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 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.
#1.1 Heat maps – Heat maps allow you to visualise user clicks, taps, and scrolling behaviour on your website:
#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:
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?
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/year
4000
2000
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 analyticsis ‘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.
"How to use Digital Analytics to generate floods of new Sales and Customers without spending years figuring everything out on your own."
Here’s what we’re going to cover in this training…
#1 Why digital analytics is the key to online business success.
#2 The number 1 reason why most marketers are not able to scale their advertising and maximize sales.
#3 Why Google and Facebook ads don’t work for most businesses & how to make them work.
#4 Why you won’t get any competitive advantage in the marketplace just by knowing Google Analytics.
#5 The number 1 reason why conversion optimization is not working for your business.
#6 How to advertise on any marketing platform for FREE with an unlimited budget.
#7 How to learn and master digital analytics and conversion optimization in record time.
My best selling books on Digital Analytics and Conversion Optimization
Maths and Stats for Web Analytics and Conversion Optimization
This expert guide will teach you how to leverage the knowledge of maths and statistics in order to accurately interpret data and take actions, which can quickly improve the bottom-line of your online business.
Master the Essentials of Email Marketing Analytics
This book focuses solely on the ‘analytics’ that power your email marketing optimization program and will help you dramatically reduce your cost per acquisition and increase marketing ROI by tracking the performance of the various KPIs and metrics used for email marketing.
Attribution Modelling in Google Analytics and BeyondSECOND EDITION OUT NOW!
Attribution modelling is the process of determining the most effective marketing channels for investment. This book has been written to help you implement attribution modelling. It will teach you how to leverage the knowledge of attribution modelling in order to allocate marketing budget and understand buying behaviour.
Attribution Modelling in Google Ads and Facebook
This book has been written to help you implement attribution modelling in Google Ads (Google AdWords) and Facebook. It will teach you, how to leverage the knowledge of attribution modelling in order to understand the customer purchasing journey and determine the most effective marketing channels for investment.
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
