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8 Important Personalization Key Performance Indicators (KPI)

When you think of personalization you also think of a perfect customer journey, beautiful looking recommendation widgets and the best matching articles? Of course you do. But when it comes to results and to the marketing and sales department, they just care of the numbers.

Here are 8 important personalization key performance indicators you have to track daily.

How To Read the Following Examples

The following calculations are based on a Recolize customer who generates 5,500 clicks on recommendations per month. Minus the 300 free clicks per month, the recommendation costs for this customer are:

(5,500 clicks - 300 free clicks) * €0.039 = €202.80

This customer generated €45,000 revenue with 600 conversions and 550,000 page impressions by displaying the recommendations on 120,000 pages in the example month.

Views

Measure how often your recommendation widgets are displayed. Compare this value to your page impressions.

Formula

Views / Page Impressions * 100 = %

Example

120,000 Views / 550,000 Page Impressions * 100 = 21.82 % of pages display recommendations

If the value is 100 %, then all your pages display recommendation widgets. Try to improve this KPI by adding recommendations to as many page types as possible.

Clicks

The click count of clicked recommended items. This value only helps in comparison with the CTR.

Click Through Rate (CTR)

Compares the clicks with the views.

Formula

Clicks / Views * 100 = %

Example

5,500 / 120,000 * 100 = 4.58 % of recommendation widgets generate a click

The higher the CTR, the better perform your recommendations. Keep in mind that the position of the recommendation widgets have a huge impact on this KPI. If the widgets are not displayed in the viewport, then the CTR value drops drastically.
Furthermore the logics behind your recommendations are responsible for a great CTR. Decide if you want to use personalized recommendations or cross-sells depending on the page context.

Conversions

The absolute count of conversions generated for a clicked article in a recommendation widget.

Conversion Rate

Compares the conversion count to the clicks.

Formula

Conversions / Clicks * 100 = %

Example

600 conversions / 5,500 clicks on recommended items * 100 = 10.91 % conversion rate

To sum this KPI up: the better you position your recommendation widgets in the viewport, the better your clicks will be. The more clicks you generate, the more you’ll covert and the better is your conversion rate.

Next to positioning, the logics of your recommendations in the context of the current site have the most influence on the conversion rate. Try to use real personalized recommendations as often as possible and try to avoid imposing your choice of products to your customers. This is not always easy in every context, but you can try to work with a great recommendation widget title to solve this.

Revenue

Calculate the direct revenue generated by your recommendations. This can be sales in an online shop, a booking in a travel portal, the reading time in a blog post or the visiting time on CMS pages. Define money values for non-salable content to measure the performance.

Return On Invest (ROI)

To calculate your ROI before returns, you have to know your margin. When we calculate the ROI for Recolize customers, we normally assume a margin of 40 %, which is quite low.

Formula

(Revenue * (Margin % / 100)) / Costs * 100 = %

Example

(45,000 * (40 % / 100)) / €202,80 * 100 = 8,875.74 % ROI

The ROI is a great KPI to measure the raw success of your personalization, but very often you don’t have all numbers or knowledge to calculate it. Even for the margin there are several definitions. Also the ROI has different definitions, which makes it hard to compare your recommendations to other sales channels.

Have a look at the CRR which could be the alternative for measuring the success of your personalization.

Cost Revenue Ratio (CRR)

Compared the the ROI, the CRR just looks at the relation of costs and generated revenue. The margin and all other uncertainties like return quotas, payment transaction costs etc. are not relevant for this KPI.

This also makes this KPI much more independent of seasonal changes and more comparable to other marketing and sales activities. That’s why lots of performance marketing companies use the CRR to compare their different sales channels.

The lower the CRR, the better the sales channel.

Formula

Costs / Revenue * 100 = %

Example

€202,80 costs / €45,000 revenue * 100 = 0.45 % CRR

Focus on Your Key Performance Indicators

It is very hard to keep on track with your KPIs every day. Try to create automated dashboards to measure your numbers anytime. As website owner you should have an eye on your KPIs at least daily. You can do this e.g. high level with a usertracking tool like Google Analytics. But keep in mind that Google Analytics is no business intelligence solution and users can avoid tracking. All numbers in Google Analytics can just be a hint for marketing and sales activities.

The Recolize Tool offers a number of very important personalization key performance indicators. In our dashboard you can measure your numbers in realtime and keep on track all the time without any effort. After your login you instantly find your KPIs for the last 7 days.

Michael8 Important Personalization Key Performance Indicators (KPI)