What Are Key Performance Indicators and How Does It Help SEO?
Key performance indicators (or KPI) are metrics that measure the performance of a task against the objective that it was set out to do. In other words, it is finding out how you are doing to attain your business objectives. While KPIs can be applied in just about any working environment, in can be an effective method to measure the performance of your online business.
Metrics can either be represented as a ratio or a number to measure certain tasks in relation to the objectives of your business. In the SEO field, Revenue, Visits and Page Views are measured through numbers while Conversion Rate, Bounce Rate and Average Sales are measured by ratios. These two forms of metric generally make up KPIs.
In order for a metric to be seen as a Key Performance Indicator, it must have the ability to recommend actions that would help the user meet objectives or increase performance for their online business. For instance, the “Average Order Value” can be utilized as a key performance indicator because this is an important factor to the overall objective of a business. With the current conversion rate, sales can be optimized by increasing the amount of orders. Other examples of KPIs are Profit Per Acquisition, Sales Per Visit and Conversion Rate.
To find an effective KPI, you must first understand the objectives of your online business very well because this will be the basis for setting up your KPI. Outline your objectives into specific measurable goals. Then select a Key Performance Indicator for each goal.
After having identified the parameters to come up with an effective KPI, find out which objective do you to measure? While analysts spend most of their time measuring page views and number of visitors, this is not exactly the bottom line of a business objective. What you want to measure are “conversions” since these are actions your visitors take as they visit your website which will eventually lead to sales. And sales lead to profit which is your ultimate objective for your online business.
Conversions not only exist on E-Commerce sites, they can also be found on other websites in the form of submitting a query, responding to an email, posting a comment or feedback, and so forth. These conversions are worth measuring.
To set an example lets define a conversion as a completed sales transaction. To calculate a conversion, the basic formula can be: Conversion Rate= (Total Transactions/Total Number of Visits) * 100. That is (6 transactions/50 visits) * 100 = 12% Conversion Rate. And so 12% is your Key Performance Indicator for your Sales Conversion Rate. In this example, it is obvious that having a score of 12% is below the expected performance of your goal for sales conversion. Having this sort of information will allow you to target which area to focus on as you try to improve the performance of your conversion rate. In this case you can try to optimize the functionality of your E-Commerce website.
Google Analytics serves as an effective tool to measure KPI’s so it is highly recommended to familiarize yourself with this tool. There are 5 basic KPI’s that should be measured for a website which can be carried out on Google Analytics.
1. Bounce Rate/Time On Site – these are 2 important KPIs to determine if your visitors have found what they are looking for. These metrics are located at the Visitors page of Google Analytics.
2. Type of Source – an in-depth report segregating the source of your traffic whether originating from search engines, landing pages, referring sites or email campaigns.
3. User Type – as a user defined option, you can set up the types of user that complete an action on your website.
4. Conversion Rate – the percentage of visitors completing a desired action.
5. Conversion Rate Goals – shows the number of visitors who have carried out actions that have reached your set goals.
Part of your SEO strategy should include Key Performance Indicators or KPIs to measure the performance of your website. Having measurable metrics will allow you to make necessary adjustments to keep your online business in tune with your objectives.