How to Use Web Analytics 2.0 to Improve Your Conversions

Last Updated: December 28, 2021

Web analytics 2.0 is a term coined by the world-famous analytics guru ‘Avinash Kaushik’ in 2007.

But what is web analytics 2.0?

Before we dive deep, let us first get a basic understanding of Web Analytics 1.0

What is Web Analytics 1.0?

This is what web analytics 1.0 is in a nutshell:

web-analytics 1.0

Web analytics 1.0 framework just focus on one thing and one thing only and that is the clickstream data.

Clickstream data is the data that shows what is happening on your website.

The clickstream data can give you answers to the following questions:

The data that you see in Google Analytics is mostly clickstream data.

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Even if you know what happened on your website, what exactly you can do about it?

Nothing much, unless you go ahead and try to determine why it is happening on your website and what actions you can take to get the desired outcomes.

The problem with clickstream data is that it is not very good at answering ‘why’.

For example:

  • Why did people visit my website?
  • Why did people spend less time on my website?
  • Why are not many people purchasing products from my website?
  • Why is my website conversion rate so poor?
  • Why are my marketing campaigns not working?

And the list goes on…

In order to truly understand your users’ behaviour, you need to understand ‘why’. In order to improve your website conversion rate, you need to understand ‘why’.

Say hello to Web Analytics 2.0

web-analytics 2.0

Web analytics 2.0 framework not only just focus on determining what is happening on your website but also focus on:

1. Outcomes (sales, leads & other business goals)
2. Why it is happening (like why people buy or don’t buy products from your website)?
3. Competitors Analysis-  It helps in determine missing opportunities.
4. What actions should I take to get desired outcomes?

You can truly understand ‘why’ when you move beyond the traditional clickstream data and use the voice of customer analysis.

The voice of customer analysis includes:

  1. Advanced in-page analytics.
  2. Surveys.
  3. Market research.
  4. Competitive analysis.
  5. A/B and multivariate testing.
  6. Usability testing.

#1 Advanced in-page analytics

Advanced in-page analytics tools provide:

#1.1 Heat maps – Heat maps allow you to visualise user clicks, taps, and scrolling behaviour on your website:

heatmaps

#1.2 Visitor recording – Through visitor recording, you can see how visitors are actually using your website, which pages they are looking at, where they are clicking, etc. It eliminates the guesswork regarding where users click and how they use your website:

VR2

#1.3 Advanced form analytics

Advanced Form Analytics

By using advanced form analytics you can track:

  • Time spent on each form field (measured in seconds).
  • Percentage of refills for each form field.
  • The number of interactions with each form field.
  • Percentage of drop-off at each form field step.
  • The conversion rate of the form.
  • Visualisation of the user flows from the first form field to the last.

#1.4 Conversion funnel analysis – Through conversion funnel analysis you can determine drop-offs from one funnel step to the next:

Conversion Funnel Analysis

Examples of popular advanced-in page analytics tools are hotjar.com and fullstory.com.

#2 Surveys

One of the biggest problems in web analytics is understanding the ‘why’:

  • Why aren’t people purchasing products from my website?
  • Why is my website conversion rate so low?
  • Why are my marketing campaigns not working?

One of the best tools to get the answers to ‘why’ is a survey:

survey

Survey your prospects and customers. Get direct feedback about your products, customer service, shipping and customers satisfaction.

Understand the decision-making process of your customers.

If you continuously gather customer feedback, you will never really be short of finding the problems that need fixing.

Then you do not need to rely on your own understanding of the client’s business, to find problems that need fixing.

Every website has got 10,000 problems that need fixing. But nobody has the time and resources to fix them all.

In order to prioritise your tasks and manage your resources, you should collect customer feedback data all the time; 24 hours a day, 7 days a week.

Your customer feedback will almost always highlight the most important issues that need fixing first.

Without such data, you may end up spending a significant amount of time and resources on fixing problems that do not really matter to your customers.

And if something does not matter to your customers then it will not help you in improving the business bottom line. It is as simple as that!

Following are various advantages of collecting customers’ feedback 24/7:

  • You can respond quickly to the ever-changing needs and expectations of your customers.
  • You can constantly innovate.
  • You can improve customer satisfaction.
  • You can increase customer lifetime value.

You should never be short of finding the problems that really matter to your customers.

Examples of popular survey tools for collecting customers feedback data: surveymonkey.com, hotjar.com, Google Forms.

Fortunately, the majority of us stopped relying on the web analytics 1.0 framework a long time ago and have started computing the impact of our marketing campaigns like SEO and PPC on our sales, leads, and other business goals.

But we still haven’t fully adopted the web analytics 2.0 framework, have we?

For many of us, the number 1 way to increase sales and leads is to send more traffic to the website.

Here lies the problem. As you acquire more traffic through different marketing channels (organic, PPC, email, social media) you need to spend more time and resources on content creation and marketing.

Then at some point, you realize that your company spends way too much on acquisitions (conversions) (By the way, have you ever calculated cost per acquisition for your organic search campaigns? If you haven’t then you should). We all know the conversion rate of our websites. But what do we do about it?

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Many of us tend to live in a world where the conversion rate is a universal constant and all we can do is increase the traffic.

More traffic means more sales. But it also means more spending.  Let us suppose you have got a new client. Now, what you should do to increase the revenue of his website? You have two options here:

1. Create more contents, target new keywords, and effectively use social media for links acquisition. Which we all do anyways (ignoring CPA and lifetime value most of the time).

2. Focus more on finding out why people don’t buy from your website and what you can do about it. (recommended)

Conversion rate optimization is all about improving the sales and conversions of a website without increasing the ad spend or traffic (at least considerably), to get the most out of our present traffic. Yet we tend to overlook it and spend the majority of our time in acquiring more traffic through keyword research, content marketing, and social media.

Why traffic driven approach is hurting your business?

When you work with the mindset of just increasing traffic and sales through content creation and marketing:

1. You are not always acquiring the best customers through your campaigns

2. You are most likely acquiring low value customers who buy once or maximum twice in their lifetime.

3. You are not spending enough on acquiring most profitable customers and thus loosing big on revenue and net profit.

When you focus on improving the conversion rate of your website, you get the best customers as you are doing two things better:

1. Targeting the right people

2. Making sure that the right people buy (via landing page optimization)

 Why best customers generate more profit than average or low-value customers?

Let us suppose that your target market is the US. So your average customer can be anywhere from the US. Let us also suppose that after analyzing one-year data you found out that people from New York City bought 2 times more than an average visitor to your website. They tend to spend 30% more than average per order. So now you know where your best customers live.

 New York City Clients (Best Clients)Average Clients (can be anywhere from US)
No. of transactions/year40002000
Average order value$70$40
Total Revenue$280000$80000
Total Spend$36000$50000
Gross Profit$244000$30000

Your cost per acquisition will remain high if you target the whole of the US through search marketing or any other ad campaigns. So it is pretty obvious that your total spend is going to be higher for acquiring average clients.

So by directing your marketing efforts in acquiring more profitable clients, you can increase your revenue and profit even without increasing traffic or spending more on content creation and marketing.

Now the big questions that come up are, why people from New York City are our best clients, what they are purchasing, and what we can do so that they buy more? If you can get an answer to these questions, you can increase your sales within a few weeks without increasing website traffic or spending more on content marketing. And this should be our aim as an inbound marketer.

How conversion-driven approach will help you as a webmaster/SEO consultant/agency?

You can save a lot of time and money on content development, marketing, and traffic acquisition by running conversion-driven campaigns instead of traffic driven campaigns.  All of this may sound so obvious to me and you but we still don’t pay attention to improving the conversion rate of a website or lifetime value of a visitor.

Traffic driven campaigns will sooner or later haunt you

Traffic acquisition is becoming more expensive and challenging with each passing month/year due to a rise in labor cost and market saturation. At some point, your cost per acquisition will become so high that you will no longer be profitable and soon be out of business.

Learn to answer ‘why’ if you wish you to remain in business for the foreseeable future

According to Avinash, the single most missing critical piece in today’s web analytics is ‘answering why’. Why people do what they do on your website? For e.g.

Why people buy products from my website?
Why people don’t buy products from my website?
What should I do so that people buy products from my website?

The answer is not ‘increase the traffic’.

The answer is ‘ask your visitors’ and ‘know your target audience’

Are we spending enough time and resources in getting answers to the ‘why’ questions?

According to the Pareto Principle (also known as the 80–20 rule), 80% of the effects come from 20% of the causes which means:

1. 80% of your sales come from 20% of your visitors.
2. 80% of your output come from 20% of your input
3. 80% of your sales come from 20% of your products
4. 80% of your profit come from 20% of your products

So what you need to do is, to determine that 20% of everything and work relentlessly on them. You can’t sell each and every product of your client in each and every location of your country, so why spread your marketing efforts and resources too thin by trying to be visible everywhere for everything you sell.

Creating a web analytics measurement framework to improve conversions

Create a web analytics measurement framework for your business. This framework (which I have adopted from Avinash) will keep you focused on what is critical to your client’s success. Here is how you can create your own analytics measurement framework:

Step-1: Determine your business objectives

Whatever you want to accomplish through your website can be your business objective. It can be sales, leads, branding, user engagement, etc.

Step-2: Determine your goals

Goals are specific strategies you use to accomplish your business objectives. For e.g. we will increase our ad spend in this region to improve sales or we need to work on ‘average time spent on site’ to improve user engagement.

Step-3: Determine your key performance indicators (KPIs)

KPI is a metric that helps you in understanding how you are doing against your business objectives.

For example, if increasing user engagement is one of your business objectives then repeated visitors is a good KPI. So if we have good KPI, it also means that we have bad KPIs. For e.g. page views is a bad KPI, exit rate is a bad KPI. So you need to be careful while selecting KPIs. Learn more about KPIs directly from Avinash.

Step-4: Set your targets

Targets are numerical values through which you measure your success or failure. As a marketer, you must know what is going to be counted as success and what is going to be counted as a failure. Without targets, no goal is unachievable.

Your targets must be SMART (Specific, Measurable, Attainable, Relevant, and Time-Bound). For e.g. ‘increasing the traffic of the website’ is not a SMART target. Increasing the traffic of the website by 25% in the next 6 months is a SMART target. You must create monthly, quarterly, and yearly targets.

Step-5: Segment your data before you make business decisions

The aggregate of any metrics is useless. For e.g. the overall conversion rate of a website is a useless metric as you can have a 100% conversion rate if the individual conversion rate of your 5 goals is 20%. Moreover, you don’t get any useful insight when you look at aggregates or averages.

In order to get useful insight, you have to segment the data. The more you can segment it the more useful and actionable insight you can get. For example, it is far more useful to know that majority of your sales come from New York than from the US. It is even more useful to know that majority of your sales come from the upper-middle-class Hispanic population in Brooklyn.

Other resources on Web Analytics

  1. Web | Digital Analytics Training Course
  2. Web Analytics Career Advice – How to Become a Web Analyst
  3. Difference between Web / Digital Analytics and Google Analytics
  4. Bare Minimum Statistics for Web Analytics
  5. Maths and Stats behind Web Analytics – Beginners Guide
  6. Web Analytics Tool Box from OptimizeSmart
  7. Google Analytics Tutorial
  8. Google Analytics 4 training & tutorial
  9. Google Tag Manager Tutorial
  10. Google Data Studio Tutorial
  11. Google Analytics BigQuery Tutorial
  12. Google Tag Manager Event Tracking Tutorial
  13. Google Tag Manager Data Layer Tutorial
  14. Advanced Analytics in Google Analytics 360 (Video Tutorial)

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About the Author

Himanshu Sharma

  • Founder, OptimizeSmart.com
  • Over 15 years of experience in digital analytics and marketing
  • Author of four best-selling books on digital analytics and conversion optimization
  • Nominated for Digital Analytics Association Awards for Excellence
  • Runs one of the most popular blogs in the world on digital analytics
  • Consultant to countless small and big businesses over the decade

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