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Web analytics

What is it?

Web analytics is the process of analysing online behaviour so as to optimise website use and increase engagement and sales.

There are two types of web analytics – off-site and on-site. Off-site web analytics looks at what is happening on the internet as a whole and includes the measurement of a product or service’s potential audience, competition and online trends. On-site web analytics is the analysis of your own website. This includes collecting data on how many people visited the site, where they came from, how long they stayed, how they navigated the site and whether the visit resulted in a sale. Off-site web analytics is useful for assessing the market and opportunity whereas on-site is useful for measuring commercial results.

Why does it matter?

Web analytics matters because online sales in just about every industry are increasing. More and more people are connected to the internet via a computer, tablet or Smartphone, which creates a significant online opportunity for just about every business. Most companies have a website but having one is not enough; you need to know how effective it is. Web analytics can tell you. If the results show that your website is not performing then it is also fairly easy and quick to conduct market research with your customers to either ask them what they want or test some changes to see what elevates performance. For example, you could test new landing pages on your site to see which one attracts more visitors or leads to more sales.

Plus web analytics is an incredibly cost effective and immediate way to test marketing ideas. Traditionally, when using direct marketing for example a campaign may include a number of different versions to see which version performs the best. That version may then be used as the control and new campaigns would test against that approach to see if response rates could be improved. Now marketers can test campaigns, offers, pricing or headlines online prior to a TV, print or direct marketing campaign to identify the best performers before spending all the money in production.

When do I use it?

It’s probably enough to conduct off-site web analytics once a year unless you operate in a particularly volatile market. The off-site analytics helps to measure trends in your industry so you can be alerted of changes in plenty of time to adapt your offering.

On-site web analytics should be conducted constantly so you know how many visitors you are attracting to your website and what they are doing once they get there.

It can also be beneficial to test various offers and marketing campaigns online before they go live on other more expensive media. For example, you could test your TV ad online to gauge response. Although the costs are still applicable for making the ad, most of the real cost is spent airing the advert on TV – being able to predict response ahead of that investment is very useful.

What business questions is it helping me to answer?

Web analytics help you answer business questions such as:

  • How many people are visiting our website?
  • Who are the visitors to our website?
  • How do visitors find our website?
  • What search terms do people use to find our website?
  • What pages are they visiting?
  • Are there any pages that are not being used that could be deleted?
  • How long do visitors stay on the site?
  • What is the conversion rate from visitors to sales?
  • What are the online trends in my industry?

How do I use it?

There are many web analytics tools and service providers, although Google analytics is probably the front-runner. What’s brilliant about these tools is that you just have to set up what you want to measure and asses and the tool will do all the work for you.

So while you could easily create your own tracking tools and embed them into your website, for example, it just doesn’t make sense anymore. The tools are already available and most of them are also free so wasting time and money re-inventing an already very accurate and sophisticated wheel is not a good use of your resources.

There are also tools such as CrazyEgg which shows you what parts of your website are ‘hot’, ‘warm’ or ‘cold’. Hot and warm areas of the site indicate where customers are visiting and staying. Cold areas are where there is no traffic or the customer quickly leaves. These insights can therefore help you to refine your online presence and give your customers more of what they demonstrate they want and less of what they demonstrate they don’t want.

Practical example

As you might expect online search engine Yahoo! Inc uses web analytics to impact revenue and profit. As one of the most popular search engines in the world Yahoo! receives millions of hits to its home page every hour. As a result, they have access to a massive amount of data that allows them to test new hypothesis or assumptions very quickly. For example, Yahoo! wanted to know whether alterations to their home page would change visitor behaviour and if so how.

They devised an experiment where they randomly assigned several hundred thousand users to an experimental group, leaving the rest as the control group. This allowed them to establish whether or not the changes to the home page resulted in the anticipated or desired behaviour change or not. The insights gained from this experiment allowed them to optimise their offerings to all users and therefore enhance revenues and profits. Plus the results of these experiments were often visible within minutes, making them an extremely dynamic tool for shaping company strategy and direction. The speed of accurate feedback together with minimal disruption and low cost mean Yahoo! typically runs about 20 experiments of this type at any given time.

As well as being cost-effective and immediate, Yahoo! also benefit because they are able to cut out all the lengthy discussions about website design and layout because it’s the evidence-based results that drive behaviour and strategic direction and not personal preference, consensus or even a dominant opinion.

Tips and traps

The real value of web analytics emerges if you continue to do it and can see how your online performance is changing over time. It is also a fantastic way to run market research without running market research. If you try something online – if it doesn’t work you change it. There is nothing printed or distributed, no man power on the streets asking questions – all you need to do is try something, assess the response and try something else.

Plus be sure to check out your competitor’s website too and compare your web performance to your competition. And there are a range of ways to do this (see references.)

The biggest online trap is building a website and leaving it. If you don’t run analytics you won’t know if it’s working or not. And even if it does work if you don’t run analytics you won’t know why, so you may be even more reluctant to change it because you won’t know why it’s working. Web analytics is absolutely essential in the commercial online world.

Further reading and references

For further insight into how web analytics can help your business see for example:

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