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15.2 How It Works
- Learn the basic fundamentals of Web analytics and conversion optimization.
- Understand why Web analytics are important to eMarketing.
- Understand why conversion optimization is important to eMarketing.
When it comes to Web analytics and conversionA visitor completing a target action. optimization, it is all about preparation. It is not just about collecting data; you need to know what data you are going to use. Once data have been collected, you need to analyze them and let the numbers inform your optimization tasks.
Goals, Events, and Key Performance Indicators
The key to the success of any Web site or online campaign is that it is designed with clearly defined goalsThe defined action that visitors should perform on a Web site or the purpose of the Web site. in mind. These will be used to measure the success of the Web site or campaign and are crucial to maintaining focus within online activities.
The goal of a Web site or campaign may depend on the type of industry, but usually it will be an action that results in revenue for the company. The goal of a Web site is also intrinsically linked to the action that you want visitorsAn individual visiting a Web site that is not a search engine spider or a script. to perform.
Although a Web site has an ultimate goal, the process of achieving that goal can be broken down into several steps. These are called eventsA step a visitor takes in the conversion process. or microconversions. Analyzing each step in the process is called funnelA defined path that visitors should take to reach the final objective. analysis or path analysis and is critical to understanding where problems in the conversion process may lie. The clicks visitors make once landed on a site, whether they follow the desired steps or not, are referred to as a click pathThe clicks taken by a visitor to a Web site in one visit..
Figure 15.1 Funnel Analysis
For example, on a hotel Web site, the ultimate goal is that visitors to the site make a booking on the Web site with a credit card.
Each step in the process is an event that can be analyzed as a conversion point:
- Event 1. Perform a search for available dates for hotels in the desired area.
- Event 2. Check prices and amenities for available hotels.
- Event 3. Select a hotel and go to checkout.
- Event 4. Enter personal and payment details and confirm booking (conversion).
One expects fewer users at each step; that’s why it’s called a funnel. Increasing the number of visitors who progress from one step to the next will go a long way to improving the overall conversion rate of the site.
There are also other pointers, or indicators, that you are achieving your goals. These are factors that can be optimized to ensure that your ultimate goal is being met. In Web analytics, these are referred to as key performance indicators (KPIs)Also known as key success indicators (KSIs), these help an organization define and measure progress toward organizational goals.. These need to be defined so you monitor the entire process to achieving your Web site goal. They can also give clues as to what factors you need to work on so as to reach your goal.
Events and KPIs are not the same thing. Events can be seen as steps toward a goal and are usually an action performed by a visitor. KPIs are indicators that the Web site’s goals are being met.
Here are some example goals and KPIs for different Web sites:
For a hospitality e-commerce site, such as http://www.expedia.com, one would expect the following goals:
- Increase bookings
- Decrease marketing expenses
For the same site, one would expect the following KPIs:
- Conversion rate
- Cost per visitor
- Average order value
For news and content sites, such as http://www.news24.com, one would expect the following goals:
- Increase readership and level of interest
- Increase time visitors spend on Web site
For the same site, one would expect the following KPIs:
- Length of visit
- Average time spent on Web site
- Percentage of returning visitors
KPIs help you to look at the factors that you can influence. For example, if your goal is to increase revenue, you could look at ways of increasing your conversion rate (that is the number of visitors who purchase something). One way of increasing conversion rate could be to offer a discount. So you would have more sales but probably a lower average order value. Or you could look at ways of increasing the average order value, so the conversion rate would stay the same, but you increase the revenue from each conversion.
Once you have established your goals, events, and KPIs, you need to be able to track the data that will help you analyze how you are performing and how you can optimize your Web site or campaign.
KPIs and events break down the factors and steps that can be influences so as to achieve the goals of the Web site. They allow you to see on a micro level what is affecting performance on a macro level.
- The trackability of the Internet allows for analysis at every level of an eMarketing campaign, which should lead to improved results over time.
- Analysis of a Web site has an ultimate goal, which can be broken down into several steps, which are called events or microconversions.
- Each step in the process is called funnel analysis. Each step in the process is an event that can be analyzed as a conversion point.
- Fewer users will engage at each step of the purchase funnel, which is why it’s called a funnel.
- The foundation of successful analysis and optimization is to determine campaign and business goals up front and use these to determine KPIs (key performance indicators) for that campaign. Analyzing metrics that are not indicators of success will detract from timely optimization.