Analyzing Your Website Statistics – Part II

What the data tells you

In the first part of this article, I discussed the basic tools that should be included in any website traffic statistics package. Here I will continue by discussing those tools that are not often found in basic services, but are critical to obtaining a thorough knowledge of your e-business and where it is going.

High Power Tools:

ROI (Return On Investment) aka Sales Tracking:

Since in any business, we are most concerned with Sales and how to increase them, this is the most powerful tool available. It is amazing how many website statistics services and software do not even mention it, much less provide the information. Somewhere around 75% of all websites do not track sales, although the number is now beginning to decline.

It is simple to implement a simple tracking system on your own, but it is very important that your website traffic analysis service provide you with certain key information. Unfortunately, most services do not.

You need the following information to be provided by your Web Stats service:

Total Sales (Units and / or $)
Number of New Visitors
Number of Return Visitors
New Visitor Sales
Return Visitor Sales
Total Units Sold
Conversion Ratio
Drop-out Rate

In addition, you should be able to see a list of all sales by IP address, referring pages, number of visits before purchasing, the amount of time on site and a number of other items.

Total Sales

This is a unit count based on the number of times that your ‘Thank You’ page gets hit. This page is only accessed after a sale is made, so it is easy to spot among your other statistics. But it becomes ultra valuable when combined with visitor information.

Again, this should be compared to the prior period to evaluate progress. This number is actually representative of your site’s overall success.

If your ‘stats service doesn’t provide this data, you could dig it out of your other site stats on your own. But since you are paying for a website traffic analysis service anyway, you might as well get it in the package. You have enough to do already.

Number of New Visitors and
Number of Return Visitors

It is very important to be able to see the number of sales from Returning Visitors against New Visitors. You may be surprised to see how many visits a person makes before the ‘Buy’ decision is made. In fact, the bulk of your sales will probably be from return visitors.

Be sure to carefully examine the pages they visited prior to making the purchase for clues as to what caused the final ‘Click’ that made you money.

You should also be able to watch the referring page for each sale. This will be used later to tell how well your ad campaigns and affiliate programs are working.

Conversion Ratio

For any number of visitors, you will make a sale. This ratio, Visitors to Sales is known as the Conversion Ratio. This is the basis for all sales analysis. Combined with your Ad Tracking module, it will tell you how effective all of your efforts have been, and how efficiently your money is being spent The closer the ratio gets to 1:1 the better you are doing. This number may also be presented as a simple decimal number, such as .0175 or something like that. In this case it would mean that 1.75% of website visitors bought your product.

You will see the conversion ratio used again in another context when we examine Ad Tracking.

As in all our other analysis, we again want to monitor current sales against previous sales and note the increase or decrease. Shifts in the conversion ratio are very important, so if this number drops, it is time to locate the reason using your other tools to head off trouble. Watching it increase will tell you that you are on the right track.

Drop-out Rate

The Drop-out Rate is the ratio between the number of people starting the sales process and the number of people actually finalizing the purchase. It is surprising how many people will abandon the sale at this point.

Incredibly, something like 71% of websites do not even monitor this valuable statistic, even though 66% of customers report abandoning the purchase before completion.

The primary reason for drop-outs is that the sales process is too complicated, or something is required that the customer finds offensive. Navigation problems is another reason.

Trend Analysis and
Percentage of Change

These two items don’t really stand alone, but should be part of many of the other modules in your e-business arsenal. I mention them separately because they will give you the clearest understanding of your current position. Unfortunately, not many services provide these numbers.

The Trend Analysis is usually drawn as a line on a graph. An upward slant shows that the item under evaluation is improving, while a downward slant implies the opposite.

The Percentage of Change is the real meat of any analysis package. It not only tells you where you came from and where you are going, but how fast. You will know instantly that not only have sales grown, but by how much.

Ad Campaign Tracking

Ad Tracking is very similar to Sales Tracking, but with some differences. First, the setup is usually done a bit differently. Your ad link is pointed to a special tracking page, or a special code is added to the end of the URL string so that the particular advertisement can be tracked. This is then simply combined with your other analysis tools, including Sales, for the final result.

You should be able to see the following information from your website traffic analysis provider:

Entry Page
Referring Ad
Number of Hits for both the Current and Prior Time Periods
Number of New Visitors
Number of Return Visitors
Conversion Ratio

These may or may not be combined with Sales information to show which of your ads led to Sales rather than just visits. However, most Ad Campaigns are just meant to drive the greatest number of qualified visitors to your site. If the visitors have been targeted effectively, the sales figures will follow.

When some vendor guarantees you ’10,000 hits per day to your site’, you can use these numbers to see if the expectation matches the reality. Here is proof positive of your ability to draw in new visitors.

Using these numbers is very easy. See how many hits each of your ads generates. Get rid of those that are not performing well and move your money on to other areas.

Entry Page
Referring Ad and
Number of Hits for both the Current and Prior Time Periods

The entry page can be any page on your site, but usually it is a sales page. The referring ad is sent along as part of the URL. This is a unique number attached to each advertisement. By reviewing each of these pages, you can identify which ads are driving the most traffic to your site.

Watching the increase or decrease in the number of hits over time will tell you when an ad is playing out. Comparing the numbers various ads and layouts will show you the effectiveness of each.

Number of New Visitors and
Number of Return Visitors

It is important to be able to separate new and returning visitors in your ads. Most hits will come from first-time visitors, but when return visitors come from your ads you know that the ad is believable to the customer. In other words, it has credibility. It also shows that potential customers are actually remembering and seeking out your ad. Note the ratio between these two numbers.

Conversion Ratio

The conversion ratio is sort of the magic number of advertising. This measures how many visitors to your site actually became customers. Ratios vary widely from industry to industry, but what we are watching is the change over time.

As stated many times before, compare this number with the prior period and look for changes. Your ‘stats service should provide you with a separate conversion ratio for each ad.

Affiliate Tracking:

Better than search engines! Originally I frowned on this marketing method as being nothing more than a pyramid scheme, but it is simply not true. These are nothing more than commissioned sales people working for you.

Many companies report that they get more traffic and sales from their affiliates than they do from search engines! There are even companies that derive all of their business from nothing but affiliates.

One reason for their success is that visitors from an affiliate site are pre-qualified. That is, they come specifically to see and purchase your products. It doesn’t get much better than that.

Use the same techniques and services as in the Ad Campaign section above to evaluate the success of each affiliate.
So there you have it. In two major sections we have looked at some very powerful tools that can make or break your e-commerce business. If you are operating without the benefit of these tools, you are trying to run a race with one foot in a bucket and a bag over your head. It would be hard to imagine how you could do worse.

To recap a bit:

We have looked at:

The Basics:

Overall Traffic Summary
Visitor Statistics
Pages Visited
Search Engines
Keywords and Phrases
Browsers, cookies and other technical data

And the Gorilla Marketers’ tools:

The Power Tools:

ROI (Return On Investment)
Sales Tracking
Conversion ratios
Drop-Out Rate
Ad campaign tracking
Trend analysis
Affiliate Tracking
Trend Analysis
Percentage of Change

The first group of tools is the minimum you should have. They will cover the essentials of monitoring your website, and if well presented, will not cost you heavily in time. The second can actually save you time and money by providing data that you would otherwise have to hire outside or add staff and overhead to accomplish in house.

In either case, don’t leave home without them.

I hope that you have found this article informative and useful. If you have comments and suggestions, I would love to hear from you. I can be contacted at will@webstatsgold.com

Regards,

WG Moore

Bio and Shameless Self-Promotion:

WG Moore is a long-time international businessman, programmer and website developer. He has worked and provided services in such diverse places as Mexico, Canada, Germany, Singapore, China and many others. He is the author of the Web Stats Gold Analysis package and Managing Director of webstatsgold.com a statistics and analysis service that provides most, if not all, of the tools and services discussed in this article.