• by Jim Sterne , July 11, 2008

My job is to help companies understand and strategize around the use of Web metrics to optimize their marketing. It starts out with measuring the success of a Web site, moves on to improving specific online customer processes, and finishes with analyzing Web behavior data to transform the business as a whole.

After explaining the massive multitude of measurements one *could* tabulate, it's time to decide what the organization, department, group or project *should* measure. With so many measurement options, the question is seldom about standards or technologies, but always about goals. What are you trying to accomplish?

You can answer that question as a corporation: raise revenue, lower costs, increase shareholder value, etc. You can also answer that question as a profit center: increase profit, grow market share, increase customer satisfaction, etc. But the answers to these questions are so often so nebulous that I am no longer surprised by the need to ask at the individual level: How are *you* compensated?

The manager who will only make his or her quarterly bonus if customer satisfaction goes up X% doesn't seem to mind going a bit over budget. The one whose income depends on cost-cutting has a more conservative perspective. But compensatory motivators are seldom considered when discussing measurement and review processes.

Having spent 10 years carrying the bag as a sales rep, thoughts of compensation are hardwired into my head. I am forever trying to accomplish one of two things:

1. Alter Compensation to Match Organizational Goals

2. Align Metrics With Compensation

It's tough to get people to talk about how they earn their paycheck. They were given a speech about their productivity and contribution when they took the job, but discussions about recompense are far and few between and are considered an inappropriate topic for public conversation.

I don't want to know how much you make; that's none of my business. But unless you know and are willing to discuss the basis for your income, you can't implement metrics to help you measure your success.

So begin with your organizational goals. Yes, we want to raise revenue, lower costs, increase satisfaction and beat the pants off the competition in terms of the number of patents filed and cool T-shirts handed out at trade shows. But which of these takes precedence?

A manager's paycheck should be tied directly to specific changes in specific metrics over specific time periods and within specific budgets. It's important that the recipient not control the measurement methods (so he can't game the system) but has a contract that stipulates the rules of engagement will not change. That way everybody can track the numbers with confidence.

So clarify your goals and the proper metrics will become apparent, as will the systems to capture the data necessary to track those metrics.

If my goal is to increase online sales, only measuring sales will not give me any visibility into the selling process. I'll want to track click-throughs, and pageviews as well as revenues. I can drill down deeper and measure clickstreams -- the various paths people take as they meander around my Web site -- in order to improve usability and speed the sales process. I can measure the effects of altering the words I use to describe my offerings. I can track the types of questions the call center fields, and try to answer those questions in an FAQ before people have to ask.

With state-of-the-art Web analytics tools, I can measure every keystroke and the X-Y coordinates of each and every mouse movement in order to assess customer behavior within every page on my site. This is where the return on investment question gets some airtime.

If I collect too much data, if I produce too many reports, if I have too much information to consider, the cost of collecting, storing, analyzing, and reporting that information will be more expensive than the benefits I can derive from its use as a decision-making tool.

So measure, but not too much. Analyze, but don't go over the top. If you align your organizational goals with your personal metrics and those of the people who report to you, you give everybody the power to track their own success and do their best to meet their (and your) goals. Just don't let them get bogged down in the details. Make sure your metrics are useful, rather than merely interesting.