The following is a guest post from Avinash Kaushik.  Avinash is a leading voice in the field of Web Analytics through his blog Occam’s Razor, speaking engagements and best selling books.  He is also the Analytics Evangelist for Google and the Co-Founder and Chief Education Officer at Market Motive.

There are world class analytics tools, available for free, from Yahoo! and Google that will get you more data than God ever intended you to have. Yet, perhaps shockingly, a vast majority of decisions website owners make are based on faith and not data.

Breaks my heart.

After wiping off my tears, and meeting with many leaders of businesses large and small, I have come to the realization that the problem is not that we don’t have enough data, or even enough of the right type of data. All that exists.

The problem is we are obsessed with data and not about the business.

And that has to change. Now. Especially if you want to take advantage of this the most glorious channel on the face of the planet, the Internet.

Here’s the secret to creating truly data driven organizations. Forget about the data!

At least at the beginning, and focus on the business and answering existential questions about your business.

There are five things you need to identify to start your journey right. In this post I’ll explain what these magical five things are, and share a concrete example with you. It is too easy to use a ecommerce website example so I’ll set myself a hard task and use as my example the website of the National Council of La Raza (NCLR). It is a non-profit website. If I can apply the framework to them, you can apply it in a jiffy to any other type of website!

Let’s rock and roll. . .  here are the first five steps. . .

#1: Identify Business Objectives.

Answer this stunningly simply question: Why does our website exist?

A variation could be: What are the three most important priorities for our websites?

Without a clearly defined list of business objectives you are doomed. Write down the answer to the above question, ensure the objectives are DUMB (Doable. Understandable. Manageable. Beneficial.).

The responsibility of identifying business objectives belongs to the most senior leader in the organization responsible for the website (the person whose neck is on the line).

There could be many objectives for the NCLR but one primary business objective is to, for example, increase attendance at immigration rallies.

#2: Specify Goals.

Here’s my definition: Goals are specific strategies you’ll leverage to accomplish your business objectives.

Since business objectives are usually strategic (“sell more stuff on the site” or “create happy customers”), goals help us drill down to something specific. Do x. Improve y. Reduce z.

The responsibility of identifying goals also rests primarily with senior leadership (in your company or at your client). Remember the people with their neck on the line? Yes, them.

In our hypothetical example, NCLR, the business objective was to increase attendance at immigration rallies and the goal would be to increase sign-up on the website.

#3: Distinguish Key Performance Indicators (KPI).

Your web analytics tool, like Yahoo! Web Analytics, has a boat load of metrics in it (hurray!).

A KPI is a metric that helps you understand how you are doing against your business goals (and objectives).

Visits and Visitors are Metrics (as an example). Conversion Rate for a ecommerce site is a KPI. Makes sense?

Be very very careful in identifying KPI’s because they are unique to every business (even between competitors) and a great way to fail quickly at this step is to do a shoddy job with steps #1 and #2 above.

The responsibility of identifying KPI’s primarily rests with the Analyst (if you have one), or the Marketer, with major amounts of input from senior leaders.

For NCLR, given our goals, there are two objectives: 1. Number of Visitors signing up for Action Alerts and 2. Number of new individual memberships. [If you don’t understand why these two then I have succeeded, they are unique to them. But if you visit their site you’ll see why I choose them.]

#4: Sweat and Set Targets!

Targets are numerical values you have pre-determined as indicators of success or failure.

You are going to love me for torturing you to come up with targets. I promise.

This is a very hard step to complete, and yet it is super important. The challenge with having access to unlimited data in under 60 mins is that most of the time the person looking at all that data (and puking it all out!) has no idea what good or bad looks like.

It is your job to solve that problem. For your KPI’s what does success look like? What number equals failure? You identify that and when the report comes out the yardstick used to judge data, and freak out about it, has already been established.

The responsibility of identifying targets is shared by the Analyst/Marketer and the Finance team (and if no Finance team then the Boss). The Analyst provides historical data and the Finance team the forecasts or just financial obligations for the current quarter / year. Together both come up with targets for your web KPI’s.

For NCLR, as an example, we could identify: 1. KPI: Action Alert. Target: 14,000 signups per month. 2. KPI: Individual Memberships. Target: 4,800 per month.

#5: Decide the Valuable Segments.

A segment contains a group of people identified by their source (where they came from), behavior (what they did on your website) or outcome (what goals were met).

A segment identifies people or their behavior that is important to your business. Either because you are spending money (paid search advertising, email etc) or it causes you to have higher revenues (all people who convert) etc. It helps focus where analysis of the data starts, what’s important to investigate first to ensure data is in service to your business rather than the other way around.

If you want to learn more about this key step check out this blog post: Web Analytics Segmentation: Do or Die, There Is No Try!

The responsibility of identifying the segments rests primarily with the Analyst, with business guidance (mostly prioritization) by the senior leader.

For NCLR we have two groups of segments to focus on. 1. Acquisition: Since search is a great way to acquire new visitors Organic Search is one segment. Since, for example, they are doing lots of email campaigns the visitors who get those emails are the second segment. 2. Behavior: Given our Goals & KPI’s we have two segment to analyze and find insights from. People who sign up for action alerts and those who start new individual memberships.

Boom! With a wink and a nod you are ready, finally, to crack open your web analytics tool and do something of business value with it.

Ok I’ll concede the above five steps are not easy. They’ll take a lot of back and forth inside the company and they’ll require asking some tough questions related to the site’s existence and business purpose. But when you are done with the five steps there will be no more data puking in your company, or decisions based on faith. There will be real analysis of the data, which will drive impactful business decisions that will increase your bottom-line and create happy customers.

Good luck, and happy analytics!

Avinash.