Welcome to the second installment of our series on how you can optimize your online platform. In our first post we examined the conversion funnel and how tools can smoothly guide users towards making a purchase.
Now it’s time to talk about one of our greatest (and geekiest) passions: analytics and why it should be one of your most important decision making tools.
Analytics platforms are pieces of software that track what happens when a user comes to your website. They allow you to understand where they came from, how long they stayed, what content they viewed, whether they bought something, and when they left.
This is a treasure trove of information for marketers, geeks, user interface experts and developers.
But this information is also highly relevant to business leaders, and if you are running an ecommerce company you can’t afford to leave analytics to the geeks for one simple reason.
Your job is to make decisions and website analytics will help you do that more effectively.
One of the oft repeated phrases emanating out of Silicon Valley these days is ‘fail fast’. Like most clichés the term has quickly lost meaning, however, there is a core truth there:
If you want to succeed in the evolving world of ecommerce you need to try many things in order to find the few approaches that work.
The best ecommerce sites operate like an ongoing science experiment. They constantly try new things, monitor the results and then scale the solutions that work while discarding failed experiments without a second thought.
This process doesn’t work without data that allows you to objectively determine whether an experiment should be scaled or discontinued. If you operate an ecommerce website, your analytics platform will be your best source of data.
Analytics can also help you understand what experiments to run. Looking through the data might reveal a trend in consumer behavior that sparks an idea that becomes a campaign that ultimately transforms your business.
It’s important to note that analytics cannot be the sole basis when making important business decisions, but it deserves a seat at the boardroom table.
Deciding with Data
So how can analytics help you make specific decisions? Here are some examples of analytics based decision making in action.
Google Analytics is the most common analytics platform so we’ve used it as the basis for these examples.
Which market should we enter first Kuwait or Jordan?
The Arab World is a collection of markets that ecommerce companies normally enter one at a time. If a company gets started in Dubai or in Saudi, it then has to determine which markets to target as it expands its presence to the rest of the GCC.
Choosing your second and third market is incredibly important.
Analytics can help you make this decision, by providing insight into how users from different markets interact with your website and more importantly your product.
In the example above we can see the breakdown of users from two markets, Jordan and Kuwait, and the user behavior in each country.
If the CEO of this company is deciding whether to enter Kuwait or Jordan, a brief look at the data will help make the company this decision.
Users in Jordan spend longer on site, view more pages and are less likely to bounce. Conversion rates are low in both markets because they don’t have a presence yet, but positive user behavior statistics indicate that the company has a greater appeal in Jordan. Kuwait on the other hand has negative user behavior stats.
This supports the argument of moving into Jordan now and leaving Kuwait for another time.
How should we position and price our product?
To sell a product you need to position it correctly and most importantly offer it at the correct price. Companies should experiment with different forms of positioning, ideally through A-B testing.
A-B testing involves showing users two (or three or four or more) versions of your website; different users see different versions on a random basis. You can then use analytics to monitor how each version performs on key metrics like conversion rate and bounce rate.
If you use this approach on your product pages you can test various types of messaging, tone of voice and even pricing to understand exactly how to pitch your product.
This process is easy to do through a tab under ‘user behavior’ called ‘experiments’. There is a set-up wizard that will guide you through the whole process.
You can also apply this process to front-end design, conversion optimization and many other business challenges.
How should we allocate our marketing budget?
John Wannamaker famously said ‘half the money I spend on advertising is wasted; the trouble is, I don’t know which half.’ Well John lived in the 19th century and most likely didn’t have access to Google Analytics.
The tab ‘acquisition’ is full of goodies that will help you understand where you visitors are coming from. This will allow you to determine which channels – SEO, paid, social media – are bringing in the most traffic and what quality that traffic is.
The data-set above is taken from ‘traffic sources’. This shows us where we get traffic from and how often it converts into a goal and other data sets such as bounce rate and average session duration.
From this snapshot we can see that 69% of traffic for this website comes from ‘CPC’ (paid search) while much smaller proportions come from ‘organic’ (search engines) and ‘none’ (direct traffic). The conversion rates for search engine and direct traffic are all above 1%, while paid search is only .32%.
Looking at this it’s easy to conclude that the website is spending a great deal on paid search at a poor return on investment. In this position the company should audit its PPC campaign and consider moving budget into other areas that are converting at a higher rate.
Building Analytics into Your Week
As a CEO you don’t have time to spend hours in front of analytics, however, it’s important to understand its implications as a business tool. Knowing the right questions to ask ensures that your team uses it to full effect.
An excellent way to achieve this is to build a weekly analytics update into your meeting schedule. This will ensure all stakeholders understand the data, how to use it and where their efforts fit into the growth of the website.
And more importantly, you must understand how analytics can help you make decisions. Otherwise you’ll be operating your ecommerce with little understanding as to how your website is performing.
Next month we’ll be pushing the envelope past Google Analytics and exploring other tools you can use to better understand your business. And don’t forget to register to receive updates when we post new blogs so you won’t miss a beat!