9 Ways to Make Money on Analytics

Web analytics tools can be one of the best investments you make, if you use the tools in the right way. The key is to realize that reading the off-the-shelf reports are not going to help you make money. They may be useful and interesting, but its not the place where to focus your time and effort in your analytics tools. This article will outline 9 ideas for helping your site more successful through the use of web analytics tools.

First, you need to realize that it's not easy. Analytics pundit, Avinash Kaushik advocates the notion that only 10% of your analytics expense should be on the tool you use, and 90% on the people who use it. Of course, if you use a free tool, like Google Analytics or Clicktracks Appetizer, 100% of your cost will obviously go into the people.

In any event, the point is that using analytics effectively is hard work. Traffic numbers, such as unique visitors, visits, and page views are numbers that you may want to watch for purposes of trend analysis, but watching these numbers won't help you make money for your business.

But, if you are looking for a way to grow your business with analytics tools, here are a few ideas that should apply to a large number of web sites out there:

  1. Find out what search terms are converting: This is one of the simplest things you can do. In most packages this is easy to setup. Simply setup conversion goals in your analytics software, and then find the mechanism they provide for tracking what search terms are driving the most conversions. This simple technique can teach you how to focus your search engine optimization and/or Pay Per Click (PPC) marketing efforts.

    Once you identify categories of terms that work, you can make key observations about your site visitors. Is someone who searches on a certain group of terms ready to buy? Or are they still in early research mode? Can you use that information to provide a better experience for them? Or are there a category of terms that you should exclude from your PPC campaigns?

  2. Find out how your landing pages are converting: This is similar to point number 1 above, but with a subtle twist. You may have different groups of pages that convert at different rates. This can help you examine the layout, content, and presentation of each of your pages, and determine how to improve your overall site performance. Google Website Optimizer is a great tool to use for this effort. For a wealth of great ideas on how to start with Google Website Optimizer, check out Future Now's great blog post: Google Website Optimizer - 7 Free Resources To Get Started.

  3. Setup and Manage A/B and Multivariate testing: It's a great idea to compare how your site converts by trying different content on your pages, different layout, better graphics, etc. But if you run your site with one configuration for a while, and then change into another configuration, your test results may be meaningless, because you don't know if any differences you see in your results are due to the different time frames in which you ran the test (e.g. external events such as a holiday can effect conversion).

    The solution is to setup your site to serve up different versions of your pages to alternating users (for an A/B test). Then use your analytics software to measure the conversion rate of the two different versions of the page. To do this, you will need to setup some mechanism for trapping on the different versions of the pages, but most analytics packages can do this easily.

  4. Use the Referrers report: - Look at your referrers report. There is a wealth of data here. For example, are there any new referrers that indicate that you have received a new link? Also, find out which referrers convert for you. Is there a way that you can expand the relationship with that referrer to get more traffic from them? Are there similar sites that you can try to develop a relationship with?

  5. Spot a missing long tail: There was a great post recently by Dennis Mortensen about Spotting a missing long tail (another person whose blog you should read on a regular basis). Dennis explains it really well, but the basic idea is that the traffic on your highest volume page should be matched by the traffic on a larger number of lower volume pages on your site. If this is not the case, then you are missing out on an opportunity. Check out Dennis' post for more details on this suggestion.

  6. Latent Conversion Tracking: This is a great one for PPC campaigns. A latent conversion takes place when someone comes to your web site through a PPC campaign, leaves the site, and then comes back later (by another paid click, an organic click, typing in your URL, a bookmark, or whatever), and then converts. If you don't take care with this, you won't provide any credit for this sale to your PPC campaign.

    This can hurt your PPC campaign strategy in dramatic ways. For example, if you naturally require multiple visits to your site to get a conversion, not tracking latent conversions can be a disaster. You can literally have situations develop where you turn off keywords that you think are not profitable when measured on a direct basis, and then watch your total site margin drop. If this happens to you, this is probably an indication of latent conversions taking place. In addition, if your PPC campaign is actually driving 20% more revenue than you think it is, you may well be open to upping your PPC campaign spend.

    Most analytic packages provide some mechanism for tracking latent conversions, but they default in different ways. Some allow you to turn on latent conversion tracking, but assume that you want to associate the conversion to the first paid click, and others assume you want to associate the conversion to the last paid click. Some will let you configure this behavior. Regardless, just be aware of what you are dealing with.

  7. Comparative Traffic Analysis: Any web analytics tool will help you get a good feeling for how your traffic is growing. It's easy to get excited when your traffic jumps up. When your traffic goes up 20% you are doing great, right? Not necessarily. What if your competitor's traffic doubled in the same time period? Point is, you want to see if you are growing faster than competition.

    And, as Avinash Kaushik taught me, it's easy to do. Just pull up an Alexa traffic chart for your web site.

    Then enter your competitor's sites in the "Compare Sites" boxes under the chart, and look at it again. You can now monitor the performance of your sites traffic against that of your competitors, and can easily see if you are growing faster than they are, or vice versa. In fact, look at the competitor who is growing the fastest and spend your time studying their strategy. It may give you some ideas.

    Bear in mind that the Alexa tool does NOT provide a good measure of your traffic, because the sample size of it's audience is too small, and it's audience is a bit skewed. But using Alexa to compare sites in the same niche makes great sense, because the skewing of the audience will affect all such sites in the same way, and the audience is large enough for that.


  8. Competitor Search Term Analysis: Hitwise and AdGooroo are two great tools that allow you to see what search terms are driving traffic to your competitor's site(s). Are you a newcomer in a competitive space? It sure would be great to know where the leaders in your space are getting their traffic.

    Or maybe you are the leader, but a strong challenger has emerged. What keywords are driving their challenge to your leadership? It would be great to know that too. Of course, these tools cost money, so they are not for everybody. But consider them seriously if you are able to afford the additional expense. The return on that investment is likely to come to you quickly.


  9. Search Funnels: Microsoft adCenter Labs is offering a great Search Funnels tool that allows you to enter a search term, and then see what people searched on before, or after, they searched on that term. This can teach you an enormous amount about the mind set of your visitors. At it's simplest level you can expose search terms that people are using which you are not covering on your web site. You may want to add coverage for your terms in your PPC campaigns, or by modifying or adding new pages on your site to cover them.

    Search funnels can also show you if your site is not helping people find what they want. For example, if you put your company name in a search funnel and look at what people search on next, and you then see that the next search is the specific brand name of a product on your site, it tells you that the user did not find it on your web page.
This is just a sampling of ideas, and there are many more ways to use analytics tools as a weapon in your business. Smart use of these tools could give you a competitive edge in the business.

If you are interested in more ideas, check out these great blogs / web sites from: Avinash Kaushik, Eric Peterson, Future Now (Bryan and Jeffery Eisenberg), and Jim Sterne. They may provide some additional ideas for applying analytics to your business.