Successful Analytics ebook 1: Gain Business Insights By Managing Google Analytics

Day

Preface

This is my fourth book on Google Analytics, but this one is different. Rather than making it a tool-specific practitioner’s bible (as my Advanced Web Metrics series endeavored to be), I approached this book as I do my work: helping ambitious organizations make a success of their business by using data intelligently.

As I have come to realize over the years, success does not depend on tool expertise alone. The bigger issue is the organization. It needs to trust the data and have confidence in the process, structure, and people behind it—things not directly related to the tools being used. So I approached this book very much from the business point of view first, then worked backward toward the nontechnical aspects of the tool—Google Analytics. My intention is that senior managers, stakeholders, and practitioners all speak a shared language and set a common path to building a credible data-driven environment. I hope the method has worked.

As for all authors, my writing of this book was not a solo exercise. It required love, support, help, guidance, advice, friendship—even random and unrelated conversations. (You would be surprised at what can spark an idea connected with data!) The people I list here are those who have directly contributed to the book or to my thinking about applying successful analytics.

Sara Clifton’s never-ending love, support, and guidance keep me on the right track and always help me to see the bigger picture of measurement, digital, and life in general.

Shelby Thayer has sanity-checked every word of my last three books, including this one. She is a great analyst, with a ton of experience at driving web measurement acceptance within a large organization, and her feedback and experiences have helped me significantly in writing a tightly focused book.

Brad Townsend is my valued technical editor. He is a smart (and modest) Googler who, as a software engineer, knows the technicalities and back end of Google Analytics like no other. David Vallejo, an expert Google Analytics implementer, developer, and all-round smart guy, helped me enormously with his technical problem-solving skills. Nothing can’t be done with this guy at hand! Dave Evans expertly reviewed Chapter 7 (Data Responsibilities) and provided insightful discussions about data privacy law. Dick Margulis is my trusted editor, who has now helped me write and structure three books and is my go-to man for navigating the tricky waters of the publishing world. His guidance and advice have been invaluable.

Avinash Kaushik has honored me (again) by writing the foreword to this book and setting the scene so enthusiastically and logically for the reader—in a way that only he can. I am lucky to count him as a friend and former colleague. He inspires me (and many others) with his advocacy and excitement for all things that can be measured.

John Wedderburn, Tobias Johansson, and the team at Search Integration (where I work) have engaged in many quality time meetings and open-ended discussions that have broadened and deepened my knowledge.

And last but not least, the vibrant and smart GACP community pushes back the boundaries of what can be done with Google Analytics, and importantly, what can be simplified with it.

I hope I have remembered everyone.

Brian Clifton

January 2015

Introduction

We think we want information when really we want knowledge.

—Nate Silver, from The Signal and the Noise

According to a recent survey of IT professionals,¹ "55% of big data analytics projects are abandoned. Most of the respondents said that the top two reasons the projects fail are that managers lack the right expertise in house to connect the dots around data to form appropriate insights, and that projects lack business context around data. Similarly, the Online Measurement and Strategy Report 2013" from Econsultancy² asked companies, Do you have a company-wide strategy that ties data collection and analysis to business objectives? Only 19% said yes, a figure that had hardly changed during the previous five years.

I wrote this book for those managers struggling to make headway—to empower you to make informed decisions and overcome the obstacles.

My goal with this book is to get you to think in terms of insights—not Google Analytics data. An insight is knowledge that you can relate to. It’s a story that puts you in the shoes of your visitors, so that you can understand their requirements when they come to and view your website, app, or other digital content.

A company’s ability to satisfy the needs of a website visitor depends on two important factors:

Visitor expectations, discerned from how they got to your content—what search engine, campaign ads, or social conversation drove their decision to seek you out

User experience—how easy it was to use your content, to navigate around, find information, engage with you (contact you, purchase, subscribe, give feedback)

It is your organization’s ability to manage, analyze, and improve these two factors that determines your digital success (or not). In this book I describe how insights are used to pull all of the relevant data points together to build a story of your visitors’ journey and their experiences. With that knowledge you can improve these: as I show in Chapter 10, improvement can be dramatic performance gains in terms of your online visibility, revenue, or efficiency savings.

Yet Google Analytics doesn’t provide insights by itself—no tool can. Producing insights requires an understanding of your business and its products, your value proposition, your website content, its engagement points and processes, and of course its marketing plan. Google Analytics provides the data (and lots of it) that enables you to assess these. However, people—not machines—build insights. This is the role of your analytics team. They sift through the noise to find the useful data, translate it into information to explain what is happening, then build stories of useful knowledge for the organization—the insights.

This book is about showing you how to do that. This book is about knowing what to focus on, what you can expect in return, the talent you need to hire, the processes you need to put in place, the pitfalls to avoid, and how much investment is required in order to make it all happen.

This is a detailed book by necessity. Building an environment where you can trust your data, understand it, and make important decisions based on it requires a deep level of immersion, not an executive summary. However, my approach throughout this book is to focus on the insight gained for the business, not the minutiae.

This book is for you if you are a manager who needs an overview of the key principles of website measurement, the capabilities of Google Analytics, and how to grow and give direction to your organization when it comes to its digital strategy. Your ultimate interest is in insights and knowledge, not more data!

In short, I aim to put you in control and provide a perspective on the entire process of building a data-driven environment using Google Analytics.

REFERENCES

1    http://visual.ly/cios-big-data

2    https://econsultancy.com/reports/online-measurement-and-strategy-report

You know measurement is important to your success—be it for you, your organization, or your career. In many respects, Google Analytics is just a tool, like the plethora of other data tools organizations use to help them make better decisions.

But web analytics—the area, technique, and industry that Google Analytics resides in—is different. Its reach and potential are far greater than any other tool you have. Why? Because not only can it measure the engagement, transactions, and revenue from your customers, it can also measure your potential customers—where they come from, what they are looking for, and how close they come to becoming a customer before they bail out (and where on your site or mobile app this happens).

This integration of customer and potential customer data is unique to web analytics—and therefore extremely powerful. For example, the vast majority of websites have very low conversion rates—typically 3% (Figure 1.1).¹ That is, only 3 visitors out of 100 go on to become customers. While many a business analyst is tasked with optimizing for that thin sliver of a segment, there is clearly a much greater potential in understanding why the other 97% of people that expressed an interest in you (they visited your website) did not convert—and using this information to improve matters.

Google Analytics can be used to analyze both customer and non customer behavior. All that is required is a single digital touch point during their engagement with your organization. Usually, the touch point is a visit to your website, though with Universal Analytics (the latest enhancements to Google Analytics, described in more detail in Chapter 6, in ebook 2), it need not be. For example, a potential customer receives an offer from you via snail mail. This contains a coupon that they take into your brick-and-mortar store to make their purchase. At the point of sale, your store sends the purchase details (product name, value, coupon code, and so forth) via the Internet to your Google Analytics account. The result is that Google Analytics can generate a report on the performance of your direct mailings and sales in your store.

The digital touch point in this example was the actual purchase. If

then

Suppose your direct mail encourages recipients to visit your website first in order to obtain their coupon code. The second digital touch point is your website, and visits to it reflect the interest in your offer. Now you have a simple yet powerful set of data that can be analyzed—even if the recipient does not go on to purchase. For example, if

then

The extra data point collected in this second list (c) tells you that evaluating the results of a direct mailing is not as black and white as just the number of purchases: 8,000 people are actually interested in your offer; without this piece of information, it looks like only 725 people are interested. Armed with this extra data, you can now improve your direct mailing to increase that number—that is, grow the interest level. Simultaneously, you can work to improve your website landing pages to go beyond 9.1% conversion, and you can also try to increase the order value for those purchases (perhaps you can upsell and cross-sell related products). The result is that you now have a great deal more options to improve sales and measure the impact of your various efforts—so you can focus on the most profitable. Powerful numbers indeed.

Business Intelligence Defined

All analytical tools that help your organization understand itself come under the umbrella term business intelligence. Google Analytics is one of these tools. For clarity, I define three particular subcategories of business intelligence.

Customer Analytics The mining of existing customer data in order to discover buying patterns and demographic information. Often this information is used to compile a marketing campaign for the upsell and cross-sell of products to existing customers, as well as improve customer retention.

Web Analytics The study of your website visitor’s online experience in order to improve it. The vast majority of data is completely anonymous. Google Analytics has traditionally been used as a web analytics tool.

Digital Analytics The evolution of web analytics to encompass all Internet-connected devices that can send a structured packet of data via HTTP, such as mobile apps, barcode scanners, checkout machines, stock taking, call center performance, or RFIDs. With its latest update, Google Analytics is now a digital analytics tool.

THE VALUE OF WEB ANALYTICS DATA

Consider the following exercise:

Many a business analyst is tasked with customer analytics (see sidebar, Business Intelligence Defined). Results can be used to compile a campaign for the upsell and cross-sell of products as well as to improve customer retention. Typical revenue increases are on the order of 1–9%.

Let’s invest the same amount of energy with a web analyst for the same organization. In this case, it is to understand the pain points of your website conversion process. The information gained is then used to reduce the friction of the process and improve the conversion rate—that is, generate more customers. In my experience, typical improvements are double digits, often triple digits (Figure 1.2).

In addition, the changes made to improve the conversion process on your website are compound. For example, if you make your website 10% more efficient at converting a visitor to a customer, that improvement is not just a one-off hit—it lasts perpetually (though not quite in practice). Therefore, in twelve months’ time when different visitors are coming to your site, 10% more of them will be converting than before. Additionally, a visitor who turns away in frustration because of a poor user experience is unlikely to return. But for every new visitor you acquire through an improved process, there is a better chance they will convert and become a long-term paying customer. The result of both of these is that your increased revenue will grow way beyond the initial uplift. Your marketing efforts just became a whole lot more efficient!

The huge potential of being able to convert more visitors into customers, or being smarter at acquiring higher-value visitors, is the great ability that web analytics brings to the table. And Google Analytics is a class-leading product in this field.

Suppose that by looking closely at how visitors interact with your website and using techniques such as sales funnel analysis, exit points, bounce rates (single-page visits), and engagement metrics, you were able to improve your online conversion rate from 3%