thinks

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:

1. 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.
2. 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:

1. 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.
2. 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.”
3. Actionable web metrics are segmented. Improving your web metrics requires pulling certain levers. Segments quickly help you figure out which levers to pull.
4. 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.
5. 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
• Referred
• Email
• 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.

Do you know Linda Bustos? You should. Linda and the good folks at Get Elastic provide excellent insights into what makes ecommerce work. The other day, Linda pointed out Google’s Search Within A Search, asking whether it represents a good idea. As Linda writes, “OfficeMax should be pleased that this works for them but not for Staples and Office Depot, at least it makes them seem a bit more important? I noticed that Target and Walmart get a search box, but not Sears. NewEgg, Radio Shack and BestBuy get one, but not Circuit City. Ebay and Overstock also are left out, which is a bit of a head-scratcher.”

Search engine marketing is quickly turning into search engine distribution. It won’t be enough to ensure that you’re ranking well in natural search and that your PPC campaigns generate solid returns on investment. You’ll also need your products and services salable from within search, too. As you look at what sales channels matter most to your business, watch this development closely. Google claims the purpose is to make it easier for customers who conduct a search on the destination site. So, Google, how do we ensure that you’re making it easier for our customers, too?

What do you think? Is Google helping customers? Or are they favoring some results over others? Tell me what you think in the comments.

Weekly link juice flowing forth and apparently ruining my website’s rankings… Ah, well. That’s the price we pay here at thinks for you fine folks learn about e-commerce and online marketing for small businesses.

• Lots of chatter this week about the use of “nofollow” for “sculpting” traffic on your website. Michael Gray says “knock yourself out” when “sculpting” traffic on your site with a nofollow. Shari Thurow thinks you should “nofollow” that advice.

  I’m only commenting because of the point this debate raises about the value of expert advice. I don’t think either of these folks are technically wrong, at least at present*. They’re generally well-regarded and clearly demonstrate deep knowledge of their subject. So, how can two “experts” have such completely opposite opinions? Trick question. That’s not important. The real question is, are these activities worth your time as a small business? Personally, I think Search Engine Roundtable has the best approach: “why not [do it], if you have exhausted everything else you could have done on your site” (emphasis mine). Most small business websites have far bigger search engine optimization - and customer experience optimization - issues than this. In other words, know the basics of SEO. But once you get too deep into that rabbit hole, leave it to the rabbits.

• While we’re all fired up and mired in controversy, now seems like a good time to talk about Google introducing competitive benchmarking within Google Analytics. Some folks think this is a really bad thing (I’m looking at you, Michael Gray). I think it’s less so. Google Analytics is a great program and remains so for most small businesses. Your web business decisions should always be supported by data. Right now, there isn’t another program on the market that delivers what Google Analytics offers for comparable cost, regardless of whether those costs are explicit or implicit. And, at least for now, the program allows businesses to opt out from sharing their information.

  I would recommend that you take a good look at Google’s policy and decide if it’s right for you. I would also suggest relying on a second source for analysis, if you can manage it, just in case Michael’s “Say it ain’t so, Joe,” scenario plays out. For instance, though it’s not the same type of tool as GA, you should take a look at Q4, a new qualitative survey tool from Avinash Kaushik and iPerceptions. Knowing why your customers choose to do what they do is often better than knowing what they do.

  Finally, not to pick on Michael specifically, but his logical inconsistency of taking Matt Cutts at his word on the “nofollow” thing and not on the GA thing proves my point above about expert advice. Not only can two different experts disagree. Sometimes one can do it all by himself.

Enjoy your weekend everyone. And look forward to further adventures in e-commerce and online marketing next week.

N.B. - I say “at least at present” for one reason: the search engines have a long history of changing their algorithms to account for improved results (whose definition of “improved” - as ever - is open for debate), even in cases where their public statements favor a given action. Again, that’s not to say you shouldn’t do this. It’s more a question of whether it’s the most beneficial action you can take. Now, where did I leave my carrots?

If Seth Godin never wrote anything else, his role in defining permission marketing alone would have made him who he is today. Jared Reitzin, CEO for a great new email and mobile marketing firm, mobileStorm, has picked up the torch, working to help small businesses go from zero to $10 million in sales using permission marketing. But Jared’s view of permission marketing isn’t just email. mobileStorm also develops direct mail, fax, and, most interestingly, mobile marketing campaigns to help small businesses connect with their customers. I recently spoke with Jared about permission marketing and how small businesses can benefit from email and SMS marketing.

Tim: Hi, Jared. Thanks for taking the time with us. Can you talk about the role permission marketing plays in helping small business reach that $10 million goal?

Jared: It costs 10 times more money to attract a new customer than it does to keep an existing one and existing clients bring 10 times the revenue . It’s very important to build a database of customers that you can continue to market to and upsell. The great thing about doing business in today’s world is that digital messaging is an extremely cost effective way of reaching people and you can easily gauge and track ROI. However on the flip side if you are not practicing permission based marketing, it could hurt your brand and will hurt your growth .

Tim: With the emergence of RSS and “pull” media, does email marketing still have a place?

Jared: Absolutely, I am firm believer that RSS will not replace email . At the end of the day, consumers still want information pushed to them; they won’t always remember or have time to check their feeds. I do think, however, that RSS is great because your message will get delivered, it won’t end up being caught by the spam filter.

Tim: What about SMS marketing? Is this viable for most small businesses? What sorts of businesses would benefit most? Are there specific types businesses that should avoid SMS as a tactic?

Jared: When I get asked this question by a small business my answer is simple, try it out. Mobile marketing is tricky and doesn’t work for all businesses. Try and work with a provider who won’t just offer you their technology but can also help strategize your game plan. Regardless, like anything else, you should be able to look back and answer the question “did I do everything I could to make it work?”. If the answer is no, then try a few more approaches. If the answer is yes, then don’t force it. A text message interrupts someone’s day, it’s a powerful form of communication. Don’t forget it can be just as negatively powerful as it can be positive. I think retail, entertainment and event based businesses are great candidates for SMS marketing.

Tim: Small businesses need to pay attention to the value of their media more carefully than large business (given the fact that they’ve got less to spend). What metrics should matter most when using permission marketing?

Jared: If we are talking about email and you sell stuff online, the most valuable metric is the total amount of revenue you driving through your campaigns. This is why email is so powerful. You can track the whole sales cycle and even see what your customers are not doing. Also every small business should know how much it costs to acquire a new customer , and when they figure that number out and it makes sense, spend as much as they can and go big.

Tim: What kind of budget should small business owners expect to spend? What’s the minimum amount that’s realistic to produce meaningful results?

Jared: It really depends on the size of their database and if they need additional services such as consulting, support, custom feature etc… A serious small business digital marketer should have a monthly budget of at least $500.

Tim: What should small business owners look for from a permission marketing (email marketing/SMS marketing) service provider?

Jared: The service provider should be able to provide good references and case studies. They should have a good reputation and willing to let you know what IP address you will be sending from so you could do some research before coming aboard. Check out their management team and the press release section, see what the company has going on and the direction they are going. Also Google them and see what people are saying.

Tim: Jared, thanks for your time today. Keep up the great work.

Jared: Thank you very much for doing this interview with me, I hope your audience takes a few things away and becomes successful digital marketers!

[Full disclosure: I plan to use mobileStorm’s services for my email marketing going forward.]

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business, e-commerce, e-commerce strategy, marketing, mobile, mobile web, small business e-commerce, small business e-commerce strategy

Defining E-commerce

The last several weeks, I’ve been discussing e-commerce - mostly from the standpoint of small business. But, I think I use that term somewhat idiosyncratically. That is, my career has been built around using the web to drive action, whether that action was to learn skills, reserve hotel rooms, research stocks or report revenues. While I’ve generated over $1 billion in revenue for my companies over the last 5 years, I’ve also delivered training, sales literature and customer service. Each has helped my companies succeed. To that end, e-commerce is any action that uses the web to generate revenues or grow the bottom line You need to look at the web’s value holistically. How do you know what’s appropriate for your e-commerce group to pursue? Like this:

• E-commerce drives a purchase action. Ideally, for most companies, this involves revenue. But, getting people to download a white paper or refer to an FAQ can be an effective method of lead generation and customer service at a lower cost. That’s a Good Thing. And it works like just like an e-commerce transaction. Just evaluate the costs of each activity relative to its benefit and its customer value to prioritize your activities .
• E-commerce allows for precise measurement. Or mostly precise. Or some kind of precise, dammit. Just don’t tell me it can’t be measured. And don’t confuse precision with accuracy. Yes, unique phone numbers and coupons have any number of flaws. They’re not completely accurate. Bummer. They’re more measurable than not using unique phone numbers or coupons. And for those of you in my past life (you know who you are): my objection to coupons was specific to that implementation, not to the concept in general. If you can’t measure it, you can’t manage it. So don’t bother doing something you’re not bothering to measure.
• E-commerce depends on marketing actions. Yes, email, print and search generally fall outside the scope of typical “e-commerce”. But the most successful campaigns I’ve ever run or been involved with were textbook examples of integrated marketing. Customers choose to interact with your brand in the way that meets their needs, not the way you want them to. That is, unless you ensure you want them to interact with your brand in the way that meets their needs. Failing to integrate your marketing and e-commerce activities (it happens, sadly) makes no sense. Or dollars.
• E-commerce transactions can occur through any channel. “What?!? E-commerce only transacts on the web!” Nonsense. Foolish, really. So long as the cost of the sale through a channel is less than the revenues generated by that sale, all sales channels are useful channels. Assuming you can track that it worked, of course, and that your intent was to drive it through those channels. Sure, some channels are better than others. You can introduce friction into the process to route customers to your preferred channels. But, don’t disregard the value of using the web to drive sales in other channels, too.

So, that if that sounds a lot like marketing to you, I’d agree. But there’s one crucial part of marketing where e-commerce plays a limited role:

• E-commerce is not the product. Well, maybe it is for Amazon. But for most companies, e-commerce is a process to get people to the product (and vice-versa). The deepest, most meaningful brand experience a customer can have is when using your product. Unless your product is the content and forms on your website, then e-commerce is only three of the four P’s of marketing (Place, Price, Promotion). Product is altogether different. The job of e-commerce strategy is to convey the benefits of that product and collect the cash. You definitely want your customers’ experience to be integrated between product and its delivery channels. But focus on your product first. Lipstick on a pig can only do so much on its own.

As we continue to look at e-commerce in these terms, I’ll be referencing items in this post as well as point you to useful resources to help with each step in the process.

Does this definition of e-commerce work for you? Let me know in the comments.

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business, e-commerce, e-commerce strategy, local business, small business e-commerce, small business e-commerce strategy

When it comes to learning, “get rich quick” is wrong. Sorry.

The Internet has made it easy to learn the basics of anything. Whether you want to know the fundamentals of SEO, social media, or salsa dancing, sites exist to help you build from the basics. But mastery of a topic takes time and - more importantly - effort. You’ll never accidentally be great at something.

That doesn’t mean you can’t accelerate your learning. You can. As Fortune notes, “The critical reality is that we are not hostage to some naturally granted level of talent. We can make ourselves what we will.” But learning is a process. And it will only happen as quickly as you are able to take information out of the world and into your head, into your hands. Business is a craft. Marketing is a craft. E-commerce is a craft. Craftsmen years ago drafted apprentices to pass along that craft and expected those apprentices to learn, to know the craft, before presenting themselves to the world as masters. But how can you learn? How can you know? The simplest way is to follow the PRRO (Plan, Research, Rehearse, Observe) method. Here’s how it works:

1. Plan. What is your goal? What do you want at the end of your study? Not just small “g” goals. Big, clear, concrete, measurable Goals. Define what you mean by “I want to be a great marketer” or “I want to rock at SEO” before you begin. Set a target, like, “I will grow traffic and sales I get through my website by 300% in the next twelve months using SEO techniques.” (Yes, that is a Big Goal. You want to be great, right?)
2. Research. Find out who the masters are and get your hands on everything they’ve got to say. How to find out who the masters are? Ask people. Search the topic on Google. Go to your local library and find books. Match the types of learning to your learning style. Learn best from hands-on? Develop and run a pilot program. Don’t get much from book? Take a class. Don’t take self-ascribed experts solely on their word, though. Question, constantly, whether what they prescribe works in the Real World. Your Real World. Then apply what works.
3. Rehearse. Rehearsal isn’t just practice. It’s practice to ensure you got it right. My sophomore voice teacher used to say, “Practice does not make perfect. Perfect practice makes perfect.” Fortune Magazine calls it “deliberate practice.” The point is, if you’re not measuring whether you did it right, you’re not doing it right.
4. Observe. Did you make progress towards the Goal? No. Why not? Adjust and Do It Again. You did make progress towards The Goal? Good. Why? Adjust and Do It Again.
5. Repeat. OK. I left this out of the acronym. PRROR is problematic to pronounce, whereas PRRO is, well, better. But assuming you haven’t reached The Goal, you need to repeat the steps to continue to close the gap. You did reach The Goal? Good for you. Enjoy your success for a moment. Then start again on a new Goal.

Developing from apprentice, to journeyman, to master takes effort. Focused effort. Concentrated effort. Measured effort. But you’re capable of it. Look at what you’ve achieved so far. Now, take the next step. Become a PRRO.