Analytics

KPIs VS. Metrics

Comments Off 30 January 2013

How do ‘metrics’ and ‘KPIs’ differ and how are they related? These two terms often cause confusion. In some cases they are used interchangeably and in other cases they have different definitions according to different people and scenarios.

At Proximity, we have a specific definition for each of these terms. In this blog post we hope to clarify the difference between these two terms and show how both play a unique role in digital measurement and analytics.

What are ‘metrics’?

Put simply, the term ‘metric’ refers to any number that attempts to quantify performance. Pageviews, unique visitors, bounce rate, conversion rate, revenue, and average order value are all examples of digital metrics. Alone, one metric is relatively meaningless; it is only when important metrics are given context and  compared to benchmarks and goals that we can gain an accurate and full view of performance and progress. But for any given media campaign, website or promotion there are dozens (if not hundreds) of potential metrics. How do we know which metrics are important? Enter key performance indicators (KPIs).

What are ‘KPIs’?

KPIs are specific metrics that quantify performance relative to business and/or digital objectives. KPIs should be carefully chosen from all available metrics based on a variety of criteria:

1. Do these metrics accurately portray the performance of a specific objective?

2. Do you have access to the metrics that you have chosen for your KPIs?

3. Do the KPIs lead to action?

Ideally, each of your objectives should have at least one corresponding KPI.

For example, imagine that you are a marketing manager at an e-commerce company and one of your objectives is to increase customer loyalty. To accurately measure progress towards this objective, you will want to choose metrics that correspond with customer loyalty.

Below is a list of potential metrics you could select as your KPIs.

  • Purchase frequency
  • Average order value
  • Purchase conversion rate (purchases/visits)
  • Return visits
  • Pages per visit
  • Bounce rate

However, only the top 3 in the list (purchase frequency per year, average order value, and purchase conversion rate) indicate the level of customer loyalty, so you would want to select those metrics as your KPIs. Another objective will have a different set of KPIs.

In a past blog post, we covered the role of metrics and KPIs in creating an actionable  measurement strategy.

Ultimately, choosing the right KPIs is important to accurately evaluating performance. In turn, a strong understanding of performance helps drive meaningful actions and optimizations that bring you closer to your goals.

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About Search Work

Proximity Search is a client service capability within the BBDO/Proximity Worldwide Network. We serve as the Global Center of Excellence for Search out of the Barefoot Proximity office in Cincinnati, Ohio and collaborate with our colleagues in over 62 offices around the world to meet the organic, paid, social, local and mobile search needs of our clients. We also offer comprehensive measurement and analytics capabilities to identify the effectiveness and ROI of all digital marketing programs.


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