Web analytics guru Brandt Dainow explains why he doesn't bother reporting total page views anymore, and why you shouldn't either.
This article is about the most common mistakes people make when they are measuring their website. It also happens to be the worst mistake. In my view, it is probably the single leading cause of online business failure, yet almost everyone makes this mistake.
The mistake is to measure overall activity and ignore the bottom line. Overall activity, such as the number of people who are visiting your site, matters only so much as it influences online sales or inquiries. Measuring something like overall page views is almost completely irrelevant unless you happen to be the technician managing the server. This is not entirely people's fault because much of the software available can't measure what matters. When it can, measuring the technicalities are always more complicated.
Before we talk about web metrics, let's focus on business basics. Which is doing better, a business with a turnover of $1 million and a net profit of 5 percent, or a business with a turnover of $500,000 and a net profit of 20 percent? The answer is, of course, the business with the turnover of $500,000 because it has a net profit of $100,000, while the $1 million turnover business only has a profit of $50,000. If you met a business owner who didn't know or care what the profit was, but only thought about the turnover, you'd know they were heading for disaster. The reason for this is that profit is what makes a business successful, not turnover.
Everybody in business knows this, but few of them seem to have grasped the corresponding truth about the web.
It doesn't matter how many people visit your site!
What matters is how many of them do what you want them to. I had a client who ran an email campaign through a new agency. They were very impressed with the results-- thousands of new visitors streamed into the site from the email. However, my analysis revealed that not one of those visits ever resulted in a sale, or even an inquiry.
In other words, the email campaign generated a great deal of activity, but it didn't actually produce any business. By any standard you care to think of, it was a complete waste of money. I think email marketers are beginning to get this. At an Internet World show last October there was a consistent stream of people approaching me from email agencies. They all had the same story: their customers were no longer satisfied being told merely the number of people the campaign sent to the site. They wanted to know what those people did once they got there.
I had another client who had a very strong relationship with a major newspaper. They had banners and links and editorial all over the newspaper's site (for which they paid a substantial amount). The newspaper was sending them tens of thousands of visitors each month.
However, when we analyzed what these people did once they arrived, we discovered that very few of them converted into customers. A financial analysis revealed that the cost per sale from the newspaper traffic was around $150, compared with $20 for PPC advertising.
They terminated the newspaper deal, put the newspaper money into PPC, and transformed the company bottom-line.
What both these companies were doing was focusing on the number of visitors to the site, rather than the number of sales or inquiries. The current saying in web metrics circles is Key Performance Indicators are nice, but the secret to success is the key Key Performance Indicators (or KKPIs).
For a commercial website only two things matter...
Getting people to see the page that says "sale successful" or the one that says "contact details received, we'll be in touch."
These are the pages that can translate into money. That's what the business is there for -- to make more money than it spends.
In web metrics terms these are your "target actions." Assessing the total number of visitors to your site is only meaningful if you also know your conversion rate. The conversion rate is the percentage of visitors who engage in your target action. You should never be heard simply saying "we got x many visitors to the site" because that doesn't mean anything.
It should always be "we got x many visitors to the site with a conversion rate of y percent."
When it comes to measuring the effectiveness of a marketing campaign, you need to be able to do this for the people who came from this campaign as opposed to the rest of your visitors. This introduces the second-worst mistake people make...
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