Marketing in the Rear-View Mirror
by Mat GreenfieldI love the definition by Albert Einstein, 'insanity is doing the same thing and expecting a different result'. It's a great concept to bear in mind as the New Year begins. I expect many of you are looking to improve the conversion rates from your marketing, and Einstein tells us that sticking with the same strategy and just hoping for better results isn't the approach favored by the rational.
But before you dive in and begin trying new things, I would suggest that looking to the future should begin by looking at the past. Most website owners will have gathered a large amount of data over the past 12 months, and this is where I suggest your search for future strategies begin.
Most websites site automatically collect data about visitor behavior, etc through a web analytics program. This package may be provided by your web host, or it may be something that you have signed up for independently (Google's new free analytics tool, formerly Urchin, is an example). Your analytics tool allows you to view all sorts of reports on hits, visits, referrers, etc, and probably allows you to slice and dice this data by different time frames.
A Word About 'Hits'
Before we begin discussing web metrics in detail, there's a common misconception that I want to clarify. Many people mistakenly understand the word 'hits' to mean the number of people that visit your website. While I don't have a problem with this in the conversational sense, be aware that your web analytics report has a very different definition of what is a 'hit'.
In the analytics sense, a 'hit' is a request from an IP address to your server. In English, a hit is counted every time your server delivers a file to a web browser. So, if a person looks at your home page, and your home page has 3 images on it, that will count as 4 'hits' (one for the index.html file, and 3 for the images). As that person continues to look at pages on your site, they continue to rack-up 'hits'. A single person spending 5 minutes on your site could trigger hundreds of 'hits'.
The metric that you should be concerned about - the one that indicates how many real people have looked at your site, is 'visitors'.
Got it? Okay, let's get on with the real stuff.
The problem is that most website owners have very little idea about what these numbers even are. If they do, they're not terribly clear on what the numbers are telling them. I?d like to suggest a brief dashboard approach to these metrics, by identifying a few key performance indicators that will not only provide a snapshot of your site's effectiveness, but will spotlight some areas to begin improving.
The basic metrics that I encourage you to begin with are: home page abandon rate, conversion rate, cost per lead, and cost per sale. These numbers are calculated as follows:
| Number of visitors with homepage as exit page | / | Number of visitors viewing homepage as entry page | = | Home page abandon rate (multiply by 100 for percentage) |
| Number of sales or leads | / | Number of visitors | = | Home page abandon rate (multiply by 100 for percentage) |
| Number of leads | / | Complete web costs | = | Cost per lead |
| Number of sales | / | Complete web costs | = | Cost per sale |
I think that cost per lead and cost per sale are fairly obvious to assess - make sure that you're making more than you're spending. A $50 cost for a $25 sale means that you're actually losing money. But home page abandon rate and conversion rate probably need a little more clarification. Here's what these numbers really mean to you:
Home Page Abandon Rate
This is the percentage of people that hit the back button once they get to your home page. I'd suggest that numbers higher than about 35-40% are cause for concern. There are two main causes for high abandon rates; either you have a problem with your traffic, or you have a problem with your home page.
What I mean by a problem with your traffic is that you are sending unqualified visitors to your site - so naturally once they arrive there and realize that it's not what they're looking for, they hit the back button. The solution to this is to more clearly define your target audience, and then be more selective about the traffic that you drive to your site. Sorry to disappoint all those SEO enthusiasts among you, but the goal is to drive qualified traffic to your site - not just any traffic.
Problems with your home page could range from too many links, poor copywriting, to various red flags indicating a low level of professionalism and trustworthiness. The solution may be some minor refinements, or a full site re-design.
Conversion Rate
This number shows the percentage of visitors that turn into a lead or a sale. For an e-commerce site 4%+ is considered a great number. For lead generation sites, numbers in the double digits are considered good (although I have worked on lead gen sites with considerably higher numbers than that). If your site is 'average' (meaning as bad as most other sites out there) then you're probably experiencing about 0.5-1% conversion for e-commerce, or 3-5% for lead generation.
If you find that you need to improve your conversion rate, it's likely that the fix is not a simple tweak here and there. You probably want to go back and clearly define your goals and your target audience and look at your site with a fresh set of eyes.
If you're like me, you've been pondering your marketing goals, plans, and activities for the New Year. This is a great time to re-evaluate ALL of your marketing activities over the past year, and fine-tune your strategy to increase effectiveness and ROI. And remember, let's not be insane about it, okay?
This article was originally printed in Practical eCommerce Magazine.
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