In the past week, I’ve spent a lot of time ripping apart Site Traffic Statistics, as well as planning metrics packages for a new site.  Strangely enough, both David Churbuck (formerly of Forbes.com and V.P. of Internet Marketing at Lenovo) and Chris Murray (former Director of Technology at CXO Media) both blogged about metrics – these are two guys I have immense respect for and you should read what they have to say.  Here’s my take on why analytics are important to all site owners, and why conversely you should not allow yourself to get bogged down in the details.

First a couple case histories from the Vario Files [invoke eerie music mode]

1. Meeting with a customer, they claim their horrendously ugly site is a big success.  600+ users (which turned out to actually be visits, not unique users) per month, a bazillion hits, etc.  The problem is their ecommerce plan isn’t working.  So I get copies of their server logs and start to rip them apart.  Turns out the site owner is getting metrics that include the webmail package on the site.  And her three employees check mail via webmail at least 3 times a day…so that’s 4 users x 3 times a day x 30 days = 360 visits per month for webmail alone.  Then I look at the homepage exit rate which at 94% is way too high – most of those people came in to the site, realized they were at the wrong place and left, or barfed when they saw the hideous page design.  The number of visits in which more than one page was viewed was in the neighborhood of 60 per month, 10% of what she thought…but wait, there’s more!  How many times did the owner herself view the page?  Or her employees? And how many times did Senor Googlebot and the fine folks from Yahoo, etc. visit?  So, exactly how much traffic did this site have?  By my guess, none.  One final question to the (potential) customer sealed it: how much do you currently earn from your ecommerce/affiliate programs?  Her answer: “I don’t know – I have never gotten a check.”  Hence my advice was not to spend money fixing her ecommerce, but to spend money on redesigning the site, and working on building traffic to a point that it could be monetized.  The project did not go forward, and to my knowledge she’s still waiting for that first check.
2. We’ve got a large corporation that owns multiple domains.  As David Churbuck would say, the gross tonnage of traffic is astounding, millions of hits.  Again, we see a homepage exit rate in the 90% range, but we also see that 90%+ of traffic is from the US, yet the US is only a component of company revenues.  I recongifure the filter, and oila! – we’re getting stats that show a depth of visit, allow us to find customers researching products, etc.  Turns out one of the domains is a 3 letter acronym not used by the company, but that refers to a cable tv channel, a former car manufacturer, and a movie theater chain in the US.  Meanwhile the webmaster is getting emails bemoaning the decision to not show Charlie Chan movies, etc.  Recommendation, sell the domain, with the single caveat that it might help create general brand awareness in the population.  Unique visitors drop to 10% of the unfiltered stats, but depth of visit increases, global distribution increases and the stats actually start to have some meaning to the business.
3. Google Adsense revenue for a content site is static over a 3 year period.  With almost no delta at all, it brings in a measily $300-400 per month, yet during that period of time, traffic has increased from 50,000 uniques to 80,000 uniques a month, with almost 11k registered users.  This is one where there really wasn’t an answer, only guess work.  My theory was that the users became innoculated to the Google Adsense presentation over time.  Keeping it in the same spot allowed them to gradually ignore it, much as they’ve come to ignore banner ads.  Solution:  I didn’t implement one, but if I were to implement, I’d try moving the Adsense location around, swap colors, etc.  The truth is, I don’t think that’s fixable, the only ones who click on Adsense are the new users, hence the relatively static revenue per month.  I would extrapolate that into ways in which I’d increase the penetration of the other advertising offerings, by keying in on incentivized actions and goal based campaigns.  Standard banners, adsense and other “fire and forget” media are dead.
4. Customer needs to evaluate the effectiveness of her directory listings.  She caters to a niche market, and is paying big bucks for listings in several directories that give her a few perks, such as ability to target email some customers, etc.  First I analyze the logs and I see that there’s virtually no inbound traffic from one of the directories.  The suggetion is “kill it.” So the directory comes back and suggests trying more mass email.  We do that.  Against an opt-in list of 2500 we mail once a week (by my thinking, too often) and see about a 10-20 user spike (it’s a small site) and they appear to be visiting more than one page. But it doesn’t really result in any sales.  Basically I throw the numbers back with an explanation, and it comes down to whether or not it’s worth the price of the directory to send mass email and get at best 15 users per email (and by the way, she also got a complaint for spamming to her ISP). Not likely, esp. since we’re fairly certain that it never brought anyone into the shop.  On the other hand, another directory, which she’d felt was too expensive, had been routinely delivering 20-30 visitors a month, and had produced sales.  Recommendation: reup the directory that works.

I always tell customers that they’ve got to be ruthless in their analysis of where their marketing dollars are going and they’ve got to try to tie it back to revenue.  Keep and reinforce what works, and get rid of the stuff that isn’t working.  Make time monthly to review where your customers are coming from and find ways to get more of them to come.  It may smack of traditional marketing, but for small business, revenue is the measure of marketing success.  We simply don’t have the time or resources to worry about vanity.

That theory works on your website as well, and is every bit as imporant for SMBs (small-medium businesses) as it is for large scale enterprise, even more so.  It’s your money – you need to know it’s being appropriately applied!  SMB’s don’t have cash to throw around, hence you’ve got to be even more attuned to what’s going on.

By understanding how customers find and interact with your site, you develop a better understanding of these customers, their motivation, and potentially identify opportunities you might otherwise miss.  The other side of the coin is that analytics packages like Google Analytics offer such a richness of statistics that one can easily start managing to the report, or literally can become overwhelmed by the shear volume of numbers.

It used to be said that there were lies, damned lies, and statistics.  Traffic stats are the red-headed stepchild of statistics, a good soothsayer will be able to attach virtually any meaning they want. Think of them as a tool, but never, ever, take them too seriously.  Traffic stats are the online equivilent of reading goat entrails…