Well if you are, I bet I can guess how long you’ve been a customer…

…alright, I know there is no way I can guess how long you’ve been a subscriber, but the odds are you’ll only stay on for 25 months. How do I know that? Based on their lifetime value metric, an average Netflix subscriber stays on board for 25 months. And according to them, the lifetime value of a Netflix customer is $291.25.

The reason that number is important is because it helps Netflix determine how much they can spend on a customer… from overhead to marketing.

Note: Netflix has recently lost subscribers as a result of some poor decisions related to their brand (Qwikster) and their business model. Regardless, we believe that Netflix is a great case study to help you understand the power of customer analytics.

The Importance Of Lifetime Value

If you signed up for Netflix right now, on average you would have to pay $11.65 a month. Over a course of 12 months, you would have spent $139.80.

If you were Netflix, would you be willing to spend $150 on a customer? Assuming that your overhead isn’t too high, paying $150 per customer can actually be very profitable. As I mentioned earlier, the lifetime value of you, as a paying customer, is almost $300… they just don’t get all of the revenue upfront. They get it over a course of 25 months.

Let me explain… at $139.80 in revenue during year 1, Netflix would be losing money. Assuming they paid $150 to get you, they would actually lose $20.2. But because on average a customer stays for 25 months, they still could make money off of you… just not in the short run.

Lesson #1: You shouldn’t be afraid to lose money in the short run, if you can make up the money plus more in the long run. But before you determine if it is worth losing money in the short run, you need to know the lifetime value of your customers. Without that number it’s impossible to optimize your profit.

Maximizing Lifetime Value

Every customer isn’t equal. And in the case of Netflix, this is especially true. Why, you ask? Well some customers won’t stay on board for even a month while others may stay on for 5 years or never even cancel…

There are a lot of reasons that each customer is different… and why some may stay on longer than others. And of course, as a business, Netflix ideally wants every customer to stay as long as possible.

By tracking each and every customer individually, Netflix can optimize their lifetime value. For example, they know that if you don’t continually rent movies, you’ll cancel sooner or later. Because of this they added features like a queue where you can create a list of all the movies you want to watch. So after you are done watching a movie, they keep on sending you more discs because you’ve told them what you want to watch. This is much more efficient then having you login every time after you finish watching one movie and asking Netflix to send you another.

To go one step further they know that customers are impatient and some customers cancel because they don’t like waiting for movies to arrive in the mail. Due to this they’ve added a feature where you can stream movies on the web, which not only satisfies your movie urge, but it keeps you busy while you are waiting.

By tracking these stats and behavior, Netflix has reduced their churn to 4%.

Lesson #2: By tracking the specific events and actions your customers are taking on your website you can determine steps or features that will cause people to engage more. And what you’ll notice is that users that engage more are more likely to be happier customers, which means they’ll pay for your services for a longer duration of time. To maximize your revenue per customer you can’t just track them in one big bucket, but you also have to track each individual customer.

Customer Acquisition

Since Netflix knows their customer lifetime value, and has fine-tuned their product to reduce churn, they can spend a decent amount of money on marketing. For example, they currently pay affiliates $16 for every customer they bring in.

Although that may seem like a small amount, it isn’t. Netflix offers the first month for free to any new customer… which means affiliates are getting paid $16 for every free customer they are driving. Whether a customer stays on board after the free month or cancels, they are getting paid $16.

Of course if a percentage of customers didn’t stay on, they couldn’t keep on offering affiliates $16 per signup. Or even spend $2 for every click from their Google AdWords campaign, but because they know their lifetime value metrics well – they can keep on dumping money into marketing.

Lesson #3: Spending on marketing is a great way to grow your business, but you shouldn’t spend too much money unless you’ve fine-tuned your business model. Knowing the lifetime value of each customer or what causes customers to stay longer than others isn’t enough.

You need to understand the lifetime value of customers who come from different marketing channels. This will help you determine how much you can acquire customers for from each channel, not just based on the first month revenue or first purchase they make, but based on the actual long term revenue potential of customers from each of your marketing channels.

Conclusion

If Netflix didn’t know the lifetime value of their customer, they wouldn’t be as large as they are. Acquiring customers in the video rental space isn’t cheap and in many cases the cost outweighs what the company will make in the first few months, if not an entire year.

But like any smart company, they aren’t afraid to spend money because they know their numbers down to the penny. Now the real question is, do you know your numbers?

If you do, then good job on being diligent and doing your homework! If not (or if you want to make your life easier), fill out the form below to learn how KISSmetrics can help you understand your customer lifetime value.

Photo Credit: Beauty Redefined

About the Author: Neil Patel is the VP of Marketing of KISSmetrics and blogs at Quick Sprout.

Track Goals & Conversions

If you have read any of my other posts on Google Analytics*, you might notice how I continuously mention setting up Goals. This is because Goals are the purpose of your website’s existence. If you aren’t measuring what leads to the completion of goals on your website, then you are missing out on the most actionable metrics on your website.

Goals can be anything you choose. They can be:

• The purchase of a product
• The completion of an email list sign up
• The download of a whitepaper
• The click of an external link

To set up a goal, simply go to your website’s profile in Google Analytics and click on the settings wheel icon. Here, you will see a tab for Goals.

Click on the +Goal link to begin adding goals. Enter a short, descriptive name for your goal, then select the goal type. The two most useful types are the URL Destination and Event Type.

The URL Destination Goal Type (as shown above) allows you to tell Google Analytics that a goal has been completed when a visitor on your website lands on a specific page. In the above example, if you have a thank you page for subscribers when they sign up for your mailing list, then that URL would be the Goal URL for a goal showing a completed mailing list signup. The URL Destination Goal Type also works great for a thank you page for a contact form submission.

The Event Goal Type (as shown above) allows you to tell Google Analytics that a goal has been completed when a visitor on your website clicks on a particular link or button. This is used when there is not a final destination URL on your own site. In the above example, if you are selling a product that is not on your website, you would add the bolded portion to the HTML code of the link leading to the offsite sales page as shown below.

<a href=”http://salespage.com/” target=”_blank” onClick=”_gaq.push(['_trackEvent', 'Category', 'Action', 'Label']);”>

The parameters in the event tracking script correlate to the Category, Action, and Label needed in the Google Analytics setup. The Event Goal Type also works great for any goals that are completed when a user clicks a button, such as the submit button of a form, download button for a free report, play button of a video, or other action. For a button, you would add the bolded portion to the HTML code of the button.

<input name=”submit” type=”submit” onClick=”_gaq.push(['_trackEvent', 'Category', 'Action', 'Label']);” value=”Submit” />

Actionable Data from Goals

Once you have set up goals, you can peruse the following areas of your Google Analytics to discover more about your most treasured people – those that are completing goals and conversions on your website. To see the following metrics based on goal completions, click on the Goal Set you wish to view under the Explorer tab.

• Under Audience > Demographics > Location, you can use your Goal Sets to see what countries, regions, and cities lead to the most goal conversions. Use this data to determine what locations to target for online advertising through Google AdWords, Facebook, or other networks.
• Under Traffic Sources > Sources > All Traffic, you can use your Goal Sets to see what traffic sources bring the highest converting visitors. Use this data to find out which traffic sources to focus on for the most targeted traffic.
• Under Traffic Sources > Sources > Search > Organic, you can use your Goal Sets to see what keywords converting visitors use to find your site. Use this data to choose which keywords your website should be focusing on in your SEO strategy.
• Under Content > Site Content > Landing Pages, you can use your Goal Sets to see what landing pages lead to the highest conversions. Use this data to decide what content topics to use on your blog or other pages to lead to more conversions.

Analyze Conversion Funnels

If you have a shopping cart on your website, you can learn about any issues with your checkout system using conversion funnels. These are set up using the URL Destination goal type shown earlier with the exception that you go further by checking the Goal Funnel box. In this section, you will enter the pages that relate to your shopping cart checkout process.

With a conversion funnel, you can visualize the number of people who have started using your checkout system, how far into the process they go, where they exit, and the overall percentage of completions from start to finish.

Actionable Data from Conversion Funnels

Once you have set up a conversion funnel, you can ask the following questions to begin working on an action plan to increase your conversions.

• Where do the most amount of people exit during the checkout process? Be sure to test your checkout process carefully. Also consider evaluating specific pages to see what it is that makes people decide to leave. Can this part of the process be made easier?
• What pages do people go to when they exit? Be sure to take a look at these pages to see if they instill visitors with confidence in your business which should hopefully lead them back to the shopping cart.
• Do people exit the checkout process to visit your return policy page? If so, perhaps adding a short summary of your return policy on the checkout pages might keep people in the shopping cart.
• Do people go back to the same product sales page from which they entered the shopping cart? Maybe some additional details about the product should carry over through the shopping cart process.

Use Advanced Segments

Advanced Segments in Google Analytics allow you to see all of your data based on a specific piece of criteria, such as a particular traffic referrer, demographic, or even one piece of content. To create an Advanced Segment, click on the Advanced Segments tab and then the +New Custom Segment.

First, you will enter a short, descriptive name for your segment. Then you can use the dropdowns to select what dimensions of data to include or exclude from your segment. Click on the Preview Segment button to see if you are getting the right data, then the Save Segment to finish.

Actionable Data from Advanced Segments

In our previous article, we talked about using your traffic sources data to find out which online marketing strategies are driving the best traffic to your website. You can take Advanced Segments further to include the following actionable data.

• Find out where the highest converting visitors are from using your Goals, then create an Advanced Segment for visitors from those areas using the location dimensions (Continent, Country/Territory, City, or Region). Use this segment to learn more about visitors from those locations including the top traffic sources that bring them to your website, what content they visit the most, and more. Use this data to find out what traffic sources to focus on and what content to create to cater to your most converting audience.
• Learn everything about the behavior of visitors who enter your site using a particular keyword by creating an Advanced Segment using the keyword dimension. Create multiple segments for different keywords and view them simultaneously for comparison. Use this data to find out if you are targeting the right keywords.
• Have you recently run a huge promotional campaign directed towards one page on your website? Create an Advanced Segment using the Page dimension and the page’s URL (everything after http://domain.com/). Then you can view all of the Analytics data for that page only to see which promotion types (social media, press releases, blogger outreach, etc.) brought in the most traffic. Use this to learn what types of promotion to apply to future campaigns.
• Want to know what new visitors to your site do compared to returning visitors? Create two Advanced Segments using the Visitor Type dimension – one containing New Visitor and one containing Returning Visitor. View both segments simultaneously to compare Analytics data. Use this data to see what content new visitors are most attracted to and returning visitors can’t get enough of so you can create more of both.

*Other (and highly recommended!) Google Analytics Posts

• A Beginner’s Guide to Google Analytics 5 (by Cameron Chapman)
• 9 Awesome Things You Can Do With Google Analytics 5
• 50 Resources for Getting the Most Out of Google Analytics
• What Your Analytics Software is Hiding From You
• What You Can Learn from Bounce Rate & How to Improve It
• How to Find Out Which Online Marketing Strategy Drives the Best Traffic
• How To Use UTM Parameters In Google Analytics 5
• The 2012 Guide to Google Webmaster Tools – Google Analytics Integration, +1 Metrics, and More

What other actionable metrics, data, and analysis do you get out of Google Analytics using Goals, Funnels, and Advanced Segments? Please share your strategies in the comments!

About the Authors: Kristi Hines is a freelance writer, professional blogger, and social media enthusiast. Her blog Kikolani focuses on blog marketing for personal, professional, and business bloggers. You can follow her on Google+, Twitter, and Facebook.

Setting Up Your Website with Webmaster Tools

If you haven’t already, the first thing you will need to do is set up your website with Webmaster Tools. To do this, visit the Google Webmaster Tools website, sign in with your Google Account – preferably the one you are already using for Google Analytics. Click the red Add a Site button to begin.

Next, you will have to verify this site as yours. Previously, this involved having to embed code into your website header or upload an HTML file to your web server. Now, if you already have Google Analytics, you can verify your site by connecting Webmaster Tools to Google Analytics. To do so, click on the Alternative Methods tab when verifying ownership. Then select the Use your Google Analytics account option.

Once your site is verified, you will want to submit a sitemap if you have one available. This is a simple XML file that will tell Google Webmaster Tools what pages you have on your website.

If you have one already, you can usually find it by typing in http://yourdomain.com/sitemap.xml to see it in your browser. To create a sitemap if you don’t already have one, you can use online tools like XML Sitemaps. If you are running a website on your own domain using WordPress, you can install the Google XML Sitemaps plugin. Once you have activated the plugin, look under your Settings in the WordPress dashboard and click on XML-Sitemap. Click on the Click here link to build your sitemap for the first time.

Right click on the sitemap link and copy the link address.

Then paste the portion of the URL after the http://yourdomain.com/ of your website into the box to submit your sitemap to Google Webmaster Tools.

It may take a few days for Webmaster Tools to start pulling information about your website if you are setting up your website on Webmaster Tools for the first time. Be sure to wait a bit, then continue on to see what you can learn from Webmaster Tools.

Valuable Information within Webmaster Tools

Once you have data in Webmaster Tools, you will be able to view the following about your website. These are only the highlights of new types of data within Google Webmaster Tools and the most important data you should always remember to check on occasionally.

Dashboard

When you visit your website in Webmaster Tools, you will first come to your dashboard. This is an overview of the important data within Webmaster Tools. You can visit specific areas such as your Search Queries, Crawl Errors, Incoming Links, Top Keywords, and Sitemaps from this screen by clicking on the applicable More links. You can also navigate to these areas using the menu in the left sidebar.

Site Configuration

In the Site Configuration section of Google Webmaster Tools, you can view the following important information.

Sitemaps

Here, you will see information pertaining to your sitemap. If you notice the last date your sitemap was downloaded is not recent, you might want to submit your sitemap to refresh the number of URLs submitted.

Sitelinks

Sitelinks are the extra internal links from your site shown below it in search results. If you Google KISSmetrics, for example, you will see their listing plus an additional six top links from this site.

Unfortunately, you can’t specify which pages you want to show up in sitelinks. If you notice one that you absolutely do not want under the sitelinks, you can demote it in this section of your Google Webmaster Tools.

Your Site on the Web

This section includes important data about search queries, keywords, and incoming links that are driving traffic to your website.

Search Queries

The Search Queries section of Google Webmaster Tools shows you the top keyword searches in which your website appears and shows the impressions vs. clicks, average position, and change in position. Why is this now more important than ever? So far, it doesn’t look like it is affected by the not provided keyword trend which leads to missing Google Analytics data. You can click on each search query to see which pages on your website rank for that keyword or phrase.

Links to Your Site

Curious about your backlinks? Google Webmaster Tools shows you the domains that link to you the most as well as the pages on your website with the most links. This is probably the most comprehensive listing of your backlinks that you will find, for free at least.

Keywords

This section shows you the keywords Google believes to be the main subject matter of your site. If these do not fit with what you want your site to be known for, you might want to look at the number of times you are using these words on your website. You can click on each keyword to see why Google believes it is important.

+1 Metrics

If you don’t already have the +1 button installed on your website, you better make it a point to install it. Google Webmaster Tools now tracks metrics related to the +1 button activity on your website and its impact in your search performance in the following sections.

Search Impact

This section shows you the impact of click through rates with +1 annotations in search vs. without.

Activity

This section shows you the rate of +1′s you receive on your site vs. on other sites. Be sure to change the selection at the top to show All +1′s to get the best data.

Audience

This section, if you have enough +1′s, will show you demographics about people who +1 your site including age, gender, and location. Unfortunately, I don’t have enough +1′s to show Audience data, so I snagged the above screenshot from Distilled’s recap of Analytics & Webmaster Tools changes.

Diagnostics

While there is a lot of valuable information in this section, the area I find myself using the most is the Crawl Errors.

It’s never good to have broken links on your website. When you click on the Not found link, you will see all of the pages on your website that result in a 404 page not found error and how many external pages are linking to them. If you have a lot of them, focus on redirecting the ones with the most incoming links.

Labs

Webmaster Tools Labs are sections where they are testing data. According to their own disclaimer, they may change, break, or disappear at any time. Some interesting data currently shown includes Author Stats for pages on your website where you are verified as the author by your Google+ profile. Also, there is a Site Performance section that tells you how long it takes your site to load and shows you some potential problem pages.

Integration with Google Analytics

Remember the Search Queries section mentioned above? You can view this within Google Analytics by going into your website profile and looking under Traffic Sources > Search Engine Optimization > Queries. If you haven’t set up data sharing between Webmaster Tools and Google Analytics, you might see this message.

Simply click on the Set up Webmaster Tools data sharing to configure this option. You will be taken to your website’s Google Analytics settings. Click on the Edit link under Webmaster Tools Settings.

On the following screen, select the website within your Webmaster Tools to link to your Google Analytics account.

When you click save, you will then be taken back to Google Analytics where you can click Apply to finish. You will now be able to see the following under Traffic Sources > Search Engine Optimization > Queries.

You can also see your top landing pages within search plus the geographical summary of people who see your website within search under the Search Engine Optimization section of your Google Analytics.

Do you use Webmaster Tools? What areas do you find most useful? Please share your thoughts in the comments below, and happy data analyzing!

About the Author: Kristi Hines is a freelance writer, blogger, and social media enthusiast. Her blog Kikolani focuses on blog marketing, including social networking strategies and blogging tips.

There’s one thing that drives me crazy about running a website.

I have no idea who’s looking at my site and what they’re doing.

Sure, Google Analytics provides some statistics that reveal insights about what people are doing when they land on my site. It shows the number of unique visitors, the pages that are the most popular, and what the total traffic is for the month.

And if you really know what you’re doing, there’s a lot of valuable info to be gleaned.

But Google Analytics is also limited. Even though I know how to use it, I still feel like I’m flying my site blindfolded. Yes, I know that 300 people visited my site yesterday, but…

What exactly were they doing?
What were they looking for?
Did they find what they wanted?
Were they confused by anything?
And most importantly, why didn’t they make a purchase?

When it comes to these kinds of questions, brick-and-mortar shop owners have a huge advantage over digital storefronts.

Why? Because they can talk to their customers, and they’re able to have a conversation with the people who are interested in buying.

Because of this conversation, they learn a lot over the years. They learn the main reasons people decide to purchase, they learn what the purchasing hurdles are, and they learn how to overcome those hurdles.

Can this be done online? Is it possible to stop guessing about what you think customers are looking for and ask them directly instead?

The answer is yes, and it starts with a simple tool called KISSinsights.

To learn more about the tool and how businesses can benefit from using it, I recently interviewed Sean Work, a member of the KISSinsights marketing department. Here’s what he had to say about the valuable ways to use KISSinsights:

Question 1: Why would a business want to use KISSinsights software?

There are many types of businesses that can use KISSinsights. I believe KISSinsights works great for all types of businesses assuming they own and operate a website. The first and most obvious are online businesses, e.g., subscription based and ecommerce. I’ll get into other types of businesses later.

Let me start by quoting one of our favorite slogans that sums up KISSinsights:

“KISSinsights helps you get the feedback you need that Analytics can’t tell you.”

And on that note, the key to really getting better business performance is to collect qualitative feedback from your customers. The quicker and easier you can do that, the faster you can make useful changes to your offering and services.

Pure numerical feedback is great because it gives you the pulse of how your business is doing. But the language people use to describe their problems, and more importantly, to describe their perception of your business is where the light goes on. This is the golden feedback that numbers can’t tell you. Asking your customers questions is a very enlightening process that every business should spend time doing.

My favorite thing you can do with KISSinsights is to ask this particular question to users who have just signed up for your product or service:

“Why did you choose to sign up with us?”

To me, the results you get from this feedback is the most valuable language you can get: when a newly paying customer tells you in their own words, why they chose to do business with you. They have just given you the magic “keywords” that will hopefully resonate with other prospective customers.

That language can now be used in advertisement copy, sign up copy, home page copy and so on.

The other thing is you learn what it is about your product or service that is attractive to your customers. Sometimes what you think is the number one key offering of your product or service happens to be the 5^th  or 6^th most important benefit on your customer’s list. You’ll find shocking reasons about why customers actually chose your service – things you would have never thought of before. And knowing this information gives you the power to make better business decisions moving forward. It removes all of the guesswork.

Think about it this way, if you own a website and you don’t know why people are signing up for your service, how are you going to solve that problem? You can sit there and perform guesswork by building new home pages and sign up pages, running tests and hoping you can see some increases in sign up performance. Or you can ASK your customers specific questions to get to the root of the problem.

I tell everyone who is interested in KISSmetrics (our web analytics service) to get KISSinsights (our simple and powerful survey software) to really synergize their efforts. The combo of the two products becomes a very powerful tool.

For those looking to use KISSinsights on a corporate website, you can use the Net Promoter Score feature to get more information on the only metric that needs improvement (according to the Harvard Business Review), or you can use it to get higher level feedback like, “What is your perception of our company?,” or “Do you think XYZ corporation has a high standard of ethics?,” or simply, “Why did you visit our website today?”.

I honestly think every company should be using KISSinsights to keep in touch with their customer base. Having constant feedback about your company from real customers can be very useful when making leadership decisions.

Question #2: What benefits does it provide?

Here’s a shortlist of some the benefits KISSinsights provides:

• An easy way to get customer feedback or support questions.
• It allows you to obtain the language people use to describe your business in their own words.
• KISSinsights is very non-intrusive to online visitors.
• It’s extremely customizable. You can select what pages, users, times of day, and frequency to show your surveys and feedback forms.
• It’s very easy to install and use, requiring the most basic skillset of web development understanding.

Question #3: What are some examples of the ways that businesses have used it?

In the case of the KISSmetrics blog, we’ll create a KISSinsights survey to ask our readers what they want us to blog about in the future. This has become a great way to keep providing content that our readers want.

About.me used KISSinsights to build a better product video. They asked a simple question to their current users “What do you use your About.me profile for?” Learning what their most loyal customers use About.me for, they were able to build a better home page video that spoke to prospective users by using the language that spoke to their target demographic the best, resulting in more sign ups.

OfficeDrop was another company that used KISSinsights to expand their business. In 2010 they had expanded their product offerings but were not seeing an increase in sales. Using KISSinsights they learned that their pricing page wasn’t clear, and they were able to fix that problem by learning from KISSinsights responses.

Question 4: What were the results in these examples, i.e. how did the businesses make more money, convert more sales, etc.?

Case #1: About.me (details can be found here: http://blog.kissmetrics.com/build-a-better-product-video/)

In the About.me case, they were about to build a home page video that missed two really important use cases. They were about to create a video based on assumptions of why they thought their product was useful to people (which is what 99% of businesses do – they just go have someone else make a video for them without finding out what their customers use their product for first).

Thanks to KISSinsights they were able to figure out what the top use cases actually were by getting the answers from real customers!

Case #2: Office Drop (see more details here: http://blog.kissmetrics.com/1-2-punch-for-increasing-conversion/)

Office Drop managed to make a 15% initial increase in visitors from their pricing page to their registration page, and with a bit more elbow grease, they were able to get a 40% increase in overall sign ups.

Question 5: What are some of the best surveys that can be conducted to gain the most valuable insights from customers?

The first thing I want to mention is that KISSinsights is very powerful – you really want to open up your mind to creative ways to use KISSinsights. I guess I would say this: start with a problem, and think of how real customer feedback can help you out.

If you’re not getting enough sign ups, ask your visitors “Is there anything that is not clear on this page?”

Again, if you you’d like to know why people decided to register, you can ask newly registered customers “Why did you decide to join today?”

In certain cases a KISSinsights survey that says “Would you like someone to call you to discuss the benefits of our software (or service or whatever)” might be a very helpful way to get more sales.

I hate to sound cliché, but really with KISSinsights the possibilities are endless. It’s the perfect tool to help you polish and perfect all your website inefficiencies.

Question 6: How easy is KISSinsights to install?

KISSinsights is very easy to install. If you have installed Google Analytics then you will have no problem installing KISSinsights. You simply paste a javascript snippet in the header of every webpage on your website.

Question 7: What else do people need to know in order to get more out of using KISSinsights surveys?

There are some ways to make KISSinsights more subtle and not annoying. You can delay the survey so that it doesn’t pop up right away. You can also only put it on certain webpages (and omit other pages) so that it’s not always popping up in front of users. You can have it just display once, etc. There are a multitude of ways to customize it’s frequency and visibility so that it’s less intrusive.

You can also provide a custom thank you message that gives people a coupon or encourages them to “like” a Facebook page after they fill out the survey. This is a great way to add a personal touch to the survey while also creating an effective call to action for a next step.

And that concludes the KISSinsights interview. If you haven’t tried it yet, head over to KISSinsights.com to sign up and begin using KISSinsights to learn valuable information about your customers.

About the Author: Joseph Putnam is a freelance copywriter from Orange County, CA who helps businesses write compelling content that increases sales and sign ups. Visit his site to learn more about how he can help you with your writing needs. You can also follow him on Twitter @JosephPutnam.

You might, instead, want to dig deeper into your Analytics to see more details. For example, you might not want to just see your incoming traffic from Twitter, but whether that traffic is the result of a particular tweet. Or you might not want to see the influx of traffic from a newsletter blast, but whether that traffic is the result of a particular banner or link in the email itself. If you want to get down to specifics, you need to start using UTM parameters for custom campaigns in Google Analytics 5.

What Are UTM Parameters

UTM parameters are simply tags that you add to a URL. When someone clicks on a URL with UTM parameters, those tags are sent back to your Google Analytics for tracking. For example, I do extensive tracking on any links for my eBook using a campaign bpp. One URL I use on a 320px wide banner ad on my sidebar is as follows:

http://kikolani.com/blog-post-promotion-ultimate-guide?utm_source=kikolani&utm_medium=320banner&utm_campaign=bpp

When I go into Google Analytics, I can see the following about anyone who has clicked on that banner ad compared to other links I have for my eBook.

I can go further by clicking on Goal Set 1 under Explorer to see how this banner converts into sales compared to other links to my eBook using a goal I have set up for my eBook sales.

As you can see, you can customize your UTM parameters to tell you almost anything you want to know about the details of how people are getting to the most important parts of your website. This can give you an even better idea of what really works in terms of your online marketing.

How to Create UTM Parameters for Your URL’s

The simplest way to create UTM parameters for your links is by using the Google Analytics URL Builder. Using the above example, you would enter the following and click on the Generate URL button to get your link.

This page also has some helpful hints on how you can use each of the different UTM parameters.

• Campaign Source (utm_source) – Required parameter to identify the source of your traffic such as: search engine, newsletter, or other referral.
• Campaign Medium (utm_medium) – Required parameter to identify the medium the link was used upon such as: email, CPC, or other method of sharing.
• Campaign Term (utm_source) – Optional parameter suggested for paid search to identify keywords for your ad. You can skip this for Google AdWords if you have connected your AdWords and Analytics accounts and use the auto-tagging feature instead.
• Campaign Content (utm_content) – Optional parameter for additional details for A/B testing and content-targeted ads.
• Campaign Name (utm_campaign) – Required parameter to identify a specific product promotion or strategic campaign such as a spring sale or other promotion.

You can learn more about how to tag your links in Google Analytics Help. It also has a handy chart view with an example of one campaign with different sources & mediums.

Note that UTM parameters are case sensitive, which means if you use abc for your utm_campaign tags on some links and ABC for your utm_campaign tags on other links, they will show up as separate campaigns in your Google Analytics. Also note that UTM parameters will be shown in the browser’s address bar, so be sure you’re not using any tags that you would want to remain unseen.

How to View Custom Campaigns in Google Analytics 5

How you use your UTM parameters boils down to how you want to see your information displayed in Google Analytics. To view your campaigns in Google Analytics 5, you will go to your website profile and click on Traffic Sources > Sources > Campaigns. Here you will see an overview of your various campaigns as tagged using the utm_campaign UTM parameter on your links.

As shown earlier, you can click on each campaign name to see additional details as tagged using the utm_source / utm_medium UTM parameters on your links.

You can use the links under Explorer when viewing your campaigns or campaign details to switch between Site Usage data…

And Goal Set data…

You can also select Ecommerce and AdSense if you have your website profile set up to measure these details. Visit these links to learn more about Ecommerce tracking and AdSense tracking for your website.

10 Examples of Useful UTM Parameters

Now that you know how UTM parameters work in terms of showing you specific data under your campaigns in Google Analytics, let’s look at some specific ways you could use UTM parameters to learn more about your traffic and how it will affect the way you share your links.

Links on Your Website

Let’s say that you are promoting a specific product on different areas on your website. In my case, I promote my eBook through different sized banners and text links within my footer, in my author bio, and so forth. You can now track which link a visitor clicked by using the following breakdown.

http://yourdomain.com/yourproduct.html?utm_source=yoursite&utm_medium=postfooter&utm_campaign=product

In this case, when you click on the details for your product campaign, you would see that one of your traffic sources is yoursite and the medium is a postfooter link. You can modify the utm_medium to include banner ads (bannerad), menu bar links (menulink), author bio (authorbio), sidebar link (sidebarlink), or any other area that you want to track specifically.

UPDATE: Thanks to Justin Cutroni who, in the comments, let us know that this no longer works due to changes made to Google Analytics in August 2011. While it does track the campaigns as shown, it will count it as a new visit. To learn more about this change to Google Analytics, you can visit this post by Search Engine Land on Google Analytics session updates. To learn better ways to track internal campaigns, refer to this post by Justin on tracking internal campaigns with Google Analytics.

Profile vs. Status Updates

Seeing social media sites such as Twitter, Facebook, Google+, and so forth in your referral sources can encompass a wide variety of things. One thing you might want to distinguish is when a person has come to your site from a social media site via the link on your profile versus from links in status updates. Since your profile link is likely to be your website or blog’s homepage, you could do the following.

http://yourdomain.com/?utm_source=twitter&utm_medium=profile&utm_campaign=website

While this would give you details about how effective your Twitter profile link really is, one thing to note is that if you do this, your links will look like this on your profiles. Note how it is displayed on sites that display your full URL (Twitter & Facebook) vs. sites where you can have anchor text (Google+ & LinkedIn).

On Twitter

On Facebook

On Google+

On LinkedIn

Posts from Different Accounts

Another interesting issue you might find when it comes to social media traffic is how powerful each of your profiles are when it comes to generating traffic to your website. Some businesses might have one main company account plus employees who have their own accounts that share the same links in their updates, or maybe you simply have more than one account on various networks. Sure you can track this using Bit.ly or other shortening service analytics, but the goal here is to collect all of that data into Google Analytics so you can see it in one place and have it associated with your goal data.

To see the difference in how different accounts perform, you could do the following.

http://yourdomain.com/page/?utm_source=twitter&utm_medium=username&utm_campaign=blog

UTM parameters are usually cut off when displayed in a tweet on Twitter and do not seem to affect the way thumbnails and other details from a specific link will come up on or appear in Google+, LinkedIn, or Facebook updates.

On Twitter

On Facebook

On Google+

On LinkedIn

Email Signatures

When it comes to email traffic, about all you can measure is whether visitors have come from online email providers such as Yahoo, Hotmail, and similar services. What you don’t know is why they came to your website from an email. If you incorporate an email signature into your messages, you can use UTM parameters for your links to designate email signatures in Google Analytics.

http://yourdomain.com/?utm_source=email&utm_medium=signature&utm_campaign=website

One easy way to create great email signatures is by using the free version of WiseStamp. You can install it as an extension on your browser (Chrome, Firefox, and Safari) and it will embed signatures into emails from Gmail, Yahoo, AOL, and Hotmail.

Keep in mind that, if you use anchor text in your email signature that the URL may still be stripped out for users who have HTML emails disabled or blocked for security purposes. The most guaranteed way to get a link through is by entering it as http://yourdomain.com/, and using UTM parameters with a URL like that will make it lengthy in the body of an email. Conversion specialists would point out that a long URL with UTM parameters would have less click-through rate compared to the shorter http://yourdomain.com/.

Different Types of Banner Advertisements

If you do a lot of banner advertising, you will obviously be interested in their performance so you know which sites to renew advertising upon. But do you want to know, as a whole, which banners perform the best? To find out, use the following parameter in your ads.

http://yourdomain.com/?utm_source=bannerad&utm_medium=300banner&utm_campaign=website

Just replace the 300banner with the specifics of your banner. You can designate tags for banner size, banner colors, or banner type depending on how you advertise. Then you can see which banner types have the best results.

Newsletters

Another particular type of email tracking you will want to do is clicks from newsletter links. Similarly to how you might have different types of links (text vs. image) on a website, you might have a link to your latest promotion in your newsletter displayed in a variety of ways. Place the following parameters in links from your newsletter.

http://yourdomain.com/page/?utm_source=newsletterdate&utm_medium=productimage&utm_campaign=product

Try different UTM parameters to find out whether links using product images, sales graphics, or text get the most clicks on your newsletter. This can be useful in helping implement a better design for newsletter conversions.

Online Documents

One way websites generate a lot of traffic is through giving away freebies such as PDF reports. If you host these freebies on your website (or if someone else hosts it on theirs for online access), you can use UTM parameters to tell Google Analytics which reports are sending traffic back to your website.

http://yourdomain.com/?utm_source=freereport&utm_medium=reporttitle&utm_campaign=website

This will give you an idea which topics are best for your free reports or other content which could help lead visitors back to your products or services.

RSS Feeds

Want to see details about your RSS feed subscriber clicks in Google Analytics? Be sure to set up your RSS feed with Feedburner – it’s fast, free, and you can learn how by using these quickstart guides for Blogger, WordPress, TypePad, Myspace, and Podcasting. Be sure to share your new Feedburner URL on your website so people can subscribe via email and RSS to your latest posts.

To configure your Feedburner feed with Google Analytics, go to the Analyze tab and, under Services, click on Configure Stats.

Check the boxes for Item link clicks & Track clicks as a traffic source in Google Analytics, then click on the Customize link.

Feedburner has already configured the UTM parameters for you, but you can customize them if you wish to see different tags in your analytics.

Social Advertisements

If you do advertising on social networks like Facebook or LinkedIn, you may want to use UTM parameters to separate your ad traffic from those social networks.

http://yourdomain.com/page/?utm_source=facebook&utm_medium=springad&utm_campaign=product

Simply enter UTM parameters as a part of your URL during the ad creation. It will not affect how your link is displayed on either network as both mask the links for internal tracking purposes.

Advertisement Creation on Facebook

Advertisement Creation on LinkedIn

Featured vs. Regular Listings

This one applies to those who submit their sites to directories and want value beyond just link building for rankings. If you’ve submitted your website to directories before, you know that there are various options, such as regular listings, featured listings, deep links, and so forth. You can use your traffic referral sources (and Advanced Segments) to see traffic from particular directories, but if you want to know what kind of listings, as a whole, lead to the most traffic, then utilize UTM parameters.

http://yourdomain.com/?utm_source=directory&utm_medium=featuredlisting&utm_campaign=website

This will help you learn ultimately if you are getting better results with a particular type of listing, or if you are just spending too much for too little traffic as featured listings usually cost twice as much as regular listings.

As you can see, there are many, many ways to apply UTM parameters to measure specific traffic in Google Analytics. Now it is your turn. Do you use UTM parameters and how do you use them?

About the Author: Kristi Hines is a freelance writer, blogger, and social media enthusiast. Her blog Kikolani focuses on blog marketing, including social networking strategies and blogging tips.

There are many reasons for confusing and missing data. Here are just a few examples of the areas from which you might be getting conflicting data and the reasons why.

Internal Traffic

If you are just one lone person operating a website that you visit maybe once a day, this may not be a big issue to contend with. But if you are someone who looks at your site multiple times a day, or have a company whose employees are viewing the website multiple times a day, then one thing Google Analytics might be hiding from you is the fact that your visitor statistics, pageviews, and other data may include you, your webmaster, your employees, and other people you don’t need to analyze. Just imagine how much your bounce rate is if you are testing a page repeatedly by opening, refreshing, and closing it immediately after?

To exclude one IP address in Google Analytics 5, you can go to your website profile settings, Filters, and click on +New Filter. Name your filter appropriately, then use the dropdowns to Exclude traffic from the IP addresses that are equal to, and enter your IP address.

If you’re not sure what your IP address is, you can actually search Google using the query what is my ip address and it will tell you right at the top of search results.

If you need to exclude a range of IP addresses (like you would with an office), you can use the IP Address Range Tool to enter the first and last IP address in the range that your office uses, and it will generate the expression you will need to use in your exclusion filter.

You can learn more about excluding internal traffic filters by IP in Google Analytics Help.

Direct Traffic

The next missing piece of data in Google Analytics is direct traffic which can be found under Traffic Sources > Sources > All Traffic and is displayed as (direct) / (none) This traffic is essentially any traffic that comes from an unidentifiable referral source. It’s not from social media, search engines, or other referring URLs.

Direct traffic includes people who have:

• Typed your URL into their browser’s address bar.
• Your website bookmarked on their browser’s bookmarks bar.
• Clicked on links in documents or emails.
• Come from sites that do not create a live hyperlink to your website, but rather just have an inactive link that has to be copied and pasted.
• Security settings preventing referring URL’s to pass through to another website.

The upside is you still have the rest of their behavior tracked in Google Analytics once they have reached your site up until the point they leave. You just don’t get to find out where they have come from. You can learn more about traffic types, including direct traffic in Google Analytics Help.

A few things interesting to note about direct traffic is the percentage of new visits (people who have bookmarks on their browser are probably repeat visitors) and related data which you can find by going to Traffic Sources > Sources > Direct. I have found traffic under the direct traffic area have a lower bounce rate, higher average time on site, and higher rate of goal completions.

Mobile Traffic

Google Analytics does give you data from mobile devices, but not everything. You can view various stats such as your mobile vs. non-mobile visitors.

You can also see specific mobile device info about your visitors.

Of course, you can see that you’re not getting the complete picture with the large number of (not set) devices. When you add in the screen resolution and sort, you can see that the issue possibly lies in Google Analytics not being able to track the latest iOS for Apple devices.

Essentially, Google Analytics can only track so much from mobile phones, and traffic from mobile applications may not be included. You can learn more about mobile reporting availability in Google Analytics Help.

Private Browsing Traffic

Popular browsers now offer users the option of private browsing. This means that their activity on your website will not be tracked in Google Analytics at all.

Google Analytics Opt-out Browser Add-on is provided by Google itself and is available for all of the top browsers including Internet Explorer, Chrome, Firefox, Safari, and Opera. There are also many extensions / add-ons made for specific browsers that blog all types of analytics software tracking, so no matter what you use, you may still be missing some data!

Keyword Traffic

The most recent change in Google Analytics has everyone stirring in the online marketing world is the loss of keyword data from organic search. When you look under Traffic Sources > Sources > Search > Organic, you might see that your top referring keyword is now (not provided).

This recent change is the result of Google changing the way logged in users search. When you search Google while logged into your Google account, you will be searching in SSL mode. Searches in SSL mode allow logged in users to have more privacy when they search by not allowing webmasters to see the keywords that these users searched to arrive to their website in organic search results.

Although the change was made for the sake of privacy, most believe that is not the case as logged in users will still have their keywords tracked and sent to webmasters who use Google AdWords. In this case, the keywords that led to a logged in user clicking on a paid listing will show in Google Analytics.

Regardless of whether the data can be accessed by webmasters in Google Analytics, the data is still being tracked. If you are logged into your Google account right now, you can visit your web history to see what is still being collected about your search behavior by Google.

Even if you shut this off, Google will still collect this data.

Social Media

Last, but not least, is the inconsistencies when it comes to social media tracking in Google Analytics. I firmly believe you can learn a lot through Google Analytics through the use of advanced segments to see what drives traffic to your website in terms of social media vs. other referral websites.

But if you start to compare other analytics data for social media to that of Google Analytics, you might be in for a surprise. Several applications and tools such as Bit.ly, HootSuite, and Buffer will show you click data for links you share on Twitter or other social networks through their platform.

Yet, if you look at your Google Analytics, these numbers may not match up. Again, this can go back to any of the previously mentioned items such as mobile application traffic, direct traffic, or people using private browsing.

Do you know of other pieces of data that Google Analytics is hiding from you? Please share it in the comments as well as the ways or alternatives you use to find out more about this missing data.

About the Author: Kristi Hines is a freelance writer, blogger, and social media enthusiast. Her blog Kikolani focuses on blog marketing, including social networking strategies and blogging tips.

For the past year, my bounce rate has averaged 3.5%. If I remove a couple of short events from my stats that drive that number higher (and which appear to be related to changes in Google’s algorithm), it’s averaged under 2%. That means for every 100 people who visit my site, 98 of them click through to at least one other page.

Below is a screenshot from my analytics account for the past month, showing my 1.79% bounce rate. Now, I’m not getting millions of visitors per month, but I do get enough to make this a statistically accurate percentage (it’s based on numbers much higher than what most political polling pools are made up of).

My site is a blog, so bounce rates that low might not be possible on more sales-driven sites. But the principles I’ve used to keep my bounce rate low can be applied to virtually any type of site, whether it’s a blog or a sales site, to lower your bounce rate.

Now, the good news is that there’s nothing complicated in what I’ve done. My site uses a stock template with some minimal customizations. There are no expensive plugins or anything else that every single site owner out there can’t afford to do.

1. Simple, Easy to Find Navigation

Navigation on the site is located in two places: the first is above the header, at the very top of the page. This navigation bar provides links to all pages on the site. It’s simple to find, stands out due to the contrast between it and the rest of the page, and only includes a handful of links. This makes it very user-friendly.

The second navigation option is located in the sidebar. At the top is a search bar, which makes it easy to find relevant posts in the archives (where there are over 300 posts).

Then there’s a banner that links to an internal page, followed by social media links that go off-site. This might seem counter-intuitive for keeping a bounce rate low, but there’s a trade-off. If a visitor is going to leave my site, I’d definitely prefer them to leave by going to one of my social media profiles than to just simple click their back button.

Next are category listings and tag clouds. The category list is purposely kept short: 12 categories in total. Anything longer becomes cumbersome and unusable. You want to make sure that your category listings will all fit on your user’s screen at the same time, without the need for scrolling. The tag cloud is more organic, with the most popular tags larger than the least popular.

From there are more widgets, subscribe buttons, and a recent posts feed. These are mostly tertiary navigation options, and aren’t widely used. But, considering there is relevant content spanning the entire length of the page, it makes sense to use more of the sidebar, as long as there’s still sufficient white space. This wouldn’t necessarily be the case, though, with a design where the sidebar is also included on individual post pages (more on that in “An Uncluttered Design” below).

The big thing here is that there’s no fancy, complicated navigation. No assisted search. No mega drop-down menus. It’s no more complicated than it absolutely has to be. Granted, such simple navigation won’t work for every site, but the basic principle of not making it more complex than it absolutely has to be is a good one to follow regardless of the number of pages on your site.

2. Every Single Page Counts

This is probably the single biggest thing you can do to lower your bounce rate: make sure that every single page on your website is useful, interesting, and well-laid-out. Visitors aren’t likely to just land on your home page, or even one of your carefully crafted landing pages. They’ll land on whatever page shows up for them in search results, or whatever page they found linked through social media.

If they land on a page that’s hard to read, has a poor design, is boring, or otherwise loses their attention, they’re going to head straight for their back button.

On my site, every single article I publish is something I hope will be useful and engaging for my readers. I don’t post for the sake of posting; I post when I have something to say.

3. An Uncluttered Design

A simple design makes it easier for visitors to find what they’re looking for. Consistency is also key. Every page on my site has the navigation at the top. No matter which page a visitor lands on, they’ll see that navigation bar.

That doesn’t mean that every single page on your site has to look the same. The individual post pages on my site have a single-column layout (sans-sidebar) and a white background behind the content. The font size is also larger than it is on the front page, which adds to improved readability. But regardless of whether you’re looking at the home page, an interior page, or an individual post, you’ll get an uncluttered and simple design that makes it easy to focus on the content.

4. Tag Clouds

Tag clouds are a great way to let visitors browse for useful content. While they don’t work well for every site, they’re great for blogs or other sites with article-style content (they even work well for e-commerce sites with a large volume of products).

One key to effective tags, though, is to be consistent in which tags you use. Don’t use multiple variations on the same keywords, but rather select from the list of tags you’ve already created whenever applicable. This makes your tag cloud smaller and more easily used.

5. Post Excerpts on the Home Page

For those times when visitors do end up directly on your home page, only displaying post excerpts rather than full-length posts almost guarantees click-throughs. Make the first couple of paragraphs of your posts interesting and engaging. Avoid copy that tries too hard or goes for the hard sell. The goal is to get your visitors to click through to more of your content.

I generally use post excerpts that are two to four paragraphs long, depending on the content and the length of each, as well as the overall length of the post.

6. Links at the End of Each Post

Since I don’t have a sidebar on the individual post pages, there’s a section at the bottom that lists the categories and keywords that the post is tagged with. (The category is also listed at the top of each post.) This makes it simple for visitors to find related posts.

Keeping the links at the end like this makes sense on a blog, where a lot of readers will be scrolling down to see comments on the post. Internal links also mean that there’s more opportunity for visitors to click through to other pages, rather than clicking their back button.

7. Regular Updates

This one is vital, especially for lowering your bounce rate when it comes to return visitors. Even if you update your blog on a daily basis, not all of your regular visitors are going to come back every day. So if they know you’re likely to have published more than one post since their last visit, they’ll click through to more pages.

Conclusion

The key thing to realize here is that lowering your bounce rate isn’t difficult. It’s all about creating a better experience for your visitors. At every step of the way, you should be asking yourself if what you’re doing is providing more value to your visitors. If you are, then you’ll likely see a decrease in your bounce rate. If not, then don’t be surprised if it has the opposite effect.

Bounce rate is only one small portion of your website’s overall success, but it is an important one. Lowering your bounce rate can help you get more out of your current visitors, and it makes sense to focus on that before you focus on growing your overall site traffic.

About the Author: Cameron Chapman is a freelance designer, blogger, and the author of Internet Famous: A Practical Guide to Becoming an Online Celebrity.

Have you ever wished you knew how to use that data so you could actually make changes to your website that gave you real and profitable results?

Web analytics will only work for you when you learn how to use the reports that are important to you and your business. Here’s how to find those reports.

Identify Business Objectives

If you want web analytics to actually make a profitable impact on your business, you need to start from the beginning with business objectives.

Business objectives are a way for a company to define its goals and direction. Good objectives will tell a company how to allocate its resources based on its strengths, weaknesses and opportunities at every level, including the website.

You can’t really start using web analytics until you’ve determined business objectives. Otherwise you are just shooting in the dark.

And this decision about business objectives comes from the top, the leadership. The same goes for business objectives for your website. What is the business purpose of the website? It could be to generate leads or build awareness.

When it comes to creating objectives, make sure they are D.U.M.B.. Here’s what I mean:

• Doable – You and your team need to be able to attain these goals. Don’t be afraid to stretch a team with a goal. That is desirable. Doable objectives answer the question, “How will this objective be accomplished?”
• Understandable – Second, your objectives need to be understood by everyone. If you can’t explain clearly, then go back to the drawing board. An understandable objective answers the “5 Ws”: What do I want to accomplish? Why? Who is involved? Where will this happen? Which requirements and constraints do I need to think about?
• Manageable – Next, your objectives have to be measurable, allowing your team to know if they are making progress. Your objectives should answer simple questions like…How much? How many? And how will I know when I am successful?
• Beneficial – Finally, an objective must benefit your company and be something that you want to work toward. In other words, does this objective seem worthwhile? Moreover, are they objectives that will inspire or bore you and your team?

In order to create objectives that meet the D.U.M.B. criteria, you need to think really hard about what you are doing and why. And like I said, web analytics will not work for you until you have those objectives.

Specify Website Goals

Goals are a way to measure your business objectives for your website. They are specific strategies you’ll use to meet your objectives. Your objectives will be broader (“bring awareness to our annual events” or “sell more books”). Your goals will help you drill down to a specific action. This could be “get hits to a landing page” or “download a PDF.”

Just like the business objectives, you and the leadership will need to decide what these goals are. They should correspond with your objectives, so if you want to create more awareness for your events, then a likely goal is to get more people to sign up for updates.

You can also use the D.U.M.B. criteria when setting up goals. And just like with business objectives, you will not be able to use your web analytics in a meaningful way until you specify goals.

Distinguish Website KPIs

Your next step is to figure out how you are going to track the progress of your goals. That’s where KPIs (Key Performance Indicators) come in, and where we can actually start talking about web analytics.

Let’s say that one of your goals is to have visitors go through a 3-step marketing funnel…open an email, click a link to a landing page and subscribe to updates.

Well, each time a person performs one of those actions, a goal is met. If a person makes it through all three steps, then three goals have been met. That means your web analytics tool will allow you to view the success or failure of certain KPIs.

But not all KPIs are the same. Here are the five that I think you should focus on the most.

• Visitor Loyalty – This metric shows you how many people are actually returning to your site. For example, you might have values like “1 Times” and “1,398 Visits” in your first row. In the second row the values are “2 Times” and “333 Visits.” In other words, you know that 333 second visits were made by people who were already at your site. Lifting this number means you increase your loyalty, which is a meaningful goal!
• Visitor Recency – The frequency with which visitors return to your site can indicate their level of engagement with your brand and their readiness to do some kind of transaction with you. Increasing frequency focuses your efforts on the visitor, the most important component to success when it comes to the web.
• Conversation Rate – Instead of measuring followers, likes and posts, you should be measuring the rate of conversation. Like visitor recency, conversation rate will indicate your audience’s level of engagement. What exactly should you measure? Try this:
  • Blogs – The number of comments per post.
  • Twitter – The number of replies and retweets sent per day.
  • Facebook – How many likes and comments, broken down against number of postings.
• Task Completion Rate – This KPI measures how many people actually performed successfully the action they set out to perform. It’s important that you combine this data with another set of data, namely why people came to your website. (You can collect that data with a simple survey using KISSinsights.)
• Economic Value – Finally, you need to put a dollar sign on the visitors who come to your website. In other words, you need to explain what they are worth, which answers another important question: How much are you willing to spend to get a customer? As Avinish Kaushik points out you’ll be able to articulate the following once you’ve identified the economic value:
  • All the jobs your website is doing.
  • The true and complete value of those jobs.
  • The total value of your web marketing campaigns.
  • Where you are succeeding and where you are failing.

Discover Your Segments

At this point you’ve got your business objectives, website goals and KPIs. The last step in making your web analytics work for you is developing segments.

See, it’s very important that you segment data before you report on a metric. Otherwise you will not get the deep insights that will actually make web analytics work for you.

What is a segment? It is a group that is identified by where they came from, what they did on your website and what tasks they accomplished. Think about it in these categories: acquisition, behavior and outcome. Let’s look at each:

• Acquisition – Includes everything you do to attract people to your website, like SEO, email, banner ads and PPC marketing.
• Behavior – Includes all the activities people perform at your website, like clicking through pages, subscribing to your blog or leaving.
• Outcomes – Includes all the activities that are valuable to you and your business, like a purchase or a sign up for your email newsletter.

For example, when you view your “sell more books” business objective, “drive more people to the book’s landing page” goal and your “visitor loyalty” KPI through the lens of the outcome category, then you will know exactly which reports to look at it.

In this case, you’ll want to break down the category of loyal visitors (how many times they’ve been to the site) and how many times each segment visited the landing page before they bought. You are looking for relationships between loyalty and the landing page effectiveness.

Why are segments important? You want to be able to see data that will actually help your business. In the example above you’ll have a very narrow silo of data based on loyalty, page visits, recency and purchases that can give you the focus you need to make a decision that will make that funnel more profitable.

Conclusion

Of course going through the above steps is not easy. It will take time! Be patient…because it will be worth the effort when you are no longer confused and overwhelmed by all the data available to you, but actually making decisions that matter and truly change the course of your website’s profitability.

How do you use web analytics to make impactful and profitable decisions?

About the Author: Neil Patel is the VP of Marketing of KISSmetrics and blogs at Quick Sprout.

What this all boils down to is the fact that your website isn’t retaining its visitors. People are coming to your site and either finding what they want but not anything else or not finding what they want at all. The key is to make sure that once visitors land on a page, they are drawn to visiting even more pages throughout your site.

Is Your Bounce Rate Really a Bad Thing?

Before we get started, I would like you to take a moment to think about the goals for your website to see if having a high bounce rate on your site is really a bad thing. I have seen some websites where the goal is not to have visitors browse endlessly through a maze of content, but instead to take a call to action. Calls to action that could lead a visitor off your website includes:

• Calling your 1-800 number to speak to inquire about products or services.
• Leading customers to product sales on another domain or network, such as if you sell products on eBay or Etsy.
• Clicking on ad banners that pay per click or lead to affiliate product marketing sites.
• Filling out a lead form that does not take the visitor to another page on your website for confirmation.

Essentially, if you have any goals that only require people to visit one page on your website, then you may not have to worry about bounce rate unless you are having far fewer goal completions compared to the number of people leaving your website after viewing a single page.

It All Begins With Google Analytics

Your first stop in figuring out how to improve your bounce rate is in Google Analytics. When you sign into your Google Analytics profile for your website, you are greeted with an average bounce rate. While you want this to go down, it isn’t the one you really need to look into. Here are some things you can learn from your bounce rate throughout Analytics.

Best “Sticky” Content

First off, you will want to drill down to your Content > Site Content > Pages (in the new version of Google Analytics).

Here you will see the pages on your website that have received the most pageviews within the last thirty days with their bounce rate. Here you can see that:

• My blog’s homepage bounce rate is a little under 50%. This means at least half of the visitors to my homepage move on to additional posts or pages on my blog.
• My most popular post this month on the Facebook Timeline profile has a bounce rate of almost 91% – after people read the post, they are satisfied (hopefully) and move on.

You can then sort the bounce rate by clicking on that column to see pages with the highest to lowest bounce rate. This information can help you determine:

• Which content leads people to more pages on your website vs. which content is the first and last that people see.
• Which pages on your site need improvement first – you will typically want to improve the bounce rate of pages with a high volume of pageviews. This way, the pages that drive the most traffic to your site will send the most visitors throughout more of your website.
• Which pages you should check out as models for ways to keep visitors on your site longer – the ones with the lowest bounce rates probably have the best leads to other areas on your website.

Best Traffic Sources

Next, you will want to go to Traffic Sources > All Traffic.

Here, you will see the traffic sources that have brought the most visitors to your website along with their respective bounce rates. What I can see quickly from this is:

• Geeks4Share.com and TrafficGenerationCafe.com are my top referrers with low bounce rates. Visitors from these websites are more likely to dig deeper into my blog.
• StumbleUpon is my strongest social referrer and has the lowest bounce rate compared to Facebook and Twitter-related sources..
• Facebook, surprisingly, has the highest bounce rate as a traffic source.

This section can tell you which traffic sources bring visitors who will stick around longer on your site. It can tell you whether you are satisfying a particular visitor over another. In my case, I provide content that StumbleUpon users are enjoying more so than Facebook users. And it can tell you which traffic sources to focus upon if your goal is to keep people on your website.

Best Keywords

Diving deeper into your Traffic Sources, under Search > Organic, you can see which keywords have brought the most visitors to your website through organic search along with their respective bounce rate. You can even see which landing pages the keywords lead visitors to by clicking on the Landing Page link above the data, then selecting Keyword (under Traffic Sources) on the Secondary Dimension dropdown, resulting in this.

This way, if you have different keywords leading to the same page, you can see which searchers are receiving the information they want on the related landing page, and which keywords are making them want to continue browsing your site based on the landing page content.

More Data in Relation to Bounce Rate

Throughout Google Analytics, almost every piece of data is linked to bounce rate. Continue perusing Google Analytics to find how demographics such as location, browser types, and even social engagement relate to your website’s bounce rate.

How to Improve Bounce Rate

So now that you’ve learned more about your content, traffic sources, keywords, and demographics data and how it relates to your bounce rate, your next question is probably how to improve bounce rate. Here are some great ideas!

• Add links to more pages within your website in your content. Think about other pages that people interested in that piece of content will want to see, and link to them throughout the content and at the end in a “if you liked this, you’ll love this” kind of way.
• Go beyond just product pages. Someone may not be ready to purchase a product, but they might just want to learn more about it. Instead of just having the sales copy, include some links such as a product manual, guides on how to use the product to achieve a specific result, what other customers have said about the product, or other similar ideas. Maybe it will keep the visitor on the site long enough to make the sale.
• Add links to content everyone will love to your sidebar. If your design includes a sidebar that remains throughout your website, then include links on that sidebar that everyone would enjoy. For example, a new visitor could end up on any page within your website without knowing anything about you, so you could have an About Me / About My Company page linked to the sidebar. You could also have a “first time guide” to visiting your site, top content, most popular products, and so on, all of which would attract visitors deeper into your website.
• Improve your content. If you notice the issue on some of your content isn’t just a high bounce rate but also a low average time on site (meaning people leave pretty quickly), then it might be an issue with your content not providing what the visitor wants. Be sure to review pages on your website with a high bounce rate and low average time on site and look at ways you could provide more information that would keep visitors on the page (like video) long enough to notice that there is more to your website without just immediately leaving.

Last, but not least, even if you can’t keep visitors on your website, you can do your best to ensure they will return by giving them links accessible throughout your website to your social media profiles, newsletter, or other online properties. If they leave your website but become a fan of your Facebook page or start following your Twitter account, you will still have a chance of bringing them back vs. if they leave and have no way to connect with you otherwise. It’s definitely something to consider if you don’t have these options already!

What other things have you learned from analyzing your bounce rate? Have you had any success in improve your bounce rates using the suggestions listed above or trying other things? Please share your experience in the comments!

About the Author: Kristi Hines is a freelance writer, blogger, and social media enthusiast. Her blog Kikolani focuses on blog marketing, including social networking strategies and blogging tips.

That’s the way Adam Mosseri, product designer at Facebook, describes how the social media giant uses data to make design decisions in his presentation, Data Informed, Not Data Driven, at UX Week 2010. Watch the video below:

But before delving too deeply into how Facebook uses analytics, Mosseri starts with who makes the decisions, or how the decision-making teams are structured. Here’s a rundown of how project teams are structured at Facebook:

• Small teams of six or seven people. “We believe…small teams…are more efficient, and speed is something that’s incredibly important to us,” says Mosseri.
• Decisions are made by these teams. Managers don’t approve their teams’ work, they give feedback and participate in feedback systems. Teams make a decision about their product, pending only the CEO’s approval.

Teams are made up of the following people:

• Product designer. Responsible for visual, interaction, and product design.
• Researcher. Conducts qualitative and quantitative research.
• Engineer(s). Typically one to four engineers per team.
• Product manager. Responsible not just for project managing, but also ensuring products ship on time and product quality.

These teams use and store large amounts of data. “We have about 20 people on the data team: 10 engineers, 10 data scientists,” says Mosseri. “We record about four terabytes of data a day. We invested a lot in the technology to store and query all this data. We have, I believe, about 10 petabytes’ worth of storage, which is an incredible amount.”

Although the investment and use of that data is important to the team, it’s used cautiously to inform decisions.

Optimizing Small-Yet-Critical Interactions

Facebook uses data to optimize workflows and interactions. He gives the example of photo uploading:

…we recently, about two months ago, replaced our photo uploader. To give you a sense of scale, about I believe it’s over 200 million photos are uploaded a day, and a few weeks ago we hit 50 billion photos in the system. That’s a ton of photos. But we thought we could do better; we thought there were problems.”

The team started with hypothesis generation: users were having trouble uploading photos. It took too many steps. They decided to conduct a waterfall analysis of the uploading experience, which involves analyzing each step of uploading photos to see what occurs. Their findings were as follows:

• Only 57 percent of users select photos, meaning they click “select photos” and find and successfully select their photo files.
• Just 52 percent upload photos, meaning they click the upload button.
• About 42 percent successfully upload.
• Some decide not to upload because it takes too long to load the page.
• Some users don’t have the current version of Flash, which Facebook uses for photo uploading.

About 4 percent are lost to poor load times and glitches — not ideal, but the photo upload success rate has increased in the past couple of months from 34 percent. “…we’re continuously iterating on it, removing bugs, removing pain points, removing steps, etc…This is one of the types of products that are data driven.”

Identify Pain Points

The team found that 85 percent of users selected just one photo for an album, which is not ideal for us or for them. “…we wanted to figure out why, so we took a look at the UI that users used to select photos, and they use…an operating system file selector. We don’t actually have control over this interface…it’s very difficult…to select multiple files.”

Mosseri and the team did something they don’t like doing: adding another step. “This resulted in a drop on the number of people who were uploading only one photo, from 85 percent to 40 percent, which was huge,” he says.

After a user has successfully uploaded more than one photo at a time, the additional prompt disappears, and he or she doesn’t see it again.

Set High-Level Success Metrics

Facebook also uses data to retroactively evaluate projects. Take the example of the deactivation page, where users wind up who decide to leave Facebook. Lee Byron, a designer at Facebook, designed, built, tested, and shipped a new version that didn’t just ask why a user wanted to leave, but gave them a reason to stay.

Mosseri says, “…[Byron] thought about being somewhat emotionally manipulative, and…[on the deactivation page] is a picture of my friend Aaron, and it says, “Aaron will miss you,” and then Kevin, and “Kevin will also miss you”…to just hit that emotional chord, to give you a reason to stay, to make you feel guilty about leaving. And it was wildly successful.”

This is an example of how an emotional tweak was supported later by the data, reducing deactivations by 7 percent, which at the time meant millions of users stayed on Facebook.

Using Data To Inform

Mosseri says Facebook is skeptical of overusing data for three main reasons:

1. There are many factors that go into making a decision about a product.
2. To avoid micro-optimization.
3. Innovation sometimes means disruption.

Multiple Factors

He describes the following factors that Facebook has to consider before making a decision
about a product:

• Quantitative data. “We use it, as I’ve showed you [in my] examples.”
• Qualitative data. “Our researchers run qualitative tests all the time…”
• Strategic interests.
• User interests. “…what people complain about, what can people ask for.”
• Network interests.
• Competition.
• Regulatory bodies. “At our scale, we have to deal with privacy advocacy groups…”
• Business interests. “This is actually, on purpose, small because explicitly we value revenue generation right now less than growth and engagement…”

Juggling such a long list of factors means the team has to be careful about relying too heavily on analytics.

Avoiding Micro-Optimization

Another reason why Facebook is skeptical of data-driven design is that they’ve found that overreacting to data leads to what they call micro-optimizations:

“A micro-optimization is when one interest over-optimizes for itself at the expense of another, and this is a very difficult thing for us as we scale. As we scale, a division of labor becomes invariably sort of more intense, and you have different people representing different interests….”

While all of the teams are trying to optimize for the betterment of the product, sometimes the interests oppose or distract from each other and the specifics cloud the big picture goals.

Innovation Is A Bumpy Road

Mosseri admits his last reason is controversial: “…real innovation invariably involves disruption,” he says.

Disruption, he continues, might mean a drop in metrics. He gives the example of the original news feed, which resulted in backlash from users and the media. But Facebook stuck with it, make some changes, and explained the changes to users. “…eventually it ended up becoming the primary driver of traffic and engagement on the site,” says Mosseri. “It is probably our greatest success story.”

Mosseri says there have been bold moves that were failures: “Along with trying to innovate and trying to make bold moves comes you run the risk of failure, and you have to just understand failure, acknowledge it, and move on.”

About the Author: Hiten Shah is the CEO of KISSmetrics.