How do you know if you’re creating value if you’re not measuring it properly?

“Are you seriously trying to tell me we’ve invested millions in our digital channels and we don’t know who our most loyal and profitable online customers are?” A tough question that e-commerce project directors of large organisations need to be able to answer.

The internet has always been touted as the ultimately accountable medium. It can be, but it seems very few organisations are effectively measuring their digital return on investment. In the current climate this cannot continue. Solutions must be accountable.

It has been suggested that some organisations (e.g. financial services) do not need to measure web traffic, as they do not carry advertising so the metrics are of little use. This is misguided. It is not a question of measuring “traffic” (most people understand page impressions or number of users by this term), it is about understanding who your online customers are and how they are interacting with your web site, what is working and what is not. It is about measuring the value your digital channels are creating for the business, providing robust management information to support decision-making and quantifying and measuring return on investment. So how do you actually go about it?

1. Focus first on the “moments of truth”

What are the “moments of truth”? These are the key yes/no or shall I?/shan’t I? decision points in the customer’ s interaction experience with your site. Typically these might be the homepage, the registration page, the point of purchase. It is incredibly important to measurement abandonment rates at these key points and do all you can to mitigate against this. Focusing on the “moments of truth” can have a huge and very quick impact on conversion rates and ROI.

Take compliance on a Financial Services site as a simple example. Of course there are laws that must be complied with but exactly how do you design the process users have to go through online? If done poorly, it can have a disastrous impact on the customer experience and hence your bottom line. You might well find that simply by reducing the number of “I accept” screens and placing the “I accept” button clearly at the top of the page, rather than forcing users to scroll past text that they do not read, improves your conversion rate by 300%. However, without proper measurement you are forced to make decisions based on gut feel and end up arguing over shades of grey.

There are now ASP (application service provider) technology solutions available that allow for fast, cost-effective measurement of such moments of truth with minimal systems integration and disruption. Focusing on the moments of truth using such an ASP model ensures maximum ROI with minimum cost and risk exposure. Make sure any such ASP can adapt to your needs and deliver against your business metrics rather than be forced into a packaged solution. The business logic and intelligent analysis of the data to produce actionable insight is much more valuable than the technology itself.

2. Measure both qualitatively and quantitatively

Clearly there is a need for measuring against fundamental technical performance metrics such as site response time, server up time, size of pages, broken links. 1st generation quantitative e-metrics are still valid to alert you to general trends or major site problems.

However, it is very important to use qualitative techniques to complement more data-driven quantitative analysis. Focus groups, usability sessions, online surveys and other user feedback and talking your customers are vital tools in giving you insight into how to improve your offering. Indeed, such qualitative techniques are typically faster, more cost effective and deliver greater immediate return on investment as a first step in maximising performance. If you make a change based on qualitative insight, how do you then measure whether it has worked? This is where you need the data-driven quantitative analysis. With the two working in tandem you ensure that you are continually refining your proposition in the right direction.

It surprises me how many organisations are still prepared to spend large amounts of money on redesigning their sites, launching new sections and services when they do not really know how or why their current proposition is performing as it does.

Anyone else feel likewise? Other methods of measuring value and delivering ROI that have worked?