Practical Ecommerce

Use Web Analytics to Improve Profits for New Year

I love this quote by Albert Einstein: “Insanity is doing the same thing repeatedly and expecting a different result.” It’s a great concept to bear in mind as the New Year begins. I expect many of you are looking for better results from your marketing, and Einstein reminds us that sticking with the same strategy and just hoping for better results isn’t the approach favored by the rational.

But before you dive in and begin trying new things, I would suggest that looking to the future should begin by looking at the past. Most website owners will have gathered a large amount of data over the past 12 months, and this is where I suggest you begin your search for strategies.

Many websites automatically collect data about visitor behavior through a web analytics program. Your web host may provide this package, or it may be something that you have signed up for independently. (Google’s new free analytics tool, Google Analytics, is an example. See google.com/analytics.) Your analytics tool allows you to view all sorts of data on hits, visits, referrers and more, and probably allows you to slice and dice this information by different time-frames.

The problem is that most website owners have very little idea about what these numbers mean. If they do, they’re not terribly clear on what the numbers are telling them. I’d like to suggest a brief “dashboard” approach to these metrics by identifying a few key performance indicators that will not only provide a snapshot of your site’s effectiveness, but will spotlight some areas to begin improving.

The key statistics that I encourage you to begin with are:

  • Home Page Abandon Rate
  • Conversion Rate
  • Cost Per Lead
  • Cost Per Sale

    I think that Cost Per Lead and Cost Per Sale are fairly obvious to assess: Make sure that you’re making more than your spending. A $50 cost for a $25 sale means that you’re actually losing money. But Home Page Abandon Rate and Conversion Rate probably need a little more clarification.

Home Page Abandon Rate

This is the percentage of people that hit the back button once they get to your home page. Numbers higher than 25-30% are cause for concern. There are two main causes for high abandon rates; either you have a problem with your traffic, or you have a problem with your home page.

What I mean by a problem with your traffic is that you are sending unqualified visitors to your site – so naturally once they arrive there and realize that it’s not what they’re looking for, they hit the back button. The solution to this is to more clearly define your target audience, and then be more selective about the traffic that you drive to your site. Sorry to disappoint all those SEO enthusiasts out there, but the goal is to drive qualified traffic to your site – not any traffic. Problems with your home page could range from too many links, poor copywriting, to various red flags indicating a low level of professionalism and trustworthiness. The solution may be some minor refinements, or a full site re-design. (Watch for a future column on simple home page fixes.)

Conversion Rate

This is the percentage of visitors that turn into a lead or a sale. For an ecommerce site, the high single digits is considered a ‘good’ number. For lead generation sites, numbers in the high teens are considered good (although I have worked on lead generation sites with considerably higher numbers than that). If your site is ‘average’ (meaning as bad as most other sites out there) then you’re probably experiencing about 1-2% conversion for ecommerce, or 5-6% for lead generation. If you find that you have a Conversion Rate problem, it’s likely that the fix is not a simple tweak here and there. You probably want to go back and clearly define your goals and your target audience and look at your site with a fresh set of eyes.

If you’re like me, you’ve been pondering your marketing goals, plans, and activities for the New Year. This is a great time to re-evaluate ALL of your marketing activities over the past year, and fine-tune your strategy to increase effectiveness and ROI. And let’s remember the Einstein quote and not be insane about it, okay?

Mat Greenfield

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