Once each department has established their own tactical objectives, a web-based
methodology must be implemented to measure the degree of improvement
experienced. Although it might be interesting to know the overall web traffic
statistics of a website (items such as unique visitors, pages visited,
referrers, etc.) it is pretty obvious that special attention must be given to
those visits that directly contribute to the success of the established
objectives (buying, asking for an estimate, soliciting information, setting up
an appointment, etc.)
This concept is very easy to explain by analyzing the behavior of visitors
inside an online store. From all the visitors that access the homepage of an
online store, only a portion will use the site's product locator. Out of that
group, only a few will add products to their cart, and from those, only a
percentage will eventually complete the online payment process. The
relationship between the total number of visitors that accessed our site and
those that successfully completed a purchase can provide our website's client
conversion ratio. It goes without saying that the higher this ratio the better
the performance of the website will be. This ratio is therefore an excellent
Key Performance Indicator (KPI) for an online store.
But even if a website is not an online store, other KPIs, just as easily
identifiable and measurable, can still be defined to evaluate the site's
objectives. For the customer-calling center objective mentioned above, the
percentage of visitors that access the customer help page after having visited
the FAQs could be considered a KFP. In other words, the fewer inquiries the
help center page registers the better the FAQ page is probably performing and
the less work the customer-calling center is therefore receiving. In the case
of the real estate agency objective, a good KPI could be defined as the
percentage of successful visits registered by the website's property locator.
Other effective KPIs for that website could be defined by measuring the number
of visitors that access property specification sheets, or by calculating the
percentage of visitors that eventually set up an appointment to tour a
property, for instance.
4. Measuring a website's performance
The identification of Key
Performance Indicators allows us to implement two fundamental processes
that will improve a website's performance:
- A "translation" of the website's traffic statistical data into concepts and
values that can be easily recognized by the individuals in charge of a
department or area
- A "transformation" of that data into knowledge that will allow a department
head to make decisions and take actions.
Let's look at each process separately. Web traffic statistics, in general,
contain technical information in a highly specialized language, and they
measure an endless set of parameters, most of which lack any relevance to a
department business lead. That is why, typically, this information is only
accessed by IT professionals or webmasters, and even then, only sporadically.
If, on the other hand, we were able to identify only those pieces of information
that are needed to calculate and measure the KFPs that have been identified to
appraise the performance of a website, we would be "translating" the vast set
of traffic statistics into a language that department heads could easily
recognize and relate to. For example, someone in charge of a customer service
department would not see that
http://www.mydomain.com/customer/client_form.aspx has registered 23,547
hits. Instead, the information presented to that individual would convey that
the number of users that submitted an inquiry to the customer help page has
decreased by 10%.
By only serving to each department the data that is relevant to calculate their
own KPIs, the task of decentralizing a website's huge traffic statistical data
and converting that information into a series of executive summaries,
customized for the each department head, becomes a much simpler endeavor.
Implementing the translation process described above also guarantees a higher
degree of involvement on the part of those responsible for each department. By
providing familiar and recognizable data, these individuals will be equipped
with the information necessary to "transform" the data received into knowledge
that they can use to propose changes or improvements. This process will be most
effective if the KFP changes are monitored over short periods of time (e.g.,
every two to four weeks.) It is in this manner that the executives will be able
to observe trends, anticipate changes and notice the effect of recently
implemented improvements. By providing this constant feedback, these decision
makers will be kept involved and motivated, supporting a continuous improvement
process.
5. Improving a website's performance
Once the Key Performance Indicators have been identified, the gauge for each KPI
is thought of being reset to zero. From that moment, each department is free to
propose and develop strategies that will improve the performance of their own
area. Since each department has a set of KPIs and a methodology to consistently
and continuously measure their performance, they have the necessary tools to
"test" new strategies and evaluate their positive or negative effects almost
immediately. At the same time, this feedback will stimulate new decisions
and/or actions for implementing improvements in each area. Finally, the changes
measured by the KPIs will be excellent indicators for determining the level of
alignment between our website's objectives and the global strategy of the
company.
Conclusion
The performance and ultimate success of a website is for the most part based on
the efforts of individual departments working together towards a common set of
corporate goals. It will be the improvements made by those individual groups,
in order to achieve their own objectives that will drive the overall increase
in Internet performance. If we then establish a relationship between the cost
associated with each of the proposed improvements and the return expected from
them (for example, in terms of a workload reduction, or an increase in the
customer conversion ratio) we will be able to not only measure the ROI for our
entire corporate website initiative, but also collect the necessary data to
justify future Internet investments. After all, the World Wide Web is just one
more avenue for conducting business. An avenue, nonetheless, that still
requires us to establish objectives, measure their achievement, and act when
necessary to provide improvements. We must also be aware that those same
principles that we have so heavily relied upon in a traditional economy still
apply in this new virtual business world.
About the Author
Fernando Maci, 2005.
General Manager of Human Level Communications, a
consulting firm specializing in search engine positioning, web development and
optimization and digital marketing, with sites in Alicante, Spain and Dallas,
Texas.
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