The Chatterbox

Analytics. Hunh? Wot's dat?

Sometimes we can get confused by unfamiliar or overly technical terms that are used in The Biz. So today let's look at one of the most important and misunderstood terms out there: Analytics.

What is it and why you need it.

In its simplest terms, Analytics is simply some software that allows you to be able to sift through a lot of information in order to tell what visitors to your web site are doing. It can be as simple as knowing how many visitors you get each day and some information as to how they arrived at your site. This is the sort of Analytics data you can get from something like the free Webalizer analytics software.

Very basic, very rudimentary but nonetheless better than nothing.

The next step up the ladder would be software that gives you the above information, plus can let you see click paths taken through your site by visitors. Sort of a 20 people started on this page, then went to that page sort of thing. Software that provides this type of data include Urchin (which I use), Google Analytics (which is what Urchin is now, though it's a bit different than the installed version I use), Clicktracks and the like.

These give you a lot more detailed information than you would otherwise be able to get access to. Many of these more powerful analytics solutions will even allow you to follow Sales from beginning to end. For instance, what keyword phrase and search engine someone used to find your site, each page they viewed and what they purchased.

This is the sort of detail you're looking for if you're going to run a web site. If you don't have this sort of detail you're simply wasting your time and the time of your visitors, because you're not doing everything you can to understand what they're looking for and putting your best foot forward. Having a web site but not really paying attention and managing it is the #1 sin far too many hopeful e-trepreneur's commit.

Ignoring feedback from your customers is a dumb way to run a business. Actively ignoring feedback they're giving you without even trying is the reason so many commercial web sites either fail completely or fail to reach a fraction of their potential.

You simply have to pay attention, and do everything you can to supply what they need. That's your Job!

Let me throw out what some might think is a funny way to look at it.

When people search they're looking for something. 9 times out of 10 they wouldn't mind paying for it if they find exactly what they're looking for and it's easy to get/use. People understand the concept of You Get What You Pay For, so as long as you make it easy for them to find you and buy from you, you're halfway there. The other half is simply supplying what they're looking for in the first place!

Soooooooooo... If you don't currently have any way to tell what people are doing you're missing the boat. If you don't have a way of measuring the effectiveness of your web site, you're probably missing out on a lot of business.

Look at it on your own site. Look at the amount of traffic you get in an average day. Then look at how many sales that traffic is producing for you.

Do less than 1% of your visitors buy from you? (That's average btw, so don't feel too bad when the answer is Yes.)

Still, doesn't this fact trouble you? It should!

So, what do we do about it?

We first make sure we can Measure what's happening. Without being able to have some way to measure both how people reach your site or what they do when they get there you have no chance of improving things.

Let me put this in other words by way of example that may help...

• Let's say for instance that you have a site that get 1,000 new unique visitors each day (don't get hung up on the new unique visitors terminology for now! I'll explain it later in the series.)
• Let's say the product or service or average sale works out to be $25 for each sale.
• Let's also say that from these 1,000 people the site is making you $100 per day, or $3,000 per month. Which is not bad, but when you dig into the numbers a bit that's 4 sales per day. Or to put it another way, for every 1,000 new unique visitors you're getting confirmed sales to 4 of them. Which equates to a 0.4% conversion ratio.
• Let's also say that you need it to be at least 3-5 times income each month from your site to make you comfortable in divesting yourself of other time consuming things in your life and becoming truly independent.

Given the above scenario, what are the paths that will get you to that $9,000 to $15,000 per month figure?

There are three answers.

1.) You leave your site as it is and figure out some way to increase your qualified traffic by 3 to 5 times what it is today. This is often very difficult to do, and each market does have an absolute traffic top end. If you're already ranking well for your key phrases and 2nd/3rd tier phrases you're probably close to your max traffic expectations.

2.) You make some changes to your site so that you convert more of your current traffic (window shoppers) into Buyers.

3.) You do a bit of number 1 and a lot of number 2.

Those are your choices.

Which is easiest? Which is the most effective?

Well, the sad part is that most webmasters only look at #1. They never even realize that they're only converting interested buyers at point 4 percent. They don't even think about the fact that getting this up to a lowly 2% would increase their income overnight by 300 plus percent of its current production.

Break time... Did you get that part? It's a very, very important point. So let me cover it again.

Your site is making you $1,000 per month. You get on average 1,000 new visitors each day. Of those 1,000 vistors, 4 of them become customers, for a 0.4% Conversion To Sale (CTS) ratio.

You make some changes to your site to make the buying process more appealing, easier and more sensible for your visitors. Because of these (usually small) changes your CTS jumps up to 2%, or 20 sales per day.

That's $15,000 gross revenue per month.

Got it?

Without doing a single thing to improve your SEO efforts or to get more traffic to your site you're now making $500 per day on average instead of $100. You're making $15,000 per month instead of $3,000.

Note here that I'm not saying that $3,000 per month is a bad thing. It's just not nearly as good as $15,000. Which can almost always be attained with a bit of testing and a bit of common sense.

The moral of the story here is that you really need to take control of your web site. You really need to know how people are finding you and what they do when they get there. Without this basic data you stand no chance of making your site the best it can be for your visitors and most certainly not for your potential customers.

That's Analytics in a nutshell. That's the tool you can use and should be using to make your site more successful.

(Note: This is the first part in a series. In later posts I'll be walking you through the entire process of how to test things, what to look for, easy changes you can make to improve CTS, etc.)