ANALYTICS FUNDAMENTALS

DATA ANALYTICS

Analytics is about tracking the metrics that are critical to your business. While businesses as a whole need to track lots of different metrics (e.g., human resource cost, revenue per employee, etc.), in this course we only talk about analytics in the context of conversion optimization.

If you drive traffic via Google AdWords to a landing page where they opt-in to your email list, and eventually buy something – the key metrics for you would be the cost per lead (how much AdWords dollars you spend to acquire a lead), number of leads, and revenue you make out of those leads. These metrics combined tell you the effectiveness of your customer acquisition strategies, and the financial health of your business.

In the end, it’s about how much money you’re making

Every website has a business objective – to get (profitable) sales and/or leads. Every objective can have several goals – specific strategies you’ll leverage to accomplish your business objectives (e.g., reduce bounce rate, increase email opt-ins, etc.). You need to make sure your goals are DUMB (as per Avinashi Kaushik): Doable, understandable, manageable, beneficial.

Configure your web analytics tools to measure each of those goals. Besides measuring simple goals, you also absolutely need to measure your Key Performance Indicators (KPIs).

What are key performance indicators? Measures that help you understand how you are doing against your objectives (e.g., getting people to buy from your online store). A Key Performance Indicator is a measurable value that demonstrates how effectively a company is achieving key business objectives. Organizations use KPIs at multiple levels to evaluate their success at reaching targets. High-level KPIs may focus on the business's overall performance, while low-level KPIs may focus on processes in departments such as sales, marketing, HR, support, and others.

Oxford's Dictionary defined KPI as a quantifiable measure used to evaluate the success of an organization, employee, etc. in meeting objectives for performance.

Examples of Sales KPIs

·       Number of New Contracts Signed Per Period.

·       Dollar Value for New Contracts Signed Per Period.

·       Number of Engaged Qualified Leads in Sales Funnel.

·       Hours of Resources Spent on Sales Follow Up.

·       Average Time for Conversion.

·       Net Sales – Dollar or Percentage Growth.

For websites, your top KPIs would typically be

?       Conversion rate (CR – the measure of your site’s effectiveness in persuading your visitors to take the desired action).

?       Revenue per visitor (long-term view, how much money are you making per each unique person in a year). The strategy for improving this KPI is to attract more valuable visitors. Use this to critically examine each new visitor acquisition effort, and segment as necessary to see identify which ones are performing.

?       Revenue per visit (RPV – on average, how much revenue you can expect to generate off of each incoming visit). Similar to the previous performance indicator, it’s a good indicator of how you’re doing right now in your marketing and conversion efforts. Compare revenue per visit to average revenue per visitor to see if your short-term efforts are paying off, but not really contributing to the lifetime value of a visitor.

?       Average order size (Sum of Revenue Generated / Number of Orders Taken). This critical measure for e-commerce businesses helps you optimize the amount of revenue you generate per transaction and helps you optimize for higher-order sums. You can also identify where the high-value customers come from, and how their behavior is different. Segmentation is key here (audience, traffic channels, campaigns, etc.).

?       Average items per cart completed (Sum of Products Purchased / Number of Completed Shopping Carts). One of the best strategies to increase average order value is getting customers to buy more items each time they purchase. By paying attention to this, you can optimize for it.

?       Checkout abandonment rate (the percentage of people who start checking out to those who complete that process). This KPI is important since it’s easiest to get money from the people who have already decided (or considered) to give it to you.

Note that this is a non-exhaustive list, and different businesses need different KPIs. SaaS companies need to measure Revenue per User, and businesses that drive paid traffic need to pay attention to Cost per Conversion and Cost per Lead. Some might want to measure Average Visits Before Conversion and Percent New and Returning Visitors.

Think critically about your business model, and the type of KPIs you need to track.

When you measure them, you get metrics? Metrics are numbers – either counts (a total – like “revenue last month”) or ratios (e.g., bounce rate).

In CXL INSTITUTE we are taught the major metrics to pay attention to besides KPIs

?       Bounce rate. It shows the percentage of people who leave a page without a single click. Note that this is not a KPI, but it can offer insights. It helps you find campaigns and landing pages that need improvement. Ignore site-wide bounce rate, look at its page-by-page.

?       Exits and exit rate. These metrics help you identify pages where most people leave your site, so you could improve them.

?       Time to purchase. This metric helps you understand how quickly or slowly your visitors convert. Convert them at a pace they are most comfortable with. The cheaper and/or simpler the product is, the fewer times people usually need. For more expensive products or services (e.g. motorcycles or liposuction), people might need more time to think/do research. Adjust your visitor path through your site, copy, and landing pages accordingly. If the Time to purchase is much longer, then you might want to use drip content email campaigns in your conversion strategy.

?       Assisted conversions. How many of your conversions had more than one channel/ad/marketing touch before converting? When you see which traffic sources convert the best, it’s not telling you the full story. Just because organic search click was the last one before conversion, it doesn’t mean it should get all the credit. They might have come via social media first. Aim to optimize for a portfolio of channels.

The major feature to have on your website is google analytics. Google Analytics. Google Analytics has been around for about 15 years

Why you need Google Analytics

Do you have a blog? Do you have a static website? If the answer is yes, whether they are for personal or business use, then you need Google Analytics. Here are just a few of the many questions about your website that you can answer using Google Analytics.

?       How many people visit my website?

?       Where do my visitors live?

?       Do I need a mobile-friendly website?

?       What websites send traffic to my website?

?       What marketing tactics drive the most traffic to my website?

?       Which pages on my website are the most popular?

?       How many visitors have I converted into leads or customers?

?       Where did my converting visitors come from and go on my website?

?       How can I improve my website's speed?

?       What blog content do my visitors like the most?

There are many, many additional questions that Google Analytics can answer, but these are the ones that are most important for most website owners.