Getting Successful Business Metrics from your Web Analytics Tool
I met analytics guru Marshall Sponder at a party last night. He’s passionate about analytics and doing some exciting work in measuring the value of social media. I’m a big numbers nerd, too. Comes with the territory as a baseball fan and as a geek marketer. Like baseball, you can count everything in ecommerce. Seriously. You name it, ecommerce has a stat for it. And there are many things you should measure. As the saying goes, “you can’t manage what you can’t measure.”
But not all metrics are created equal. For instance, conversion rate, which so many people live by, has some fundamental flaws. While I don’t feel as strong about as Avinash Kaushik, I agree that conversion rate is not the most useful metric. All useful web metrics share 2 key attributes:
- Web metrics are tied to business results. These aren’t “web metrics” at all. They’re business metrics. If the thing you’re measuring doesn’t tie back to a business result, it’s useless. Sales volume, sales revenue, inventory turn, costs reduced. These are all Real Things. “Fuzzy” metrics don’t pay the rent. And if you’ve got bright young kids on your staff, passionate about web analytics, don’t squash their enthusiasm. But let them know that some web metrics are more important for making payroll, too.
- Web metrics are actionable. Measuring stuff is great, but to turn my earlier quote on its head: “Measuring stuff you can’t manage is stupid.” For example, conversion rate is tied to business results. But if fails the actionable test. Actionable web metrics also share these 5 features:
- Actionable web metrics are timely. Finding out what you sold six months ago is great, but it makes it very hard to repeat the process. While you don’t need to measure everything daily, checking that you’re going in the right direction once a month or less may not give you enough time to correct for any problems.
- Actionable web metrics are precise. Don’t confuse precision with accuracy. While Avinash Kaushik explains the difference between precision and accuracy better than I can, I’ll summarize with my favorite quote about this topic: Apples are apples. It doesn’t matter if your apples are rotten as long as you’re comparing ‘em to other rotten apples.”
- Actionable web metrics are segmented. Improving your web metrics requires pulling certain levers. Segments quickly help you figure out which levers to pull.
- Actionable web metrics are trended. A number in isolation tells you nothing. You’ve got to see what direction they’re moving, too. I personally like to see a week at a time and how the same week stacks up against the prior year, for instance.
- Actionable web metrics are meaningful. Statistical significance* is important, too, but meaning is more important. Here’s why. Assume you get 200 sales from 1,500 visitors vs. 20 sales from 30 visitors. While the 66% conversion rate of the latter is better, in statistical significance terms, 200 sales is better than 20 in the Real World. Only focus on statistical significance when you’re measuring meaningful results. 4 sales on 5 visitors is statistically better than 1 sale from 5 visitors, but, unless your margin per sale is huge (and there are cases where that would be sensational), would you care that much?
OK, so theory aside, what should you track? Well, that varies by business (remember, they’re business metrics, not just web metrics). As an example, though, here’s a representative set of the things I pay attention to and how often:
- Sales trend by segment (every day and weekly aggregate)
- Unique visitors trend by segment (every day and weekly aggregate)
- Revenue trend by segment (every day and weekly aggregate)
- Bounce rate by traffic source (weekly)
- Bounce rate by campaign (weekly)
- Bounce rate for top pages (weekly)
- Days to purchase (monthly)
- Visits to purchase (monthly)
- Top abandoned pages (monthly)
- Site overlay (monthly)
And I like to look at them by these key analytic segments:
- Typed URL
- Paid search
- Natural search
- Internal search
- Repeat visitors
- “New” visitors
I don’t always drill down into the details by segment if the trends hold to targets, but it’s handy to have the data if you deviate from the trend or goal. Seasonal adjustments in your trends are a nice touch, too, if you can handle it. (See, I told you that ecommerce can count everything. And you thought I was kidding).
I don’t suggest you need to track all these things. Some businesses may only care about select subsets. The key point is that each of these meet the requirements for useful metrics. What items work for your business? Let me know in the comments.
* – By the way, if you need to determine statistical significance, Brian Teasley has a great set of statistical significance calculators available here.
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