Eloqua Experience 2009: Why choosing the right KPI is essential to gaining ROI


Senior Manager Boris Grinkot recently attended the Eloqua Experience 2009 Global User Conference in San Francisco. He sat down to answer a few questions about his key takeaways for online marketers…

Q: You were the only non-Eloqua employee to have a booth in the Marketing Effectiveness Zone. Users from around the world sought your advice about conversion rate optimization. Was there any pattern to the challenges marketers brought you?

Most websites are not really having a conversation with the customer. They are not guiding the customer through the page. And, most importantly, they are not testing their pages. They may test an email message or a form with Eloqua, but they don’t test the whole page.

There is massive room for improvement to optimize landing pages to ensure they are customer-focused, and then continually improve the results generated by those pages through testing.

Q: Measuring those results was also a major topic of conversation at Eloqua Experience?

Eloqua Experience 2009Yes. Eloqua is seeking to standardize key performance indicators, or KPIs, that CxOs use to measure results in much the same way financial accounting uses key ratios and cash flow statements, income statements, and balance sheets. Today, most measurements in web analytics – like visitors per month, for example – do not directly translate to a standard accounting metric, such as net revenue.

Q: Based on past statements we’ve received from web clinics and here on the blog, KPIs are a little misunderstood by some marketers. How can readers choose and use KPIs effectively?

In our research, we find marketers most frequently tend to look at numbers like conversion rate, bounce rate or number of visitors. While these numbers can be meaningful within the context of page or process functional performance, they don’t necessarily do a good job of measuring the financial performance.

Revenue per visitor is usually an essential KPI that connects online customer behavior to a financial outcome. While this is a more straightforward KPI to calculate for ecommerce sites, even if you have a lead-generation site, you should understand the value of each lead to determine your revenue per visitor.

Average order size can also be a meaningful KPI that helps you distinguish customer segments (e.g., collectors vs. gift shoppers) or test functional changes like in-cart upsells. Choosing the right KPIs is a big topic, but the short of it is that you need to distinguish between behavioral, demographic, and financial metrics and use them appropriately.

Q: So the important thing to remember is, that while some metrics might be useful in an intermediate step, the overall goal should be a revenue-based number?

Absolutely. For testing and optimization, you need those intermediate numbers.

For example, if you’re optimizing just one step of a shopping cart, conversion rate or clickthrough are important testing metrics. But you don’t want to lose sight of the big picture – which would be overall revenue or revenue per visitor. Let’s say you’ve optimized a step and more visitors are clicking through, but they are less motivated and in the end are buying less. If you don’t have that overall revenue KPI, and you just looked at conversion rate, you would erroneously assume that you have definitively improved your shopping cart.

Q: What are some other caveats when choosing a KPI?

Even if you choose the right KPI, you can still get bad information by not looking at individual channels. You may have good revenue per visitor, but that number is just an average. What if one channel is delivering ten times the revenue per visitor of another channel? That is important information to have, especially if you’re paying for traffic, because you need to understand how that spend converts to revenue.

Q: What is the overall benefit of choosing the right KPI for C-level reporting?

By focusing on dollars instead of traffic, business leaders gain a deep understanding about how the investments they make impact revenue generated through the website. If you invest more in a site, what ROI are you getting?

Clickthroughs and conversion rates only muddy the answer to this question. You need numbers directly related to the spend of each campaign. And not in the aggregate, but specific to a channel – so you know that investing X in PPC, email, TV, or even print will lead to a return of Y.

The other upside, which I’m glad Eloqua is pushing, is that numbers like overall revenue, revenue per visitor, or cost per acquisition bring web metrics much closer to standard accounting. These numbers give CxOs the best indicators of their site’s performance in a format they are used to seeing.

Use the comments section below or post your questions to our MarketingExperiments Optimization group.

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