Here's a scenario:
You're sitting in a "Strategic Review" or "Deep Dive" meeting called by your Executive Vice President (or some equivalent higher-up). She wants to get to know your team better and find out what you accomplished in 2008, what your plans are for 2009, and what strengths, weaknesses, opportunities and threats you face with respect to your competitors in the year ahead. You've prepped all week reviewing all the Key Performance Indicators (KPIs) for your website to ensure they are top of mind if you are asked - "Know your numbers" you've been told.
Indeed, you are asked to share an indicator of success from the previous year. You proudly spout about how KPI X improved 25% over the year previous. Then, icy silence grips the room and you feel your stomach drop as she coldly retorts, "Who cares? What did you do to drive cost out of my organization in 2008?"
There is probably no greater insult than to be told that you are irrelevant. Essentially, you've just spent an entire year running the race in the wrong direction.
It is incredibly important to ensure that your Key Performance Indicators reflect the larger goals of the organization and your senior leaders. Otherwise, why do you have a website?
At OpenRoad, whether assisting clients with new Key Performance Indicators or reviewing existing ones, they all must pass a relevancy test in terms of their fit with larger organizational objectives.
Relevance means that the goals of the website and thus the metrics used to gauge its success are consistent with or aligned to the larger goals of the organization. The website should be a force that drives the organization forward or contributes to the bottom line. Improvements to the site that lift the KPIs should by extension improve the organization's performance.
(It should be mentioned that relevance is only one test that your KPIs should pass. At the very least the KPIs and targets should be run through the "SMART" mnemonic. That is, all of your KPIs and targets should be Specific, Measurable, Attainable, and Time-bound in addition to being Relevant.)
Ensure Relevance by Illustrating Traceability
Provided your employer is clear in its objectives, establishing relevance is as simple as drawing the connection between the larger objectives and your KPIs. In larger companies, the highest objectives sometimes link through divisional and departmental objectives along the way, but the connections should still be clear nonetheless.
At OpenRoad we use a simple table we call a KPI Traceability Matrix to show the connection from objective or goal through to KPI. A common example would have two to four columns, each representing a step in the hierarchy.
|Strategic Objective / Goal||Business Unit Goal||Key Performance Indicator|
|Increase Revenue by 10%||Increase sales of high margin products by 10%||Online high margin product sales rate
(Number of online orders containing high margin products / Total number of orders for the period)
|Decrease reliance on North American customers||100K European leads by Dec 31st||European Newsletter subscriber rate
(Number of new European Newsletter subscribers / Number of European visits)
- The first column contains the highest level goals.
- The middle one or two columns contain the related divisional and/or departmental goals, each entry being associated with the related higher level goal on its left.
- The final column on the right will contain the KPIs, each correlated to the goal on its left and ultimately the top-level goal on its far left.
Reading the table left to right illustrates the traceability of your KPIs right up through the goals of your boss, all the way to the objectives that keep your senior leaders awake at night.
Like the pyramid above, often top level objectives fan out into many more objectives further down. You may need to repeat some of the high level goals in multiple rows of the KPI Traceability Matrix in order to correlate to all of the KPIs. This is fine - different KPIs may measure different benefits that drive the same overall objective. The point again is to ensure that the links can be clearly illustrated.
Identifying Strategic Objectives
If you are starting your KPI Traceability Matrix from scratch here are some places to look for those high-level or strategic goals:
In the organization's literature:
If you are employed at a large company, a well organized not-for-profit, or an organization that has been given a mandate from the government (such as a Crown Corporation), there is a good chance that the strategic objectives (sometimes and/or "strategic imperatives") are explicitly defined within an annual report, service plan or similar document. If not, they may be inferred by dissecting any available mission, vision or purpose statements that can be found into its constituent parts. If you are fortunate, explicitly stated objectives will come with explicit measures that you simply need to convert into an online KPI.
Trace your objectives up the hierarchy
Another method of finding strategic objectives is to start by examining the goals and targets given to you by your boss and seeing how they relate to the objectives set for him or her. Interview your boss and his or her leader to understand how they are measured and how they trace back to objectives set higher up the food chain.
Look for cues from the top
A third objective-hunting technique is to see how the senior leaders frame and position the organization in their communication. What objectives do they discuss in the media? With investors? On conference calls? In their monthly newsletters?
You may find that your organization has strategic objectives where not all goals are weighted equally. You may also find that your organization takes pride in corporate responsibility and desires a "double" or even "triple bottom line" which factors the environment or the community into its definition of success. Where possible and sensible, it is wise to look at your KPIs holistically and strive for the same balance structured by the organizational goals.
One popular approach that many corporations use to set goals is the "Balanced Scorecard" approach espoused by Robert S. Kaplan and David P. Norton which recommends that companies balance their objectives by considering four factors:
- Satisfied Shareholders (Financial, bottom line type objectives)
- Delighted Customers (Customer satisfaction, loyalty, brand type measures)
- Effective Processes (Efficiency metrics, process metrics)
- Motivated and Prepared Workforce (Measuring employee morale, skill, buy-in)
If your organization follows this or a similar model, it may be prudent to have at least one KPI from each of the categories, e.g.
|Balanced Scorecard Objective||Example Key Performance Indicators|
|Satisfied Shareholder||* Average order size
* Cost per page view
|Delighted customers||* Percent satisfied (measured by survey)
* Percent repeat purchasers
|Effective processes||* Average time to publish
* Percent stale content (> 90 days old without an edit)
|Motivated and Prepared Workforce||* Percent employees satisfied (employee survey)
* Percent employees certified (taken an internal course for example)
You should also examine your organization’s goals for explicit or implied weighting of the objectives. Some companies will weight objectives with percentages to calculate overall performance:
- Goal 1: 50%
- Goal 2: 30%
- Goal 3: 15%
- Goal 4: 5%
Others will weight by having more KPIs related to some goals over others. OpenRoad has one not-for-profit client that weights its objectives by having more than one measure for two of its five goals:
- Goal 1: One KPI
- Goal 2: Two KPIs
- Goal 3: Two KPIs
- Goal 4: One KPI
- Goal 5: One KPI
They also further weight their goals by making some KPIs short term, to be measured in one year's time versus others to be measured three years out.
Regardless of the weighting scheme used, to have traceability and therefore relevance to the strategic goals, your KPIs should understand and reflect the priorities of the organization by reflecting their weighting when appropriate.
Once you have created your KPI Traceability Matrix, vet it with your peers, your boss and through whatever Web Analytics stakeholder groups or committees that may exist within your organization. Buy-in on the traceability is just as important as acceptance on the KPIs themselves.
Make it a living document
In Web Analytics: An Hour A Day, Avinash Kaushik states that one should expect 15% of his or her KPIs to change in an average year as priorities are adjusted and the relevance of some KPIs wane. In this perhaps not so average year, 2009, your organization may choose to make strategic changes to cope with the economic crisis. It would be wise to stay on top of such changes in your organization and ensure that your KPIs remain traceable and relevant.
Circle the dates on your calendar when the annual report or service plan comes out and set aside time to double check the traceability of your KPIs. Stay up to date with announcements, appointments and reorganizations -- new people in charge may mean new priorities or objectives that may break your KPI Traceability Matrix.
Keep it handy
Keep your traceability matrix a copy/paste away in whatever format is the local currency at your organization, be it PowerPoint, PDF, MS Word, E-mail, or a JPEG so that it can be dropped into a presentation or report when required.
By taking the time to understand and document the traceability of your KPIs, you will ensure the continued relevance of your website, web analytics, and yourself within your organization.