Web Analytics: 101
You can’t manage what you can’t measure. These wise words apply to everything from business budgets to baseball teams. And managing a Web site is no different.
That’s why the field of Web analytics is exploding. Web analytics is the science of collecting information about how many people are visiting your Web site, where they are coming from and what they are doing when they get there. The data can be used to inform new design direction, measure the effectiveness of marketing campaigns and understand how customers interact with your brand.
Tracking this data is a big business — the Web analytics software market has nearly doubled in just the last five years, to more than $600 million, according to IDC, an information technology market research firm. But the world of Web analytics is largely a mystery to the average small-business owner. It deals with highly complex software and algorithms. It uses a language all its own, which is hard for many non-Web geeks to understand.
So, let the demystification begin. First, the basics: Web analytics works by tracking a visitor from the moment he enters your site to the moment he leaves. A Web site accomplishes this by installing a small piece of code, called a “cookie”, in the visitor’s browser. This cookie then tracks that customer every time he visits the site.
Web analytics yields a host of useful information that can help you understand how people use your site, where they go and how they buy. It measures “unique visitors,” or the number of new people that show up on your site. It can tell you their “referrers,” or what site they came from. It can tell you how long these visitors stayed, how many and which pages they viewed, in what order and how often they return. And from that data, you can infer all kinds of things, like how much money you’re spending per click (a simple calculation dividing your investment in the site by the number of clicks), what your sales-conversion rates are (a ratio that measures how many people that visit the site actually buy something) and how different changes you make to the site affect these results.
The number of ways you can slice and dice the data is endless. That’s why Jascha Kaykas-Wolff, vice president of marketing at WebTrends, the Web analytics market leader, recommends doing two things before you do any analysis of your Web site:
1.) Identify your questions and goals: “Before you do anything, the business problem needs to be identified,” says Kaykas-Wolff. “These tools and services don’t solve business problems, they just help you develop a strategy. So you need to decide what it is you want to know.” You might be wondering what your questions are. Some simple ones: How many people are visiting your site? How long are they staying? What is their “click path” (What pages do they visit and in what order)?
2.) Commit to action: “If you’re going to go down this road, you’d better be willing to make changes based on the information you have,” says Kaykas-Wolff. “If you’re not going to let the data direct you, getting the numbers will be useless and possibly costly.”
After completing these steps, you’ll have a better idea of what information you need to collect and how often you’ll need to analyze it. Kaykas-Wolff says the most common mistake that Web analytics reveals to WebTrend’s clients is “misappropriation of resources,” describing companies that spend a lot of money hiring Web designers only to find later they missed the mark. “They often find the approach they took does not work on the Web,” says Kaykas-Wolff. “You have to be very nimble on the Web … Don’t build a massive Web site, and then find out it’s all wrong.”
There are many different Web analytics services. Some are free or very cheap, like Google Analytics, or Yahoo! Web Analytics. Others are more expensive and sophisticated and offer advice to accompany the data, like WebTrends. Whichever service you choose, make sure you know what you’re looking for before you start.
That’s how you’ll get information you can really use.
Dan Briody is the author of two books and is the former Executive Editor of CIO Insight Magazine, a leading publication for information technology managers. He is also a frequent contributor on technology topics for Wired, Inc. and Business Week magazines.