My daughter Meera came to me a couple of days ago asking me why do we have the number zero (0). She said that if you add anything to it, the number does not change and if you subtract anything from it the number does not change. She is still in Kindergarten and has not been introduced to multiplication and division. I explained to her in as simple terms as possible that for numbers you need a starting point and that is why we have the number zero which is also called a separator.
Just as we have a starting point for numbers, we also need to have a starting point in our data analytics. This is also called base lining. We need to be able to measure different types of numbers also called as KPI (key performance indicators). Everything that we do needs to be measurable and working towards an end point or goal. Also, the goal needs to be reevaluated regularly and updated as appropriate.
It is always important to get an idea about how your historical KPI’s are doing? If you are a brand new website, observe your traffic for a period to understand the KPI’s. If you are an existing website but do not have analytics enabled, enable analytics and observe your traffic (and KPI’s) to understand it better. More in detail about KPI’s and enabling analytics in future posts.
Web analytics tools
There are a huge number of web analytics tools available on the web. Some are free and some are paid. Some are for small businesses and some are for enterprises. Depending on the amount of traffic, transactions and the fine tuning analysis that your site requires, you will need to select the appropriate tools. A very common free tool that is used by small businesses and bloggers is Google Analytics. I use it extensively as it provides me the analytics data that I am looking for.
Over the years we could have multiple zero points (baselines), each for different goals, as well in theory also for the same goal, as long some of the initial parameters have changed (e.g. scope, assessment logic, responsibility & accountability, etc.).
Not everything that we measure in respect to performance is a KPI. For example a business can measure 100 different things in respect to performance (e.g. process-based metrics), though only about 10 can be considered as KPIs. It’s actually recommended to have a small number of KPIs that show how the business is doing, what is important for the business, in other words metrics that reflect strategic or operational goals (e.g. zero defects, 99% on time, etc.). The weight is on “Key”, in other words which metrics show the performance of your business.
KPIs can be defined in theory also for smaller organization sub-entities (e.g. departments, regions). In this case is recommended to align the local goals to the global goal. Local and global metrics are named KPIs – that can be confusing, so maybe some enriched denominations are needed. On the other side we can name everything that we measure in respect to performance as KPI, though by doing that it’s easy to forget what is important for an organization. (As a parenthesis, I read some time ago a study which supported the theory that only a small percentage of the employees know an organization’s strategic, tactical or operational goals. Through metrics in general and KPIs in particular the awareness could be raised.)
KPIs can be used without a baseline in respect to a goal though the baseline is needed to report ourselves to an initial or intermediate point (e.g. we could report the progress in report to different previous years), in order to understand various factors related to the progress (e.g. what’s the rate of change, how the KPIs is performing, etc.).