Web Analytics - The Basics
Key Numbers for Managing Your Website
Like any other aspect of business, websites don't start with perfect success. They all start rough and improve with time. The key to this is web metrics, getting the numbers which tell managers what is happening in their site because you can't improve something you don't understand.
Historically the only people measuring what is going on in a website has been the technical staff running them. However, the numbers they need to make a computer work well are not useful for understanding the performance of the site in sales and marketing terms. The aim of this article is to provide the few simple metrics a sales or marketing manager needs in order to measure, and improve, their online activities.
Success on the web means getting people to do what you want when they visit your site. So the first thing you need to do is decide what it is you want them to do. This is called the Target Action. In most cases it's buy something or fill in a form. If you haven't determined what your target action is before you built the site, it's worthwhile looking at your site once you have determined your target action. Ask yourself if your site's design makes it easy for people to engage in your Target Action? Ease of navigation is consistently one of the Top-10 complaints people have about web design.
Once you have determined your Target Action you need to determine how successful the site is. The key performance indicator of success is your Conversion Rate. This is the percentage of visitors to your site who engage in your Target Action. If you want them to fill in a contact form, your Conversion Rate is the percentage of visitors who submit the form. If you're selling online, your Conversion Rate is the percentage of visitors who buy something.
The average conversion rate across the web is 2%. Amazon are said to have the highest rate at 9%, though this is not a figure they will confirm. Mick Mason, Internet Account Manager for Superbreak.Com, one of the largest travel companies in the UK, once told me the conversion rate for his site is 7%. But these sites are special cases, with very high brand recognition. This means people already know what the site is selling before they go there. It is possible to run a perfectly profitable online business with a conversion rate of 2%. The web is a volume business. Once you know what your conversion rate is, you know where your priorities lie: if your conversion rate is 2% or more, your site is doing well and you should concentrate on getting more visitors. If your conversion rate is less than 2%, you're wasting the visitors you're getting and should put your efforts into improving the site.
If you do want to improve your site, you need to establish where it's failing. The secret is to work back from your Target Action. The first thing to ask is, "how many are getting to that point in the site?" This is your Prospect Rate. For example, if you want people to fill in a contact form, your Prospect Rate is the percentage of visitors who viewed the form in the first place. If the site is selling things it's a little more complicated. At its simplest, the Prospect Rate is the percentage of visitors who viewed looked at your wares, viewed your product pages. However, you may want to establish Prospect Rates for different sections, such as product pages, the shopping cart, and the credit card payment page. The most important, and often overlooked, area in online shopping is the credit card payment page, so you may want to concentrate on that first.
Between viewing these pages and completing the Target Action, the visitor has to do something. If it's a form, they have to fill it in and hit the submit button. If it's a shopping site they have to fill in a credit card page and submit that. People who look at these forms and don't complete or submit them are said to have "abandoned". Each form therefore has an Abandonment Rate, which is the percentage of people who looked at a page, but didn't complete it.
According to the UK's Internet Advertising Bureau, the average Abandonment Rate for shopping carts in the UK is 41%. On many sites it is much worse, especially for contact forms. If you've never examined the Abandonment Rate for your forms, don't be surprised if you find it is over 90%. You can easily calculate your Abandonment Rate for a form by comparing the number of views of the form with the number of views of the Thank You page, or whatever page it is the visitor gets when they submit the form. If you have no discrete, measurable page which is served when someone fills in a form, then change the site design so you have something to measure.
The basic rule for reducing abandonment on forms is to ask less questions. Many people treat contact forms as an opportunity to engage in some market research. They may ask questions like "how much is your budget?" or "where did you find our site?" Each of these questions will be a reason for someone not to complete the forms. Remember what the form is for - to get the contact information from a potential customer so your sales team can start talking to them. Is loosing a potential customer a reasonable price for a little market research ?
For sales systems with abandonment issues, the lesson is to keep selling. Don't assume that once a visitor has put something in the shopping basket they're committed to buying it. They're only committed when you've got their money. Many people have second thoughts about buying a product once they're asked to put in their credit card information. This is the time to remind them what they're going to get for their commitment, why they liked the product in the first place. Some shopping sites in the USA go one step further. If you attempt to leave their sites from the credit card payment page, they'll offer you a discount on the spot.
If your Abandonment Rate is OK, but your Conversion Rate is too low, you need to look at the interaction between your site and your visitors. There are two related metrics here - Committed Visitor Index, and Bounce Rate.
People are goal-directed on the internet. Sometimes they go online because they wish to go directly to a site because they want something they know it has. You don't need to worry about these people, you've already achieved success with them. Your new audience will come from some form of search. When someone doesn't know of a site which can provide what they are looking for, they will search, then they read the sites they find. When someone like this first arrives on your site they quickly scan it to see if it looks likely to provide what they are after. At this time they are a Scanning Visitor. Web designers talk about the "8-second rule," which refers to the fact most people will allow no more than 8 seconds to reviewing a site before making that decision. In actual fact, our research indicates you've probably got 30 seconds. But in either case, the lesson is that you don't have long. You might want to ask yourself if the core offering of your site can be clearly conveyed in half a minute or less.
Once someone commits to reading your site, they have become a Committed Visitor. Your Committed Visitor Index is the percentage of visitors who stick around and read your site. Most people count Committed Visitors as those who read more than 1 page, or spend more than 1 minute, but you should decide from your site design what constitutes a serious visit.
It helps to separate Scanning and Committed Visitors when you're looking at how people interact with the site. Getting people to stop scanning and start reading requires different design elements from selling to them once they're seriously reading. Your site should have both, and your designers should be able to identify which elements of the site these are. Some pages should be designed for new arrivals to switch them from scanning to reading. These are your landing pages. Your landing pages should funnel visitors into pages inside the site which are designed to get visitors to commit your Target Action. Successful sites will often have separate landing pages for each online ad they run.
The percentage of visitors who merely scan the site then leave is your Total Bounce Rate. This will vary according to the source of your visitors, so you should be able to determine the Bounce Rate for each site sending you visitors. What you will discover is that the more people know about your site before they arrive the lower the Bounce Rate will be. Bounce Rates for forum listings can be as low as 25%, whereas Bounce Rates for banner ads are often 90% or more. Bounce Rate is also used to evaluating the site's landing pages. Each landing page has its own Bounce Rate. If you want to look further, you can break down the Bounce Rate for each landing page by source.
You can put all this together to determine your ROI for online advertising. You'll either be paying for impressions or click-throughs. Either way the ROI calculation needs to be based on conversions. JupiterResearch has found that 75% of people buying online advertising don't measure the return on investment. This certainly explains some of the prices people are bidding in Google. Multiply the Conversion Rate for visitors coming from each ad by the cost per visitor. That's your Cost Per Acquisition (or CPA). Ask yourself if you can afford to spend that much to get the sale. In order to do this you need to be able to separate out your visitors according to their sources. For any given page, you need to know where those visitors came from.
So by working back from the Conversion Rate, examining the Abandonment Rate for each page between the Target Action and your landing pages, you can easily establish how well your site is performing, and where. Splitting your visitor analysis into Committed and Scanning visitors enables you to get a better handle on how your site handles people at different stages in the visit. With these metrics you can understand and improve your site's performance.
Talk to me if you want to discuss this, or any other issue.