IN THIS ISSUE:
This month’s edition is about using analytics and tracking
your online
conversion rate. Measuring the success of your marketing
efforts is one of
the smartest things you can do as a small business owner.
1. An Analytics Consulting Model for Small Business
2. Uncovering Both Top- and Bottom-Line Growth for Your
Online Business
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answered in the next gWave blog!
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June 2007
An Analytics Consulting Model for Small Businesses
Dr. Ralph
F. Wilson,
Editor-in-Chief Web Marketing Today
I came back from the <a href="http://www.emetrics.org">Emetrics Summit</a> in San Francisco, May 7-9, 2007, hopeful that small businesses can
find a way to get in on the tremendous benefits of web analytics and
testing. I am convinced from my five years in the Total Quality Management
(TQM) Movement in the early 90s of the following: "What you
don’t measure, you can’t improve."
How Things Stand for Small Business Web Analytics
Here’s how I see it in a nutshell:
place for their
website (though too many aren’t aware of the analytics data
available from
their web hosting service for no additional cost).
- Good to excellent web analytics tools are now available
for small
businesses for free or at low cost, so no one can say these
days, "I can’t
afford the software." In particular, <a href="http://www.google.com/analytics/">Google Analytics</a> (www.google.com/analytics/) and <a href="http://www.wilsonweb.com/afd/clicktracks.htm">ClickTracks</a>
(www.clicktracks.com) are within reach of nearly all small
businesses.
- But small businesses just aren’t able to do much with the
data at their
fingertips.
- Because larger businesses use analytics and testing and
small businesses seldom do, the performance gap between large and small
business profitability becomes greater every year.
Why Consultants Are Needed
The gap, in my opinion, is because small businesses don’t
have a person on staff who has the training, the time, and the focus to
gather, analyze, and fact on the data, resulting in improved efficiency of the
website and higher conversion rates.
Here’s my conclusion. Small businesses that "get
it" and really are
willing to pay the price to improve must find and engage
competent and
creative web analytics consultants for several hours per
month.
Reports. Frankly, you don’t merely need expensive analyst reports
on
what’s happening on the site or in sales. They’re important,
but that’s
merely maintenance. Google Analytics and most other
professional analytics
packages can be set up to e-mail you regular reports.
Reports, properly
configured, may alert you to problems, but reports alone
will not move you
forward.
Analysis. Consultants need to be engaged to:
- Study your data regularly over a period of many months,
- Make recommendations for how to improve your site and
online sales,
- Design and implement tests that can determine whether
these hypotheses
are accurate, and then perhaps
- Help you implement the changes on your website, if you
don’t already
have a web designer or webmaster who can do that for you.
A Consultant Model
Here’s a possible shape that a web analytics consultant
contract might
take:
Hourly rate: $75 to $200 per hour. This may sound like a lot
of money, but
we don’t flinch when we take our cars for repair. Well, we
may flinch, but
we do it because we must. A consultant’s hourly rate will
depend upon
experience, the number of hours contracted for each month –
and, frankly,
exposure to large companies that expect to pay higher hourly
rates. If it
makes you feel better, compare consultant costs to the lost
opportunities
and the potential gain. Getting a good consultant should
make you many,
many times more than you pay, so long as your business has
potential.
Set-up Phase. When you first engage a consultant, he or she
will want to
set up your analytics package so that provides the data that
will be most
helpful to your kind of business. This might include
determining
appropriate KPIs (Key Performance Indicators) for your
company and setting
up reports that can be generated automatically. This phase
might take 4 to
6 hours, more or less, depending on your business and the
current state of
your analytics.
Monthly Analysis. I recommend that you engage an analyst for
4 to 10 hours
per month to study your data and make recommendations. This
is time
consuming, hard work. Unless you have the training, you
won’t be able to
dig deep because you won’t know from experience where it is
most
productive to dig.
Testing Cycles. Two to four times per year you’ll want your
analyst to run
tests that you and your analyst agree upon. These tests will
typically help
you optimize your landing pages, navigation system, user
interface, etc.
Setting up tests is time intensive, and typically includes
test design,
graphics design, page layout, and then analysis of the data
once you have
collected statistically significant data. The results might
then suggests
a couple of other tests to optimize a page. Such tests might
take 20 to 40
hours per cycle.
Here’s how this might look in terms of dollars.
|
$75 per hour |
$125 per hour |
$200 per hour |
|
|
Set-up Phase (one-time only), 4 to 6 hours. |
$300 to $450 |
$500 to $750 |
$800 to $1,200 |
|
Monthly Analysis, 4 to 10 hours per month |
$300 to $750/month |
$500 to $1,250 |
$800 to $2,000 |
|
Testing Cycles, 20 to 40 hours per cycle |
$1,500 to $3,000 two or three times per year |
$2,500 to $5,000 two or three times per year |
$4,000 to $8,000 two or three times per year. |
|
Annual Costs |
$6,900 to $18,450 |
$11,500 to $30,750 |
$18,400 to $49,200 |
This model, at least, provides you a way to look at the task
and discuss
it with an analyst, though you and your analyst may want to
change the
approach to suit your needs better.
I believe that a small business owner who hires a analyst on
this sort of
basis will look back a year from now with profound
appreciation for how
far they’ve come. Yes, it’s expensive. But the payback for
most small
businesses will be 10-fold to 50-fold or more on their
investment. That
encourages me. What discourages me is that way to many small
businesses
are so short-sighted and cheap that they choose not invest
in web
analytics consulting and are thus doomed to maintain the
status quo — and
fall behind their competitors.
The final piece of this solution is finding an analyst who
is both
competent and open to working with small businesses. The
[http://www.webanalyticsassociation.org/] Web Analytics
Association
(www.webanalyticsassociation.org) might be a potential
source of small
business consultants, though their current job board deals
only with full
time employment positions. Google has certified a number of
[http://www.google.com/analytics/support_partner_provided.html]
Google
Analytics Authorized Consultants in various countries
(www.google.com/analytics/support_partner_provided.html). I
can also try
to
[http://www.wilsonweb.com/contact/analytics_referral_form.htm] refer
analysts I trust to qualified small businesses
([http://www.wilsonweb.com/contact/analytics_referral_form.htm]
www.wilsonweb.com/contact/analytics_referral_form.htm).
Uncovering Both Top- and Bottom-Line Growth for Your Online
Business
Kevin Gold, Enhanced Concepts
About.Com:Small Business:
Canada
Traffic Generation versus Website Conversion Strategies
On Wall Street, financial investors speak of CEOs improving
their
companies’ "top line" by increasing sales volume
or their "bottom line" by
reducing their expenses to expand the margins from their
current sales
volume.
For online businesses a similar "top line - bottom
line" approach should
be taken by business owners determining where to direct
their improvement
efforts.
Defining Top-Line versus Bottom-Line
An online business improves its "top line" by
increasing the number of
unique visitors to its website or its "bottom
line" by increasing its
"visitor-to-sale" or "visitor-to-lead"
conversion rates.
Let me illustrate.
After an online business establishes its performance
metrics, it is able
to predict with confidence the expected results from its
visitor traffic.
For example, an online business’s performance metrics may
show that for
every 1,000 visitors received, 15 sales are completed - a
sales conversion
rate of 1.5 percent.
With this understanding, the business can increase its
"top line" growth
by driving more visitors to its website. For example, if the
business
invests money in traffic generation efforts to increase
visitor traffic
from 1,000 to 10,000, 150 sales will be achieved from the
1.5 percent
sales conversion rate - a ten times growth rate.
Top-Line Improvements Focuses on Traffic Generation
What are "traffic generation efforts"?
In brief, traffic generation efforts are ways an online
business attracts
visitors to its website. They may include online efforts
such as search
engine optimization, pay-per-click search engines, affiliate
marketing,
email campaigns, and media or offline ones such as direct
mail,
television, radio, and public relations.
On the other hand, the business may decide to spend its
money on improving
its "bottom line" by concentrating efforts on
website conversion
strategies.
For example, if the above online business invests money in
website
conversion strategies to increase its sales conversion rate
from 1.5
percent to 2 percent, then for the same 1,000 visitors,
sales will
increase from 15 to 20 - a 25 percent increase.
Bottom-Line Increases Focus on Website Conversion Strategies
So what are website conversion strategies?
Web site conversion strategies are website design changes
that connect
with your visitor’s wants and persuade them to take action
to achieve your
goals as well as theirs. There are endless strategies to
increase your
bottom line, although some have greater significance than
others.
Depending on your type of online business, different
strategies may
achieve greater results for your website and offer greater
relevancy for
your visitors.
If you manage a consumer or business product website, then
website
conversion strategies that focus on reducing shopping cart
abandonment may
provide the greatest website conversion improvement. While a
service
business’s lead generation website will find improvement
from website
conversion strategies focused on "contact us" form
completion.
Implement These Website Conversion Strategies
There are website conversion strategies that will improve
conversion rates
for all online businesses regardless of their individual
objectives. These
strategies include improvements to…
- Website’s sales copy, including writing headlines and
sub-heads with
stronger visitor appeal, defining stronger calls-to-action,
using more
visitor-relevant and benefit-oriented words and positioning
popular
visitor keywords in prominent areas to connect with visitors
and persuade
them to action.
- Graphics and layout design to generate visual relevancy
and message
consistency for your visitors.
- Guarantees, returns, shipping, privacy, customer support
and security
policies you present to gain confidence and trust from your
visitors.
- Navigational structures to make it easier and more
convenient for your
visitors to locate the products and services they desire to
purchase.
- Buying or contact options to increase the ways in which a
visitor can
purchase or receive contact from you including alternatives
to a shopping
cart or online form like phone, mail, fax, online chat, and
email.
How to Decide Between Top-Line or Bottom-Line Improvements
Your decision to pursue "top-line" or "bottom-line"
improvements to your
online business should be evaluated by (1) the objectives
you plan to
achieve, (2) the amount of money you have to spend, (3) the
time-line
established to meet your goals, (4) the amount of visitor
traffic your
website currently receives and (5) the conversion rate your
website
currently achieves for your calls-to-action.
Establishing a plan before you make any decisions is
critical.
As the old joke goes, "I’m making progress climbing the
ladder of
success - I just don’t know if it’s leaning against the
right wall." The
plan for your online business should include measurable
goals based on
your current performance metrics.
Knowing your budget is essential in the selection process.
Certain
conversion enhancement strategies can be implemented for a
small
investment of your time and effort, while traffic generation
efforts may
require greater investments of time, effort or both.
Figuring out your
budget enables you to also forecast the potential return you
may receive
from improving your top-line versus your bottom-line.
Obviously the areas
that provide the biggest bang for your buck are the ones to
start one
first.
Understanding your time-line is also essential since many
website
conversion enhancement strategies will offer quick improvement
to your
conversion rates while traffic generation efforts like
search engine
optimization have long lag times before delivering ample
visitor traffic.
Identifying your current visitor traffic volume and
conversion rates,
especially for new online businesses, is also very important
when
determining top-line or bottom-line improvement. If you
currently have low
visitor traffic then you will have difficulty in determining
if a website
conversion enhancement strategy had a real effect on
improving your
conversion rates.
For example, if your website receives 100 visitors a month,
it will take
you at least a month or two before any real measurable
changes occur to
your conversion rates. In this case, you would be better off
focusing on
top-line (traffic generation efforts) first and then
returning to
bottom-line improvements for increasing your conversion
rates.
Likewise, if your website currently has strong visitor
traffic, say 15,000
visitors per month, yet your current conversion rate
produces only 5 sales,
then obviously you need to improve your bottom-line and
focus on conversion
enhancement strategies.
Take time to review your "top line" versus
"bottom line" opportunities and
to decide which one offers you the best return for your
dollars spent. If
you concentrate on improving one of the two areas over the
next month, you
can be confident that measurable sales growth is achievable
for your online
business.
