Wednesday, July 06, 2005

Measuring the right things. [part 1]

The thing I get asked to do the most, and the thing the most people seem to have trouble with, is identifying the right things to measure. It's not surprising that clients have so much trouble - the possibilities are crazy. You can measure anything (well, anything that's measurable).

It's actually an age old marketing problem - if you provide too many choices, the customer gets option paralysis. They can't make up their mind. In the classic marketing sense, option paralysis leads to a slowed or lost sale (I can't pick which one I want - it's too difficult). In the case of web analytics, it leads to data bloat (I want everything, just in case I might need it). Problem is, there tends to be an inverse relationship between the amount of data available and value derived. While it's true that we consumers want choices, we don't function very well if we have too many of them.

So in these cases, it's my job to help clients identify the right data - the key data points they should surface to understand, at a strategic level, the business performance of their web site. You may have heard of these data points...they're your Key Performance Indicators (KPI's). Of course, you need more than KPI's to manage a site. But the right KPI's will make using the rest of your data easy. They're like a road map in an unfamiliar city. Without them, you're completely lost.

Actually, come to think of it, they're more like the Neverlost GPS you get in your Hertz car. Well thought out KPI's actually tell you where to go.

Now, in my mind, KPI has become over used and under utilized. Lots of people talk about tracking KPI's, but very few people are tracking what I would call truly key performance indicators. Further, we run the same risks with KPIs as we do with data in general. Too many, or poorly organized, KPI's become just more data.

Stay tuned. In another post I'll talk about how I help my clients arrive at the right KPI's for their business.

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