March 22, 2009
A Key Performance Indicator is a measure of how good or bad you are performing on some measurements that are key to your business success. Generally a KPI is constructed as the sum or regression of some specific success events that you have pre-determined to be good for your company’s performance. Ie. a KPI should produce an indicator whether or not you will be successfull in reaching your goals.
For an e-commerce website these KPIs and success events are quite easy to determine and measure as anything that leads to a sale, or is in fact a sale, makes up the core of your existance. Hence, any kind of event that leads the user to commit the most profitable choice for you should also count as success events in your KPI.
With regards to corporate communication, events such as downloads of quarterly reports or whitepapers can be crucial for your corporate communication and should hence be defined and measured as success events leading to your aggregated KPI.
Social media and KPIs
With the introduction of social media in the toolbox for analyzing web success the regular model has to be extended. Problems in defining what actually determines your success has appeared on the skyline. What are the success events of social media? What can you as a company measure to know whether or not you are successful in what you do in social media?
The pragmatic take on Social Media KPIs
There are many different measurable metrics in social media. Metrics such as friends, followers, favourites, reviews, references, quotes, likes, stumbles, digs etc. can be easily obtained and tracked. These metrics are off site events that can be measured as successes if they increase outside the website. However, there are also on site success events that should be tracked in order to find the nominal indicator of how successful you are in social media. Such events as comments to articles and blogs, ping backs, RSS and newsletter signups, buys and “tell-a-friends” are such events that can be counted to the aggregated success of your social media activities.
The evangelist take on Social Media KPIs
For the evangelist of social media, a company is seen as successful when it is influential, when it listens and discusses key issues with its target groups through social media. The relationship that leads to a successful strategy is built upon trust. Hence we have to find a way in which we can determine success events leading to trust, which is the basis for influence in social media and in any kind of business for that sake.
Joining the pragmatic with the evangelic view
I have had a difficult time navigating towards what is the hen and what is the egg in this equation. A fan on Digg or a follower on Twitter is not a success event in itself as it is not a guarantee for increased online influence. However, you need followers and fans in order to be able to use your influence in a way that is counting towards your company’s long term success.
Time is the most valuable component
I have realized that time is one of the most crucial success events. In order to show accurate indicators however, we need to separate marketing/sales campaigns from corporate/brand communication.
Marketing/Sales Social Media KPIs
Given that your campaign is for a product or a service that leverage upon the PR value of it being a new thing, your exposure time has an expiry date. Given that the value of a product or service decrease over time, the pace at which you can get your new product shared to the most people become of utmost importance.
Corporate/Brand communication Social Media KPIs
If successful the value of your brand and communication will increase over time. Thus you want all of those you communicate with through social media to adapt a behaviour that is beneficial to your brand and maintain that behaviour over time. If people trust you, they will not only follow you, but also share your thoughts with others as they look upon you as a valuable source of information.
Boiling it down
As an increase in brand value will prolong the value of our products and services as it puts a brand price premium on top of the actual price of the service or product, we should try to maximize the long term brand value whilst making the highest short term ROI on our products.
In the following posts I will determine how to find metrics that can be measured in order to determine good KPIs through using a set of examples.
[This post is work in progress – please comment and get back to me with suggestions]
In the following posts I will handle topics such as:
- Problems with simplification and exclusion of basic metrics
- How to measure influence over time
- Produce a matrix for separating Marketing vs. Brand KPIs
- Show how by keeping small promises through marketing – build your long term brand
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