Evaluating S.M.A.R.T. KPIs for Internet Retailers (2017 Edition)
The "S.M.A.R.T." acronym (specific, measurable, achievable, relevant and time bound) has been around for years (since at least the early 1980s) and continues to be a driving force behind enterprises' decisions related to the establishment and monitoring of their goals and their performance metrics.
KPIs are often driven by enterprise objectives and will vary greatly by industry. Information publishers, for example, might monitor a KPI such as subscriber renewal rate while brick-and-mortar service providers could track in-store visits resulting directly from a digital advertising campaign. Internet retailers can also establish key performance indicators (KPIs) that can be used to evaluate the overall success of their enterprises or a particular activity/initiative in which they engage (projects, programs, campaigns, etc).
When it comes to establishing KPIs, e-commerce merchants should keep in mind that they (these measurements of progress toward our goal) can range from those that indicate the maintenance of some state (e.g., zero customer complaints) or the movement being made toward some state - such as a percentage increase in monthly sales.
Ideally there should be a mix of quantitative and qualitative indicators, as well as leading (predicting the outcome of a process) and lagging indicators (that present the success or failure after the event concludes). Let's take a closer look at some questions that Internet retailers should ask to determine if their KPIs meet the S.M.A.R.T. determination:
+ WHAT SPECIFIC AREA NEEDS IMPROVEMENT?
Total sales and revenue, total orders processed, website traffic increases, reduction in abandoned shopping carts, monthly average order value or customer lifetime value; the more specific the better. Instead of total sales, for example, perhaps track "total sales on mobile devices by those in the female demographic aged 21-35.
+ IS THE GOAL MEASURABLE?
Establish a starting point/baseline and have processes and systems in place to quantify and monitor the progress being made toward achievement of the goal.
+ CAN THIS BE ACHIEVED?
Develop goals or indicators of success that are attainable and realistic and aren't overly challenging, requiring significant investments of time and effort.
+ HOW RELEVANT IS THIS?
Ensure that any KPI or goal is aligned with the organization's broader mission and purpose, prioritizing those initiatives that are most likely to yield success.
+ WHAT ARE THE TIME CONSTRAINTS?
A goal without a deadline is just a dream; how long do you estimate it will take to achieve the designated goal and what KPIs are in place to track progress being made?