People do love their KPIs

A lot of people do love their KPIs, but they can be a real killer of business efficiency. What is a reasonable concept in theory has been made into a monster in practice, normally by managers who really should do a bit of homework.

The main problem is when someone takes a metric which seems important and simply declares it to be a KPI. The other, which may be related, is when a KPI becomes a target. I sat in a meeting recently when somebody declared that ‘clickthrough rate’ should be a KPI in assessing the relative effectiveness of websites where they were advertising. Clickthrough rate is just a measure of how successful the site is at getting visitors to click on an advert. If it does this by trickery, as many do, virtually all of these people could be useless to the advertiser.

What’s more, if the advertiser then told the website that its advert clickthrough rate had to hit a target, the website could just adjust things to do that, without necessarily getting any more people to click on the advert – never mind getting more relevant people to do so.

Another metric which is often abused as a KPI in website traffic analysis is ‘bounce rate’. So, a lot of people came to a page and left quickly? Does this matter? If a visitor to that page spends £100,000 with you, who cares if it was the only visit to the page, or one amongst a million unproductive ones? Targets should be business-related, and KPIs should be meaningful metrics.

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