At Mediastead we love data! Give us mountains of data!
We tell our clients, however, that not all data is created equally. It’s important to separate important data (known as KPIs or Key Performance Indicators) from interesting data (known as Vanity Metrics).
Website visits increased 38% last month. Does that mean your revenue increased 38% as well? Probably not. In fact, for many businesses, the number of website visitors does not correlate directly with income or profits. Website traffic is an important metric, but not necessarily a KPI.
However, reducing shopping cart abandonments 25% could easily impact revenue. If this occurs immediately after adjusting your shopping cart user interface, your web development team scored a big win, and you probably scored big profits.
Identify your KPIs before spending money
Identify your Key Performance Indicators before spending money on SEO, website redesigns, or pay-per-click advertising and you will make better strategic marketing decisions.
KPIs are different for each business, but here are some examples of important data and where to find it.
Step One: Install Google Analytics 4
Most people have heard of Google Analytics, the industry standard for collecting data about your website traffic. What you may not know is that later in 2023 a new version (Google Analytics 4) is replacing the previous version (Google Universal Analytics) and the data will not transfer over. Ask your web team if they are using GUA or GA4, and if they’re using the former, instruct them to update as soon as possible.
GA4 , unfortunately, is designed around professional data analysts. There are mountains of data to traverse, but only a small amount is truly critical. There are some tools to make this easier, but we strongly recommend talking with professionals.
Visitors and sessions – Total visitors are unique people that visit your website. Sessions are the number of times an individual visits. A strong website will have multiple sessions per visitor. You may also want to qualify visitors and sessions. For example, you may only want visitors from the United States if your product or service is only available in the US. Qualified visitors and sessions should be tracked over time. Ignore spikes unless you can control those spikes, for example, the Mediastead weekly newsletter is sent early afternoon each Thursday. Our traffic jumps substantially on Thursdays.
Landing pages – GA4 can tell you the first and last page each of your visitors views. Controlling the entry point is important. For example, we have an article 12 Do’s and Don’ts for Employee Social Media Policy. Unfortunately after analyzing our traffic we realized that many of the people who came via Google search were university students doing research. We now know that traffic landing on this page should be considered vanity metrics rather than a KPI.
Exit pages – When a visitor leaves your site their exit page is recorded. Ideally you want that exit page to be a “thank you” page after they’ve made a purchase. Analyzing exit pages may give you insight into pages where the visitor gets stuck or feels like they have completed their mission. Sometimes these exit pages are natural, such as downloading a user manual for a previously purchased product. Other times exit pages indicate hesitation by your customers. Are many of your visitors leaving when you ask them to sign up for an account? Perhaps you’re making the request prematurely in the relationship.
Referral sources – Sources of referrals are almost always KPIs. They tell you whether you’re benefiting from organic search results, pay-per-click advertising, social media, or your email newsletters. Referral sources can sometimes surprise you. Occasionally you’ll see a spike from an outside link or a boost when a social media post goes viral. A deeper look may cultivate more long-term traffic.
Search Engine Optimization, KPI or vanity?
There is a common myth that great SEO will lead to the Gods of Google delivering wheelbarrows full of cash to your door. This myth is cultivated by some SEO firms.
The truth is that SEO can be critical, or a waste of time and money depending on your business.
Local Search Optimization
Today most search engine traffic that actually generates revenue dollars go to websites of local businesses that serve a geographic region. Google in particular has become very good at pointing people to local goods and services and integrating features such as maps and one-touch phone calls.
If your business serves the local region, or even hundreds of local regions, having a good SEO plan and skilled SEO consultants can deliver cash in dump trucks instead of wheelbarrows. [Disclaimer: Google does not actually deliver cash in dump trucks. Metaphor.]
Compare SEO and PPC expenses
Often good SEO is a long-term strategy, whereas PPC (pay-per-click) advertising is a short-term strategy. When the ads stop, so does the traffic. A key strategic decision is how much money and effort you use on SEO versus online advertising. You’ll want to track organic traffic and paid traffic every 90 days at least and compare the value you’re getting from each endeavor.
Social media can be a mix of KPI and vanity metrics.
When evaluating social media you will need to understand audience demographics. Here are some general indicators.
- Facebook is strong with a broad B2C audience. It works well with many consumer brands and local businesses. Facebook can also be a recruiting tool for entry-level positions.
- LinkedIn is strong for recruiting professionals and B2B marketing.
- Snapchat, Instagram and Tik-Tok are strong developers of brand identity, particularly among the younger audience.
- YouTube, Twitch and Twitter are great tools for engaging your audiences in meaningful two-way interaction when used properly.
For example, you own dump trucks that deliver gravel to construction sites. Your social media company is generating high traffic from Facebook and Tik-Tok using entertaining time-lapse videos. Unfortunately, this isn’t the type of interaction that gets you more clients. It’s vanity data.
On the other hand, if your social media company has cultivated a strong community of general contractors on LinkedIn, the traffic may be substantially less but substantially more important.
Online Advertising is always a KPI.
Whenever you’re purchasing online advertising, the data stream can be intense. Ultimately you want to determine how much of your advertising is accomplishing specific goals. These may include:
- Website traffic for increased brand awareness
- List building by pointing to a specific lead magnet
- Direct lead generation
- Direct sales of products or services
- Sales and fulfillment of digital products
The easiest KPIs are the ones where you can convert a specific action to dollars of revenue directly. A strong advertising management campaign should be able to turn almost any KPI into revenue dollars, and help you fairly evaluate your advertising expenditures.
With Key Performance Indicators, time will tell.
One of the most challenging parts of our job at Mediastead is tempering the enthusiasm of a high KPI data point. Once you’ve identified your KPIs, you’ll want to track them over time. For some companies this is monthly and for some it’s quarterly.
Two factors you should consider when looking at your key performance data.
- Is your KPI trending upward consistently?
- Are you in control of this upward trend? Have you applied specific campaigns that influence this KPI?
Great businesses methodically and purposefully improve their Key Performance Indicators and generally ignore vanity metrics.
Are vanity metrics worthless?
No. Vanity metrics can be indicators of outside factors that may affect your business. If you have a negative PR experience, for example, these metrics can help you understand the impact because you have a good understanding of the norm.
Other times vanity metrics may help you identify an opportunity. For example, you create a video which goes viral. Your referral metric identifies a specific social media influencer that helped you along. Now you can build a relationship with that influencer as well as other similar influencers.
KPIs and the 80/20 rule.
Focus on KPIs and spend 80% of your time and money to develop these further. Monitor your vanity metrics but limit using resources until the vanity metric graduates to a KPI. The classic 80/20 rule once again applies.
As you climb mountains of data, the team at Mediastead can be your guide. Contact us, click our human-staffed website chat or call 215-253-3737.