7 Steps to Turn Web Analytics Into Your Most Valuable Marketing Component

“The price of light is less than the cost of darkness.” — Arthur C. Nielsen Jr.

Art Nielsen is one of the pioneers of market research, and he hit things right on the head when he said that, and it rings far truer in today’s Internet world than ever before. Far too many organizations trudge on with business as usual, very much unaware whether the money they spend on their web site is spent in optimal activities or not. Sure, you might be tracking some high-level numbers like orders and total revenue, but if you don’t know more than that, how do you know if the money you’re spending to acquire those orders is being used most efficiently? You may be leaving a lot of revenue on the table.

A Sad Story
I have a colleague (not a client) who has a small business selling a very specific item used in all homes. He only sells them online. He started by purchasing several that were deeply discounted at a local retail store and reselling them online. He now imports them by the ton from China. If I had managed that in just a few years, I’d be very proud of my success.

Yet if you asked him about metrics, he could tell you three main things: how many orders he receives per week, how much revenue those orders generate, and how much he spends on Pay Per Click ads. He has no idea what his Conversion Rate is, or even how many people visit his site each day. He can see the number of conversions from his ads in Google’s & Bing’s reporting, but doesn’t believe in their accuracy. He spends thousands of dollars per month on Pay Per Click ads, yet he doesn’t really know what his return on that spend is. He knows he makes more than he spends, and he is satisfied with that.

What if he knew for sure which sales were coming from the ads, which were coming from organic search, and which were coming from referrals? What if he knew whether his conversion rate was fabulous, or awful? What if he knew what percent of his orders were from repeat customers? How would he change his marketing spending if he knew all that? How much more revenue could he create with the same (or less) spending levels, but applied optimally?

Make Analytics Work For You–It’s Easy!
Does any part of the story above sound like you? You can correct that. It’s easy, and often inexpensive. Here are seven steps to make web analytics help you hit your marketing objectives.

1. Create a customized “Scorecard”. Identify the most important metrics for your business (see step #2) and implement consistent measurement of them in the form of an easy-to-digest “Web Site Scorecard”. If your system does not have the capabilities to measure one or more of your most desired metrics, assess the cost of enhancing it so that you can. An up-front investment in measuring the most valuable analytics can pay rewards for years to come. In any case, be consistent with the publication of your Web Site Scorecard, and be sure it is seen by the important decision makers in your organization (see Step #4).
2. Choose KPIs tied to real marketing objectives. Your Key Performance Indicators (KPIs) are what your scorecard is all about. These are the core metrics you are focusing on. Don’t just choose KPIs that are easy to measure, or KPIs that your colleagues are measuring. Your KPIs should be tied as directly as possible to the objectives in your Marketing Plan. Think “desired outcomes” of visitors to your site. Metrics such as “Page Views per Visit” might be important if your main revenue stream from the site is selling space to advertisers, but otherwise, something like Conversion Rate or Average Order Size probably ties in much more closely with your Marketing Objectives.
3. Where possible, include cross-channel or cross-platform KPIs. Your web site is just one part of your business. Even if you are purely an online retailer, or you’re a blogger, and you think your site is your entire business, you’re wrong. External marketing opportunities such as email, search, social, and more can and should be part of your marketing plan. If you are a larger enterprise, then your web site is certainly just one component of an integrated Marketing Plan for your company. Where the site influences other channels (or tactics), or where they influence your site, try to measure their effectiveness.
4. Champion the cause. Far too often, web analytics are the neglected stepchild of the organization. Regardless of the reasons for that, fight to overcome them. Design your scorecard so that each KPI has an illustrated effect on the bottom line. If there is pushback on spending to enhance the system to provide the metrics you need, make a business case to get the approval. If your organization traditionally thinks of the analytics as too technical to understand, clearly explain what each KPI is measuring in words that all managers can readily relate to. Show why each KPI is important and what it is telling you. Your scorecard doesn’t have to be (and shouldn’t be) the same old Excel spreadsheet that people dread to see. Make people clamor for it if it is late.
5. Compare your metrics against yourself. How you are doing against your competition is of course important, but that is very difficult to measure accurately. There are services that can give you estimates of things like traffic metrics or share of search for your competitors, and it’s good to have that information. But those are just estimates, compared to hard, accurate data for your own entity. And your competitors are much more protective of their more sensitive numbers, such as conversion rate. Besides, there’s not much you can do about their numbers. It’s much better to focus on your own, and implement plans to improve your KPIs over time.
6. Fine tune your web marketing tactics with your new information. Here is where the payoff is. Remember the example at the start of this post? If my friend had learned for example that his conversion rate was 0.5%, he might reduce his PPC spend by 20% for a few months and spend the money on a Usability Study. That Study could likely uncover a few changes to make to his store to increase conversion to 1%. That would have the same effect as doubling traffic to the site. If you know that Average Order Size increases dramatically for people who arrived from Pinterest, you might spend more analyzing ways to leverage Pinterest for more traffic. In the end, you’ll make spending decisions which maximize your ROI on them.
7. Relax and don’t overreact. Metrics are best viewed over time. Don’t micromanage them. Unless you are Amazon, a drastic change in numbers from one day to the next is most likely just an anomaly that will correct itself the next day. It’s negative trends you want to be on the lookout to defend against.

Analytics Aren’t Just For Ecommerce Sites
Finally, it’s important to point out that while I mainly used ecommerce sites and metrics as the primary examples here, effective use of analytics can improve any web site with objectives. Whether yours is a non-profit charity, a brochure-ware site, an online newspaper, or a personal blog, you probably have (or should have) objectives for it, and desired outcomes that will lead to meeting those objectives. And properly measuring the factors that drive those desired outcomes will allow you to take steps to improve upon them.