Metrics
Beyond the Dashboard: 5 Tips for Data Diving in Google Analytics
I used to run websites for a living.
I was responsible for the performance of those sites, and I was the de facto “web analytics guy” within my company. But I wasn’t a full-time Web Analyst, and I had lots of other strategic and operational things to do.
Sound familiar?
When I did look at my web analytics, I often skimmed the information contained in my default “dashboard,” and rarely dove into the real data unless someone came to me with a specific question, or I had to produce a report.
There’s an obvious downside to that approach: The data in the dashboard is very “averaged out” and may lead us to miss more specific data points that we can leverage to do a better job. But how do we get at the juicy money making data, while not spending too much time getting buried in minutia?
The solution? Scheduling in regular, recurring “data dives” to make sure you are not getting addicted to the dashboard view of your website. Maybe start with once a week, and put it in your calendar. (If you don’t you’ll likely never find the time ☺)
Note: I am using Google Analytics in these examples because of its ubiquity, but they should all be applicable to any modern web analytics system:
Here are 5 tips to get you started:
- Instead of the default “last 30 days” view of your analytics, try exploring different extended date ranges. For example, I used to keep a rolling, 90-day dashboard. Using the “timeline” function in the date selector tool is good for this. So is selecting “date range” in the comparison dropdown menu; that way you can compare the same date range in the prior year, for example.
- Make sure you assign goals and dollar amounts to every conversion on your site. Most sites have a primary conversion like becoming a lead, subscribing, or purchasing, but micro-conversions are important, too. Tag your primary conversion goal with your average order value, your lead conversions with a value per lead, etc. For micro-conversions, figure out what percentage of your visitors that take that action eventually leads to sales. If 1% of blog subscribers turn into deals, and the average deal is worth $500, then that micro-conversion goal value should be $5.
- Explore the Traffic Sources reports to get a better understanding of your traffic “mix.” Segmenting by traffic source can often yield quick, actionable insights. Try looking at your organic traffic over the last 6 months, or your referral traffic over the last 3 months. What does the traffic graph look like? How well or poorly are they converting? Has that KPI remained consistent?
- Dive into your Top Content reports, and try sorting by “$Index.” Note: This value is only calculated if you’ve assigned goal values and e-commerce revenue values across your site. And believe it or not, there are ways to assign e-commerce values to your site pages even if you’re not running an e-commerce site. $Index calculates the values of pages according to how often they’re accessed en route to a conversion. It works kind of like the plus/minus point system used in the NHL. If a player is on the ice when a goal is scored, they’re “+1,” and if they’re on the ice when a goal is scored against, they’re “-1.” So if a page is very regularly visited by customers who convert, it will have a high $Index value. It’s a great way to figure out which high-impact pages you should start testing and optimizing.
- If you have site search, spend some time hooking your web analytics up to your in-site search, then dive headfirst into the very valuable data the Site Search reports can provide. Are you able to see which keywords are delivering “zero results”? What keywords are being used most often in search? Are visitors who search more likely to convert? Do they spend more per transaction? Are there products are services your visitors ask for that you don’t offer? Should you?
I know there are more handy tips around, but I limited this to 5 because I’m sure our readership has some brilliant ways they can share on how to do healthy and productive “data dives.”
And if this was useful, let us know, and maybe we’ll do a part two.
One final note: Data diving is healthy and fun, but just remember to come up for air once in a while ;). Even more important, don’t let the stuff you learn from your analytics just sit there, turn your learnings into action and let’s move our conversion needles together.
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Written by:Brendan Regan
Are Your Analytics Reports Breaking News or Listing Facts?
I have a friend who works in the online marketing department for a multi-million-dollar clothing retailer in Canada. Because they’re still stuck in the dark ages and don’t yet have an online store, the company’s web marketing team consists of four people.
A week ago, my friend called me to ask, “What’s the industry average time spent on a site?” Her boss asked her to find out because she was doing a presentation to the marketing team and would be attempting to describe what was happening on their website.
My friend was looking at her analytics reports, assuming they should be reporting metrics like “time spent”, but she couldn’t give me any explanation as to why they were measuring certain things or how it all fit together. This marketing team had no idea what their analytics were trying to tell them.
Sound familiar? Whether or not we care to admit it, this problem is all too common. By themselves, the facts can be deceiving. If the facts don’t fit into a larger story line, they’re meaningless. Just because something happened, that doesn’t make it newsworthy. That’s why…
Marketers should think like news editors.
Your web analytics program works for you, not the other way around. It’s the news wire that serves your staff of reporters and, as editor-in-chief, it’s your job to decide which stories are most important.
There are two types of approaches to web analytics reporting:
• The beat reporter reliably follows the same story from day-to-day. If you tell the beat reporter to follow “time spent”, she will diligently explain where visitors spent the most time, how much time they spent overall, and how much time they spent today versus yesterday, last month, last year, and so on.
• The investigative reporter tries to find the meat of the story; to get the bottom of what truly matters. If you tell the investigative reporter to follow the “time spent” story, she’ll start to ask big picture questions. She’ll want to know why time spent matters, how it relates to your other metrics, whether “time spent” means one thing on one page and something very different on another, and whether it even matters if visitors are spending more — or less — time on your site verses the competition’s. She even wonders if this whole “time spent” thing is really a distraction. She doesn’t want to spend her time chasing false leads.
Like other default metrics, average time spent tells us nothing on its own. The company that my friend works for has over a thousand employees. Most of the staff in their home office and brick-and-mortar stores use computers every day, and many of them likely have their browser set up to go directly to the company’s homepage automatically. Each day, a large amount of their traffic probably comes from employees, not potential customers. If this is the case, the average time spent on their site tells them very little about the customer experience on their website, because employees’ time spent would skew this number. Likewise, the traffic sources would be skewed and the average page views and bounce rates from the landing page would also be skewed.
Don’t use your analytics tool just to report the facts. Become an investigative reporter. For each piece of information you find, ask yourself why it matters. Ask how the metrics tie together. Most importantly, ask yourself how the web metrics you report on tie into your overall business goals.
That’s how reporters break news.
. .
About the Author: Melissa Burdon is an investigative reporter (or Persuasion Analyst) at FutureNow. She’s also a recovering Canadian. Oh, and it’s her birthday.
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Written by:Melissa Burdon
Marketing Lessons from Huckabee and Obama
“They said our sights were set too high,” proclaimed Sen. Barack Obama to a crowd of supporters after winning the Iowa Caucus, the first real test on the road to the White House.
It’s true. Obama was underestimated, as was his Republican counterpart, Mike Huckabee, who beat his closest rival, Mitt Romney, by huge margin despite being outspent on the order of 15-to-1. Although Huckabee, the Christian evangelical former Governor of Arkansas, had risen sharply in the polls headed into the caucus — thanks to good performances in recent debates and a knack for off-the-cuff, wisecracking candor on live TV — not even his closest staffers could have dreamed of such a win (especially after a week of cringe-inducing PR gaffes by their candidate).
The race has only just begun for these two — very different — candidates, but their Iowa wins destroyed myths about what was possible for their campaigns.
Marketers should take notice.
Branding (a story that resonates)
Obama’s Story: “Change You Can Believe In” is the slogan, and it’s working. Experience in Washington isn’t everything; in fact, it’s a setback for anyone who wants to reform the system. He believes in “the audacity of hope” and is often mocked for his optimistic (some say “naive”) rhetoric. A freshman Senator with a mere 20 years in politics, he’s positioned himself as the only Democratic candidate who can truly offer a fresh start. He’s built an enthusiastic and diverse base, although he’s especially popular among young voters, who rarely turn out to vote before the general election and often show up in weak numbers when that happens. But they’re showing up now — and in big numbers. Our racial and economic divisions are possible to overcome, he believes, because that’s exactly what he’s done. He’s seen the U.S. from more angles than most of us, and that type of experience can’t be shown on a resume. Americans are tired of divisive politics, and Obama claims to be the one who can end the partisan gridlock that has characterized the Bush administration. More importantly, though, a vote for Obama is said to be more than a vote against his rivals; it’s a vote against cynicism and the status quo; a chance for YOU to have a voice in politics (”I’m asking you to believe. Not just in my ability to bring about real change in Washington … I’m asking you to believe in yours”). Besides, he’s even good at basketball. Oprah supports him and, apparently, so does Iowa. Shouldn’t you?
Huckabee’s Story: “Faith. Family. Freedom.” Just an ordinary guy; one who happens to have been a pastor, a governor, and a patient diagnosed with Type II diabetes, who then lost 110 pounds and ran three marathons. Tax reform (abolishing the income tax and replacing it with a heavier sales tax) and a return to traditional family values are two of our biggest priorities. A creationist evangelical who lived in a triple-wide trailer next to the Arkansas governor’s mansion just to save taxpayers’ money while it was being renovated. He’s become a media darling over the past few months after unpretentious, quick-witted appearances on The Colbert Report, The Daily Show with Jon Stewart, the CNN/YouTube Debates and, the night before his Iowa win, on The Tonight Show with Jay Leno. To say his is an untraditional campaign is an understatement, and, although comparatively broke (and that’s changing quickly), Huckabee has something worth more than money: Evangelical supporters (literally, in his case) who would rather vote for a guy like them than someone who’s just trying to buy their vote or pander to them. Chuck Norris supports him and, apparently, so does Iowa. Shouldn’t you?
Lesson #1: Nothing is inevitable. Nothing is impossible. When your competition seems unbeatable, don’t be afraid to compete on your own terms. People loves an underdog, especially one whose message reflects their own aspirations. A little candor goes a long way. Winning votes is one thing, but transcending old rules by tapping into the right message is what spreads word of mouth and grows your base.
Lesson #2: If either of these candidates had blindly followed the advice of so-called “experts,” they would seem more scripted and, consequently, less authentic. You don’t need to be negative to win, but you’d better know how to leverage other people’s mistakes.
Lesson #3: You can’t be all things to all people. Not everyone’s going to like what you’re saying (or selling). If you want to create brand awareness AND brand advocates, fearlessly define what you’re not.
Lesson #4: Leave the I-me-my stuff alone. A good campaign isn’t all about you (your brand), it’s all about “YOU” the customer). Too bad Hillary didn’t have the We-We Monitor years ago.
Money Isn’t Everything
Check out the difference in small money donations between Clinton…
and Obama…
Lesson #5: It’s important to look beyond the bottom line. Although Clinton leads in terms of total donations, the bulk of it is from (presumably) rich donors who have given the maximum contribution allowed by law. Obama, meanwhile, has more than doubled his rival in contributions under $200! Average Order Value, as it were, for Clinton is higher than it is for Obama, but in a world where a vote is a vote is a vote, there are simply more people willing to reach for their credit cards and checkbooks for Obama than for any other candidate.
Will Obama grab the nomination and upset Clinton? Can Huckabee translate his momentum into wins in other states? What else can we learn from these candidates?
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Written by:Robert Gorell
A Commonly Overlooked Metric: “Thankfulness”
Bryan Eisenberg
…marketing in an era when the customer is in greater control than ever. That businesses can ‘Always Be Testing’ (for free!). And, of course, for Hannah, Sammy & Stacey.
Cinde Johnson
…the fact that more e-tailers are coming to the realization that relevance, scent, and my buying process, are more important than their selling processes, and for making their sites more persuasive. (When you live in the “official” middle-of-nowhere, shopping online isn’t just a convenience, it’s a necessity!)
Holly Buchanan
…companies and marketers making more efforts to truly understand and communicate with their female customers. I fully believe this will lead to better results for marketers, and better results for women in general. When women are surrounded by advertising that doesn’t speak to them, isn’t relevant to them, where they don’t see themselves reflected, it’s a real problem.
Documentary filmmaker John Pilger once asked, “Does culture influence advertising, or does advertising influence culture?” I believe the answer is both. (Dove’s “Onslaught” video gives just a small taste of what it’s like to be surrounded by advertising to women.)
My hope is that in the near future, I can create video that is the opposite of “Onslaught” — that promotes all the thousands of ads that are relevant, inspiring, uplifting, and break through stereotypes. I’ll call it “Breakthrough.” I can’t wait to work on it.
Peter Lee
…all the people who now believe in the power of conversion optimization. You’re making my job much easier.
Marijayne Bushy
…an environment that fosters growth and learning, and provides me with an opportunity to help businesses and organizations of all variety and sizes. I’m grateful for colleagues who are supportive, intelligent, insightful, and prolific. And lastly, I’m grateful for our wonderful clients, who are open to new ideas, putting a new spin on old ones, and taking criticism in a positive light — and for those who’ve never hired us, yet use our free resources to dig deep and explore innovative ways to grow their organizations.
Howard Kaplan
…among other things, the Boston Red Sox for winning their second championship in 89 years.
Melissa Burdon
…the fact that people are finally seeing that they shouldn’t settle for a 2% conversion rate and are investing in conversion optimization before spending more budget on search. I’m thankful to Robert for editing my articles. I’m thankful for all the male employees at FutureNow. (But I’ll be even more thankful when we hire more females. 
) Oh, and I’m thankful that the ski season starts this week!
Brian Bond
…analysis and metrics becoming a much bigger focus for marketers this year. I’m also thankful that Google finally launched a pay-for-performance ad model.
Robert Gorell
…our readers. In nine short months, you’ve helped transform a cool bi-monthly newsletter with several thousand subscribers into a top marketing blog with 100,000-ish repeat monthly seekers of knowledge. Thank you for stopping by. I’m thankful for everyone who shares their comments — you challenge our thinking and help us to (hopefully) give you a better GrokDotCom. You keep the conversation going. I’m thankful for our writers, whose insights never cease to impress me. And for all of the bloggers who inspire us. Because of you, good ideas keep spreading — quickly.
Anthony Garcia
…a lot of things, but especially my beautiful wife & children, my clients, our team, and anyone who’s kind enough to read this. Most of all this year, I’m thankful for one of my favorite emerging brands — my brand-new, burping-yet-gracious baby daughter.
John Q(uarto-vonTivadar)
…finding this cool Thanksgiving t-shirt to add to my collection!
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Written by:The Grok
Measuring Visitor Engagement: Tools + Tips
“Engagement” in the web analytics world is about as emotionally-charged a word as it might be with someone you’ve been dating for a week. At best, it’s a conversation-killer. At worst, it’s a nuclear warhead. Marketing and analytics experts have a hard enough time agreeing on what exactly engagement is, let alone finding the metric(s) to illustrate it.
But this confusion among smart people makes sense when you think about it. When was the last time you had a face-to-face conversation with someone, only to realize they weren’t listening? How can we expect to measure engagement with metrics, when we often can’t tell if the person right in front of us is truly engaged? In fact, the only people who can reliably tell when you’re tuning out are your friends, family, and significant others. There’s a reason for that. They’ve seen your behavior before, analyzed it, and suddenly, in their minds, you’re easier to predict than Paris Hilton.
Likewise, engagement means different things to different websites. Since each site has its own unique characteristics and purpose, engagement must be defined by your site’s goals — not by Amazon’s, eBay’s, or Ms. Hilton’s.
The first step is to define how an engaged visitor behaves in terms of your site’s goals.
- What is the ultimate purpose of your site?
- Content site example: Get people to read my cooking blog.
- Commerce site example: Get people to buy hats from me.
- What actions do visitors exhibit when they’re interacting with the site and moving toward its ultimate purpose?
- Content site examples: Reading articles, signing up for newsletter, subscribing to RSS.
- Commerce site examples: Viewing products, reading reviews, viewing about us page, adding items to cart.
So, what exactly does an “engaged” visitor do on your site? What are some of the clues that engaged visitors leave behind in your analytics?
- Do they stay long?
- Do they click a lot?
- Do they visit the site many times?
- Are their repeat visits days apart? Weeks apart?
- Do they penetrate deep into the site or bounce off of it?
- Do they view lots of pages?
- Do they take a given action like sign-up for a newsletter, refer a friend, or download a file?
- Do they leave comments on your blog?
- Do they link, Digg, Stumble, or otherwise find you del.icio.us?
- Do they purchase?
- Do they purchase repeatedly?
Some sites will have an even harder time than others at capturing the elusive engagement in their analytics and may instead need to combine the quantitative data with qualitative analysis, like surveys. (Here are three great survey questions.) But proceed with caution. While many sites could benefit from using surveys on their quest to find missing pieces of the engagement puzzle, it’s easy to be mislead by what customers tell you in a survey. Ever take an online survey where the questions were fundamentally flawed? Do you prefer the taste of New Coke to CocaCola Classic? (The folks who were surveyed did.)
What’s even more dangerous is that only certain personality types bother to participate in surveys in the first place. (And good luck getting a Spontaneous customer to fill out a survey unless they’re either angry or bribed.)
A common approach to getting an initial handle on engagement is to take certain metrics that relate directly to your visitor’s main goals: those that measure if visitors are taking the actions you want them to. Monitor them closely, and see how these metrics play off each other when certain changes happen — e.g., changes in season, updates to a checkout process, special promotions, inactivity on a blog, industry trends — affect the site.
When Metrics Lie
When selecting which metrics to use, keep in mind that it’s easy to be deceived by your own numbers. Proceed with caution by giving an in-depth look into the stories these metrics can tell you before placing your trust in them. In order to be sure that your metrics are an accurate reflection of engagement, you shouldn’t take one-off metrics at face value.
“Page Views” are a great example of a metric not worth trusting on its own. In this case, it may very well be that a visitor isn’t finding what they’re looking for. Perhaps they’re “pogo-sticking” from page-to-page in search of what they need. Now you’re keeping them on the site longer, thus increasing “Time Spent,” which, again, can be deceiving by itself. Although wasting the customer’s time — so long as they don’t leave the site — will increase the page views and time spent, it may not mean you’re actually engaging visitors. (Not in the way we’d hope, anyway.)
Engagement Metrics + Toolkit
With your site’s goals in mind, and a rough understanding of how an engaged visitor behaves, here’s a sample of some metrics that may be useful relative to your site’s purpose:
- Visitor Engagement Index = (Visits) / (Visitors)
- Take Rate = (# of Visits Taking Part in Desired Activity) / (Visits)
- Repeat Visitor Share = (Repeat Visitors) / (Visitors)
- Heavy User Share = (# of Visits with X or More Pages Viewed) / (Visits)
- Committed Visitor Share = (# of Visits Lasting Longer Than X Minutes) / (Visits)
- Committed Visitor Index = (# of Page Views in Visits Lasting Longer Than X Minutes) / (# of Visits Lasting Longer Than X Minutes)
- Committed Visitor Volume = (# of Page Views in Visits Lasting Longer Than X Minutes) / (Page Views)
- Bounce Rate = (# of One Page Visits) / (Visits)
- Scanning Visitor Share = (# of One Minute Visits) / (Visits)
- Scanning Visitor Index = (# of Page Views in One Minute Visits) / (# of One Minute Visits)
- Scanning Visitor Volume = (# of Page Views in One Minute Visits) / (Page Views)
- Average Order Amount = (Total Sales) / (Total Orders)
- Sales Per Visit = (Total Sales) /(Visits)
- Repeat Order Rate = (# of Orders From Existing Customers) / (Total Orders)
- Order Acquisition Ratio = (Marketing Expense/Number of Orders) / (Marketing Expense/Visits)
- Conversion Rate = (Number of Sales) / (Visitors)
- Page Views per Visitor = (# of Page Views) / (Visitors)
- Average Time on Site
(Eric Peterson even offers his own complex engagement calculation, and discusses the web analytics community’s challenges to it.)
Once a set of metrics is selected that directly relates to potential engagement on your site, constructing a weighted average of the set might help. This needn’t be some painfully complicated multivariate regression model, needing someone with rocket science experience like our buddy John to make sense of it; just some metrics that can serve as a collective vital sign to measure how well your site is engaging people while carrying out its core mission.
Jim Novo makes a potent case for using visitor recency to measure engagement and how to leverage it. If you can collect information relative to the history of each specific user, and the recency of their visits, his approach can send your ROI skyrocketing.
Novo’s approach shows how recency can explain a visitor’s potential value, given their propensity to return to your site frequently, as represented by the horizontal axis below. The vertical axis, meanwhile, shows how often the visitor has taken the action being measured.
Although fuzzy and directionally correct at best, engagement is vitally important to measure because it’s a predictive metric. If your current visitors are exhibiting behaviors indicating that they’re engaged, they’re likely to return soon — and often. If you see signs that visitors are becoming less engaged with the site, it’s safe to suspect that recent changes to your site or the flow of its traffic may be working against you. Either that or your competition’s finally outdone you. Regardless, it’s always good to know when to hang it up and try something new.
Engagement can also be a useful measure of the effectiveness of your branding. If visitors are showing signs that they’re engaged with your site, they’re generally showing affinity for your brand.
While engagement has become a heated buzzword, and arguably an excuse, it’s important not to be mislead. Since it’s a state of mind for your visitors, and therefore not easily quantifiable, there’s no simple way to measure engagement. But attempting to measure will help you to keep your site from proposing on the first date.
Do you have any unique approaches for measuring engagement? Let us know. We’d love to get a conversation going in the comments.
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Written by:Ronald Patiro
Unlocking Key Performance Indicators: Conversion Rate
After hitting on Take Rate, Bounce Rate, and Order Acquisition Ratio, it’s time to turn our attention to a metric near and dear to our hearts here at Future Now: Conversion Rate.
The Conversion Rate (CR) tracks how well your website is achieving its main objective. This goal will vary depending on the type of site. An e-commerce site’s main objective, of course, is to get people to buy product. Here’s how a commerce site would calculate conversion:
CR = Number of Sales / Visitors (A metric often related to CR, especially with content-driven sites, is Take Rate.)
The higher the CR, the better the ROI (Return on Investment). Improving conversion increases the amount of money you can make with the same amount of traffic. To determine exactly how conversion affects ROI, calculate your Order Acquisition Ratio.
Understanding what affects conversion requires an in-depth look at the entire online marketing strategy. To begin, break down the steps involved in the site’s sales process. For instance, a retail site would look like: Homepage -> Category Page -> Subcategory Page -> Product Page -> Cart -> Checkout.
Along with these steps, the Exit Rate for each must be calculated. Exit Rate shows how many people are not converting by leaving the site at various stages in the sales process — often thought of as a funnel, although it’s slightly more complicated in reality. Still, the funnel gives us a visual representation of where to find the biggest leaks, so we can fix them and optimize the experience to recapture money that would otherwise be left on the table (if you don’t mind me further mixing metaphors).
Each stage in the process is a micro-action that will lead the visitor closer to the macro-action of converting (e.g., purchasing). The best way to diagnose why various steps, or micro-conversions, aren’t performing as well as they should is to ask three simple questions:
1. Who is the audience at this step?
2. What action would we like them to take?
3. What information do they need to feel confident enough to be compelled to take that action?
When asking these questions, it’s important to recognize that a website is not one size fits all; it should be many sizes fit all. Multiple scenarios, or pathways through a site, need to be planned ahead of time in order to suit different personality types and how they prefer to behave online. It’s also important to take into account how close a person is to making a decision. Are they early on in their buying process and just researching, or do they know exactly what product they want? (Bryan’s recent screencast shows how to appeal to different buying modes and temperments.)
To help understand why visitors may not be taking the necessary micro-actions to move closer to converting, the Hierarchy of Optimization provides a useful guide in addressing potential problems. This hierarchy forms a pyramid and starts with basic requirements, then moving higher up toward the top, where persuading visitors to take the action is the highest aspiration.
Let’s look at them in reverse order…
- Functional. Does the site offer something that the visitor needs?
- Accessible. Is the visitor able to access whatever it is that the site offers?
- Usable. Are there unnecessary difficulties or roadblocks that cause friction for the visitor?
- Intuitive. How well is the site’s sales process structured? Is it compatible with how the visitor likes to buy?
- Persuasive. Does the visitor truly want and understand the problem by clearly knowing that it will solve their needs? Do scent trails carry through to the more funnel-like, conversion point on the site (e.g., the checkout process)?
If your CR is less than 10%, you should focus on optimization — but there’s always room for improvement. Along with taking steps to remove obstacles that impair the visitor’s buying process, causing them to waste their time thinking instead of doing, the most potent tool is empathy. Anticipating your visitors’ motivations will help you to answer their questions at each step — and that requires a good deal of planning.
Remember, a website exists to help its visitors achieve their goals. Give people visiting your site all of that, and the ROI will be well worth the effort you put into it.
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Written by:Ronald Patiro
Unlocking Key Performance Indicators: Order Acquisition Ratio
Now that we’ve taken a look at Take Rate and Bounce Rate, it’s time to look at another very important metric: Order Acquisition Ratio. Simply put, this performance indicator is used to measure the effectiveness of your marketing.You’ll need three numbers to calculate your order acquisition ratio:
1.) Visits to your site
2.) Number of orders placed
3.) Total marketing expenditures (which can include fixed costs associated with maintaining the site, but let’s focus primarily on marketing expenses)*
With these variables in mind, we will get two contributing metrics with which to calculate order acquisition ratio.
Cost per Visit (CPV) = Marketing Expense / Visits
CPV measures how much you’re paying to attract each single visit to your site.
Cost per Order (CPO) = Marketing Expense / Number of Orders.
CPO tells you how much you’re paying in terms of marketing budget to get a visitor to your site who converts and becomes a customer. This is directly related to your Conversion Rate.
Order acquisition ratio is then calculated by taking the CPO and dividing it by the CPV.
Order Acquisition Ratio = (Marketing Expense/Number of Orders) / (Marketing Expense/Visits)
It should be a positive number (if not, you’re in trouble). The lower the ratio, the better your marketing budget is being used. Some of the best ways to lower OAR include:
- Boosting conversion! Increasing conversion lowers your CPO. Since conversion is the website’s primary goal, there are literally thousands of factors that affect conversion. (Conversion is so important to online health and wellness that improving is integral to everything we do for clients.)
- Improving organic search rankings with relevant content. When you spend the time and money to create relevant content, the CPV and CPO should both drop — and you’ll further lower CPO by converting more visitors.
- Targeting quality traffic sources. In your analytics, segment your site’s incoming traffic by source in order to identify where to put those marketing dollars. (Bounce Rate is a great starting point for this.)
- Optimizing PPC campaigns. With an effective PPC campaign, you’ll be able to convert more visitors. While this will increase your CPV, but when done correctly, it will yield a larger decrease in CPO by converting a higher percentage of traffic.**
Order Acquisition Ratio is based on more traditional bored boardroom metrics because it has a close relation to traditional financial statements. It has nothing to do with “Web 2.0,” “Web 1.0,” or Facebook. So, it’s great for sharing with your boss since it’s directly tied to the bottom line. There’s even a cousin to this metric; a non-ratio, cold-hard-cash version of the Order Acquisition Ratio known as the Order Acquisition Gap. To calculate it, simply subtract the CPO from the CPV to get a negative number. This number shows how much money you waste in marketing dollars on visitors that don’t convert.
Order Acquisition Gap = CPV - CPO
There are other close relatives in this family of metrics, all of which focus on costs associated with generating new customers. To calculate these similar metrics, you’ll need to be able to track the same figures discussed above — except they need to be further segmented. Track the following numbers, and you’ll also benefit from a few additional metrics (listed in the bullet points below):
- New visitors to the site.
- Number of orders placed by new customers.
- Total new customer marketing expenditures.
With these figures you can see the effectiveness of your new customer acquisition efforts:
- Customer Acquisition Cost = (New Customer Marketing Expense) / (Total New Customer Orders)
- New Customer Cost per Visit = (New Customer Marketing Expense) / (New Customer Visits)
- Customer Acquisition Gap = (New Customer Marketing Expense/New Customer Visits) - (New Customer Marketing Expense/Total New Customer Orders)
- Customer Acquisition Ratio = (New Customer Marketing Expense/Total New Customer Orders) / (New Customer Marketing Expense/New Customer Visits)
[*Regardless of the expenses you include, it’s crucial to set a standard and stick with it in order to accurately measure and account for the specific impact of such changes.]
[**When monitering your order acquisition ration, never tolerate any increase in the cost per visitor without an accompanying decrease in cost per order.]
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Written by:Ronald Patiro
Unlocking Key Performance Indicators: Bounce Rate
For the second installment in this series, we’ll cover bounce rate (aka “reject rate”). Simply put, bounce rate measures the amount of visitors that are landing on your site and immediately bouncing off of it.
To qualify as a bounce, analytics tools will typically take all visitors who only see one page and leave. Time may also be used to qualify a bounce (e.g., any visit under 10 seconds as a bounce).*
To calculate bounce rate, take the number of bounces and divide it by the number of visits. You can measure bounce rate for your entire site and measure the bounce rate for specific landing pages.
Example: 10,000 bounced visitors / 30,000 total visitors = 33% bounce rate.
There are many elements that will effect the bounce rate. The main idea is that people coming to your site are following a scent. If they arrive on your site and have no trace of the scent they were following, they will immediately leave. Some of the main elements to investigate when looking into your bounce include:
- Traffic source. Are certain traffic sources consistently delivering visitors that are more likely to bounce?
- Inbound links to your site. Look at the link and surrounding text that links to your site. Do the links give the visitor an accurate idea of what to expect on your site, and does your site contain what the link leads them to believe they will find on the page?
- Keywords. If you are measuring the traffic coming from search engines, are the keywords the visitor searches for visibly present on your landing page?
- Stating your unique value. Do you have a unique value proposition? Is it present across the site and particularly on your landing pages?
- Page title. Do you have a relevant page title that is telling of what your page contains.
- Headings and headlines. Are there relevant headings and headlines that tell a visitor where they are and what to expect.
- Global Navigation. Is your navigation intuitive? Does it use words and naming conventions that your visitor understands? If your sitewide bounce rate is high, this sitewide feature may be contributing.
- Load Time. Are your pages loading too slow for people to even give them a chance?
- Page descriptions. Are the page descriptions you created relevant to the page?
- Perceived length. If your pages are very long, they may be perceived as a waste of time, thus causing people to bounce. This also relates to forms. Are there any intimidating forms present?
- Look and feel. Does your site’s aesthetic match what a site in your industry typically looks like? Is your site cluttered and lacking in white space?
- Server. Are you testing to see if your server is up to par?
- Browser compatibility. Are different browsers viewing your pages correctly?
Bounce rate is a great starting point when analyzing important aspects of your site. Here are some of the important elements you can measure with bounce rate:
- Where should your marketing spend go? By getting information about which traffic sources are delivering lower quality traffic, you can optimize these campaigns by analyzing the elements listed above and in the meantime divert your money into campaigns that are outperforming them.
- Which keywords should you be paying for? Use bounce rate a starting point for analyzing your keyword performance.
- Are your optimization efforts successful? If you are making changes to a page or sitewide feature, has the bounce rate gone up or down?
- How effective are your landing pages? If your landing pages are bouncing more than one out of three people visiting your site, you may want to investigate why this may be happening.
Avinash Kaushik has even called bounce rate the “Sexiest Metric Ever” — and I agree. As far as web metrics go, bounce rate is sexy. Don’t ignore the other metrics in light of bounce rate’s beauty.
So, get testing, and be sure to check out the next installment, where we cover “Order Acquisition Ratio.”
. . .
*It’s important to check what your analytics program considers a ‘bounce’ before analyzing any data.
[Editor’s Note: Want to get less bounce to the ounce? Future Now can help.]
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Written by:Ronald Patiro
Unlocking Key Performance Indicators: “Take Rate”
[This series will take an in-depth look at important web metrics, one-by-one. Enjoy!]
Key Performance Indicators or KPI’s (define) are the critical Web metrics you should be monitoring to evaluate the effectiveness of your site. Key performance indicators may differ depending on the business topology (ecommerce/retail, lead generation, content or self-service/support), but understanding them broadly is critical to any organization’s online success.
In this first installment of Unlocking KPI’s, we’ll discuss the “take rate”; the amount of people taking you up on a given offer on your site. It’s not necessarily your “conversion rate,” because that term is generally reserved for the site’s primary goal, or macro-conversion (e.g., acquiring a new lead, processing an e-commerce order). Take rate is used to measure micro-conversions. These can include:
- Newsletter subscriptions
- Downloadable materials such as ebooks
- Case studies
- White papers
- RSS subscriptions
- “Add to Friend” links for social networking sites
- Up-sell and cross-sell offers added to shopping cart
To calculate take rate, simply find the number of successes for the action being measured and divide it by the number of people exposed to the action.
Example: Lets say I write an ebook about where to find the best pizza in Brooklyn. 8,000 hungry people downloaded this ebook from my site last month. And during that month, my site received 80,000 visits. Of those visits, there were 40,000 unique visitors.
Take rate = 8,000/80,000 = 10%
This can also be done with unique visitors.
Take rate per unique visitor = 8,000/40,000 = 5% 20%
So now that we have the calculation behind take rate, lets look at what influences the take rate. Ultimately, the presentation of the material you want visitors to take has to be perceived as relevant and valuable. The specific elements that will influence how a visitor perceives your presentation need to be tested and optimized to find out what is working best. You will know you are moving in the right direction when your take rate increases.
Here’s a list of some main elements to test on your site that will influence its take rate:
- Call to Action. Does it consist of an imperative verb and an implied benefit? Is it clearly noticeable?
- Title. Is the title of the section containing your offer relevant and noticeable?
- Point of Action assurances. Are you easing the visitor’s concerns about taking the action? For instance, two commonly overlooked assurances regarding newsletters are privacy policy (i.e., that their email address will not be shared with third parties) and telling the visitor they can cancel anytime.
- Benefits associated with the offer. Are you speaking in terms of benefits that the people who accept your offer enjoy? Are you picking the most persuasive benefits relative to the segment of traffic you see the page attracting?
- Tell the visitor what to expect. If the material is downloadable, tell the visitor how large of a download is required. If it’s a newsletter, tell them how often its sent.
- Location of the call to action. Are you presenting the call to action (e.g., text link to white paper download, newsletter sign-up) above the fold? Is it in an area where the visitor can expect to find what your offering?
- Targeted keywords. What are the keywords you targeted to attract people to the page the offer is presented on? Are they relevant to your offer?
- Look and feel. Does the offer look like a banner ad? Is it contrasted against the rest of the page enough to stand out and be noticed?
Now that you have a framework of understanding what a take rate measures, and elements of its presentation to test to optimize, lets have a final look at why take rate is important to your site.
In planned scenarios, the take rate can be viewed as a leading indicator for the short-term performance of your site. Viewing a take rate as a micro-conversion point to indicate interest in your macro-conversion goals will tell you if people are moving forward in their buying decision process. If your take rate increases, you’ll qualify more people to move to your macro-conversion goal — like plugging holes in a leaky bucket.
For the next installment of Unlocking KPI’s, we’ll cover the ever-important “bounce rate.” Until then, if you have any questions, we’d love to hear from you in the comments.
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Written by:Ronald Patiro
Top “Dot Bomb” Era Websites — Where Are They Now?
Earlier this morning, our team was waxing on about Google’s (GOOG) record share price, and whether the company would maintain its dominance for years to come. We got to talking about big-shot online players of the past, and I mentioned that a lot of the top sites from years ago are now either gone or, worse, forgotten. So, when I came across Max Freiert’s recent post on the Compete blog, “Internet Allstars ‘01: Where are they now?“, I felt vindicated.
As you can see, not only has almost every site on the list (save for Google and a few others) dropped considerably, there’s (obviously) no sign of many of today’s top players. No Facebook. No MySpace. No Wikipedia. No Craigslist. In fact, a lot of folks around here were surprised to see that Google came in at #12 — which seems pretty high, although this was when they started to get popular.
Say what you will about “attention” as a metric; it still shows that being the Web’s “next big thing” isn’t necessarily a goal worth having. (No offense to Neopets.com, but free cartoon screen saver downloads don’t quite have the “wow”-factor they used to.) Six trips around the Sun may not be a long time in human-years, but in Internet-years, it’s a lifetime.
When one company owns 40% of the market for online advertising, it’s just not sustainable (30% would be a much healthier number). Google may be one of the most important companies of this Internet era, but let’s face it: they don’t have the assets or a General Motors or the customer loyalty of, say, Wal-Mart. The other search engines are innovating faster. And, let’s not forget, Microsoft will go to great lengths to steal advertising market share.
Online, success means running a marathon, not sprinting to the top. As we’ve said since 2001, beware of selling yourself short on traffic.
What do you think? Will Google be the top dog in another six years?
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Written by:Bryan Eisenberg
