June 2010

28 Jun 2010 01:59 am

manyWe have more web metrics and data than there are stars in the universe (slight exaggeration!).

Yet we stink at informing decisions. Our reports are ignored. Sites & online marketing continue to suck.

A large part of the reason is that a large part of our job seems to consist of glorified data puking, hoping someone will be impressed. After all there is so much data in those reports!! #fail

This blog post encourages you see the forest, the much hyped big picture, and shares a framework that will help you ensure that every single moment of your day is spent on activity that will be:

    1. of value to your organization, hence appreciated and acted upon

    2. has a clear line of sight to the one thing that matters: profit

If you don't want your professional life to be frittered away then please come along this short journey.

First some context…

If you have seen one of my keynotes recently then you have heard my near evangelical fervor when it comes to trying to convince you to compute Economic Value.

If you have Web Analytics 2.0 then you already know who much attention is paid to this concept in the book (jump to page 159 for how to compute it for your website).

soccer match win plan

The reason for this emphasis is to help fix our miserable failure at at creating data driven organizations.

To steal your energy away from being just in the report / data production business.

To encourage you to do better than spend a lifetime implementing analytics tools, building data warehouses, chasing the next shiny object.

My recommendation has been:

1. Identify your Macro Conversion (focus on this a lot!).

2. Report revenue. Report like crazy on the 2% conversion rate.

3. Identify your Micro Conversions.

4. Compute the Economic Value (see page 159). Show your bosses and HiPPO's the complete value of your website.

That last one will get any organization to sit up and pay attention.


Because for the first time in their young and passionate life they'll see the complete value your website is adding to the business. And because my dear it will be a huge number that no one can ignore! You are going to tie your work to the bottom line!

Revenue = Good. Economic Value = God! [Also slight exaggeration :)]

Professor Ken Wong's Magic Potion

Prof. Wong is the award winning Commerce '77 Teaching Fellow in Marketing at Queen's School of Business (and an awesome speaker, you should hire him for your next event!).

He took the stage after my talk and said, I am paraphrasing here, "Avinash did not go far enough in his keynote. Economic value is important but the only thing that matters is Profit!"

That was awesome!

One of Prof. Wong's key points was how the success of our work, as Marketers, is measured based on a lot of things but not often enough based on perhaps the most important metric of them all: Net Income.

Prof. Wong covered a lot of key points (as a MBA with a minor in Marketing I wanted to take off my clothes and jump for joy when he said the 4P's of Marketing are killing Marketing!).

I wanted to share two of his slides that left a lasting impression on me.

They are particularly applicable in the web analytics context. In sharing my interpretation of them my hope is it will change a little bit how you think about your work and success.

The very first slide, "Profit: The Ultimate Client Need", shares the key elements that need to function for the outcome (ROI) that causes companies to remain in business.

ken wong roi flow chart

My interpretative points.

Net Income is driven by two important variables:

Unit Margins (how much you make on each X you sell or Y service you provide)

Unit Volumes (how many of X or Y you sell)

Margin times Volume gives you the golden metric Net Income!

[Keep this formula in mind, your life should be revolving around it else you are wasting everyone's time.]

Peel the onion back one more.

Unit Margins is in turn driven by two more variables:

Price (how much you charge for X product or Y service)

Cost (how much it costs you to make X or provide Y)

Price minus Cost equals Unit Margins.

Get it?

So if you want to have very high Margins you have two variables you can control. You can charge lots for your product or service (think of a Vertu phone).

You can also make it at the cheapest possible cost (no phone costs $100k, you make it for $300 and sell it for $100k).

You can of course also charge lots and lots and it costs you a lot to produce (think of a Tesla car). But give some thought to how you'll stay in business.

Continuing the onion peeling…

Unit Volumes, our other variable to have high Net Income, is driven by two variables:

Market Share (is your share 90% or 5%?)

Market Size (is that share of a market the size of Maldives or China?)

Both share and size are important.

You'll sell lots of X or Y if you have a high market share and the limit you'll hit is the size of the market (you can then play in the current size or grow the pie).

line of sight

Line of Sight.

Having a clear line of sight means that you are able to map every metric you report on (or better still torture with segmented analysis to find insights) every single day directly to the strategic objective of the company.

Prof. Wong is suggesting, rightly so, that that strategic objective is Net Income.

And you have only one of four things that you'll move through actions your company takes: Price. Cost. Market Share. Market Size.

Here's my crystallizing question for you. . . .

When you report the metric Page Views Per Visit which of the four are you solving for?

How about with Bounce Rate? Or Time on Site? Or % of New Visits? Or Visitor Loyalty? Or…..

Is there a direct line of sight between what you as a Marketer are being incented on, or you as an Analyst are spending time analyzing?

If not, are you surprised that no one loves you? Sorry… I mean… no one loves your work?

Here is a simple exercise you could go through: Pick out all the metrics you are reporting today (on your dashboards and top reports). Try to put them into one of the four important buckets from Prof. Wong's slide.

The clear line of sight exercise. . . .

web metrics line of sight framework

Were you able to cleanly bucket all metrics you currently report? Time on Site and Conversion Rate and Task Completion Rate and % Internal Site Search Exits and Cart Abandonment Rate and % of the Page Scrolled and % of Visitors Refreshing Pages and all the other sweet things.

Some of the metrics in the above paragraph are complete crap, you are wasting your time and everyone else's time with them. And you'll now discover that very quickly because you won't have a place where you can bucket them.

Other metrics will make you think harder. Where do you bucket Conversion Rate? Are you impacting Price or Cost?

What about Customer Satisfaction? Or Page Rank!

Not every metric will map cleanly, and that is ok. I had to think really really hard to bucket each of my metric in the above picture. Some of the metrics were controversial. But bucket I did.

If it turns out your web metric has no line of site then it might be time to kill.

If the work you do can't be mapped into Price, Cost, Market Share or Market Size then why are you doing it?

Before you dip your hands into Omniture or WebTrends or Surfaid, :), answer that question.

I know it seems like a lot of work for a "lowly" Analyst to do. It is. But without it there is little hope for your personal success (promotions / bonuses) or your company's success (higher Net Income).

"What Matters Most" Fishbone Analysis

As you look at the picture above it is amply clear that the metrics I have chosen in each of the four buckets are perhaps unique to me/my business.

The reason is simple… they are a reflection of the strategy my company is currently executing, i.e. our "world domination via an effective data driven online marketing plan".

This simple truth, that metrics should reflect current business strategy, is the reason I loved another slide from Prof. Wong's presentation.

It leveraged the same framework, but added "what matters most". . .

marketing what matters most sm

[Click on the image above for a higher resolution version.]

The focus is still on Net Income driven by, hopefully, improved Margins and Volume which in turn are driven by much beloved 4 levers of Price, Cost, Share and Size.

What is awesome about the "fish bone" above is that it drills down to the 14 specific strategies that most businesses will use to become great (or simply survive).

You Ms. Web Analyst now have a framework you can take to your Marketing Directors and CMO's to discuss which of the 14 strategies they are currently executing to drive the 4 beloved levers.

Ask any Web Analytics "Guru" or "Professional Speaker" or "I am so important you are paying me $5,000 an hour to give you generic advice Consultant" and they will always tell you that all good journeys in web analytics start with asking your bosses this question: What are the goals of the organization?

The advice is sound (and well worth $5k/hr). The problem is that we never get an answer from the customers of our data / our management. You are $5k x 8 hrs short and still none the wiser.

Get off the slow train to nowhere…. You now have a new BFF: Prof. Wong's "What Matters Most" slide!

Don't ask the generic "What are the goals" question. Ask "Of these 14 specific strategies which are we currently executing".

Once they tell you which ones (be patient, it might shock them that you are giving them something tough and specific to think about), you'll be in business.

The 5 strategies they pick from the right-most column will help guide you in terms of picking the right Key Performance Indicators / Web Success Metrics for your business.

And you know why a win now is guaranteed?

Because each metric you identify starts with a specific business strategy which has a direct line of sight to the 4 beloved levers which will have a impact on Net Income!!!

Minorly orgasmic right? [Trust me, you do this and you'll agree. :)]


Recommendation #1: The Web Analytics Maturity Mandate!

For far too long we have been like toddlers… bumping into things, having a limited vision, working just what we know (which is little).

What I love about this approach is that it forces us to grow up. It forces us to understand what we are solving for: Net Income. It forces us to have a line of sight between our work and the ultimate goal: Net Income. It forces us to not live in our dungeon but rather take a well defined framework to enable the discussion that will yield wins all around.

No lip service to how important process is. This blog post shares what you specifically must do to succeed!

industrial evolution 1

Recommendation #2: Win With Web Metrics: Steps

Here are the specific steps I recommend you follow for optimal execution of the recommendations.

Step 1: Learn Finance 101 and the terms outlined in the slide titled "Profit The Ultimate Client Need".

Step 2: Don't pick any metrics, don't run reports, resist the charms of Google Analytics, Omniture Discover2 etc.

Step 3: Meet with your Management team (or the senior most Marketing person) and identify which strategies outlined in "What Matter's Most" the company is executing (/wants to execute).

Step 4: For each strategy identified in step 3 identify the Web Metrics / KPI's with a clear line of sight to the 4 beloved levers.

Step 5: Use the Web Analytics Measurement Framework as the foundation of all your reporting.

Step 6: Spend you work day on focused segmented analysis to identify actionable insights you can report using the Web Analytics Measurement Framework that will help drive data driven actions on "What Matters Most" so that your company will improve in the one thing that matters: Net Income.

Step 7: The happiness you'll get from leading a meaningful professional life will make you irresistible to the opposite sex which in turn will lead to happiness in your personal life! Enjoy it.

A simple but effective 7 step process.


Good luck.

Ok now it's your turn.

Do you agree that a focus on Net Income and a focus on "what matters most" is key to success in web analytics? Can Web Analytics tie the work they do, the metrics they report, into Price, Volume, Market Share & Market Size? Or is our work simply not that important? In your job today how do you ensure line of site? Will you change anything based on the recommendations from Prof. Wong?

Please share your feedback / critique / ideas.



Zach Olsen, who blogs at By Data Be Driven, has taken the Clear Line of Sight framework outlined in this post and applied it to a medium sized eCommerce website. It is so wonderful, take a look:

zach olsen web analtyics framework sm

[Click on the image above for a higher resolution version.]

Zach's effort is awesome for these key reasons:

  • Really clear line of sight from Business Objective to Net Income.

  • Clean flow from What Matters Most to 4 beloved levers (Price, Cost, Share, Size).

  • (This one I love the most…) Identifying of Targets for each metric! You can't be serious about Web Analytics without doing this!

I hope you are as impressed by Zach's effort as I was.

He has also done something sweet for all of us… he has created a excel spreadsheet that you can download and customize for yourself, and hence get a jumpstart! You can download it at this blog, bottom of this post: Web Analytics Framework Example. Please download it!

My thanks to Zach for his effort and for his permission to share it here.


Couple other related posts you might find interesting:

15 Jun 2010 02:53 am

symmetry 2Most of the time spent by Marketers & Analysts tends to be spend looking for "known knowns".

Things we know and expect to see in the data, we look to see if they are there. "Oh look Google is still our Number 1 referrer and we are selling lots of product x as we always do. Yea!"

Some of our time is spent reacting to the "known unknowns". Looking for things we know might be happening but don't know when they happen. "I would like to know when conversion rate dips below q%, let me go see if that happened last week."

None of it is spent looking for the "unknown unknowns"…. mostly because it is a hard problem to solve. But one that is important for Omniture and WebTrends and Coremetrics and other tools to solve. "I did not even know 20% of our customers were from Australia and that 9 days ago they all stopped coming to our site."

[For one approach to solving the unknown unknowns problem, and source of this framework, please see the second video in this blog post: Analytics Becomes Intelligent. Hello Insights!]

I believe that actions taken based on web analytics data dramatically increase when we shift from our obsession with the known knows to the known unknowns.

From: "Oh my God I did not know that metric had crashed for that segment!! If only I had known that I would have taken action sooner."

To: "Thank goodness I had an alert in my inbox about that big drop yesterday, I'm off to fix landing pages for that segment. No I can't talk to you about Desperate Housewives, I have to go take action!"

And you know what? That is easier to accomplish than you might think.

All you have to do is use the built in Custom Alerts feature in your web analytics tool (and every single tool worth its salt now has one, so you have no excuse not to use it!).

How does it work?

You want to know when something of value happened. But you don't want to hunt and peck at data. You want to be poked with a stick that it happened. You need. . . .

google analytics custom alerts

Being told when to look at important things you can take action on, sounds magical and revolutionary? It is. :)

In this blog post I want to share some alerts with you with the hope that it'll spark your creativity.

I also want to hear from those of you who have already use this feature. What is your favorite alert in Omniture? What is the one alert that you created in WebTrends that saved your job? What is the first alert you create for a client, and why?

But before we go jump into the alerts pool naked and all excited…

A Prerequisite:

There is one important reason custom alerts are not used more, or when used they provide little value: A lack of focus on the important.

Many of us toiling away in the field on the front line are just tasked with producing "numbers", or fulfilling certain contractual reports production expectation.

So the alerts we end up creating might be on random things, guesses, what we feel might be important or, again, random things. If you triggers alerts based on that you shouldn't be surprised no action gets taken.

Worse to impress our bosses we might spam everyone with alerts and it takes only a few days for people to configure their email filters to send all your alerts directly into spam.

Please do not underestimate how horrible this problem is.

So what's the fix?

You want the known unknowns right? Ask people around you what they want to know that is important to the business, but currently unknown.

You are asking what the business objectives are, you are asking for the goals, you are asking about targets.

In short you need to leverage the Web Analytics Measurement Framework. . .

objectives goals targets kpis

See how important alerts to identify the known unknows just pop out at you right away?

If you don't put in the effort, as a in-house employee or as a outside Consultant, to go through the process of working out the Web Analytics Measurement Framework you will fail at this.

Spend time with your HiPPO's and Clients. Spend time with the Marketers. Spend time with people who have the power to take action. Ask all these people what's important but they don't know.

That'll give your effort the focus that will guarantee action.

You skip the above process and all you are doing is self foreplay that will yield nothing (except frustration).

A Helpful Tip For Increased Success:

In championing a rethink of how we all approach our segmentation strategy in our web analytics tools I had recommended a Web Analytics Segmentation Selector Framework.

123 foam blocks It advocated identifying actionable insights by focusing on three key activities:

1. Acquisition 2. Behavior 3. Outcomes!

Do the same thing with your custom alerts.

Rather than creating all kinds of alerts, they are easy to create, go through the exercise recommended in the segmentation post and focus your energy on the 1. the top priorities and 2. things decision makers might action.

In web analytics it is never ok to not focus on the most important. It is especially criminal behavior if that waste of time and life is cause by you firing off "alerts".

Remember the tale about the boy who cried wolf? Don't be that.

Creating Custom Alerts:

You have your objectives, goals and targets squared away. You are not going to boil the ocean, you are going to focus on identifying the known unknowns in 3 key buckets, for things people care about.

Now, finally (!), it's time to get down to business!

It is not very difficult to create custom alerts. If you use Google Analytics in the left navigation click on Intelligence, then click on the link that says Create new alert. If you are using Site Catalyst or Yahoo! Web Analytics etc please check your user manual.

Let me walk you through a simple one.

You've convinced the HiPPO's that Twitter is where it is. Their response: "Meh!" But you have permission to tweet a storm away, but not during work hours. So you set out to do this as a hobby, but you know you are right, and while you don't want to spend looking at every twitter visit, you want to be alerted when twitter revenue shoots up!

Step one is to choose your primary alert settings. . . .

custom alert step one

Give your alert a name. In this case High Twitter Revenue (since you are already adding campaign tracking parameters) to your tweet urls.

With Google Analytics you can apply this to one of your websites or all of 'em or just to a selected few. Quite convenient.

Choose the period for which the data will be analyzed. In this case you want to know the moment glory is achieved. You can also choose Week or Month.

Finally choose (with the check box) if you want to be emailed or for the alert to just be noted in analytics.

So far easy right?

Step two is choosing the sweet settings. . . .

custom alert step two

You choose the dimension you are interested in. There are a bunch to choose from. New vs. returning visitors, countries, campaigns, a particular page someone came from or a page someone landed on your site etc. Depending on the tool you use you might have fewer or more options.

I choose Source and the Value I use is twitter.com.

Note the Condition in the middle. Quite important. You can choose Matches exactly or does not contain or ends with or whatever. This one box can be your shining moment or the start of your embarrassment, choose carefully.

Now for the last step. . . .

custom alert step three 1

Choose the metric you want to focus on.

If this is your first alert, or the first few, try as hard as you can to focus on activity #3, Outcomes. That is what people care about the most. Try to resist, for now, the temptation to alert based on visits or time on site or % of new visits. They are nice and all but really…. no. :)

I choose the metric I like as an outcome on my blog (remember a non-ecommerce website!): Per Visit Goal Value.

Now the KEY PART!

For my value I choose 2. There is a lot of thinking behind that.

Not only do I want to prove Twitter brings in revenue, that would be easy. I want to prove that my efforts with Twitter are so magnificent that they will knock your pants off.

So I don't just have a alert set up, it is set up to cross a high bar. My average Per Visit Goal Value is $1.14. My alert is set to be triggered at $2.

You don't win people over by just meeting some averages, you win them by being big and brave. Keep that in mind when you create alerts.

Ok lecture over and as it turns out I am done with my first alert!

Click Save Alert, do a little jiggy, wait for glory.

When it comes, when you've cleared the high bar, it will look like this:

google analytics custom alerts email

If you did not opt for your email to be sent in then it will look something like this in your web analytics reports:

google analytics custom alerts intelligence

Now you know when an unknown that you might not specifically be looking for has occurred and you can, as the email says above, partake in "happy analyzing"!

[Note: If you use Google Analytics make sure you use Annotations to add a quick note with your victories directly on the graph. These Annotations can be shared with others and now when they login they'll also say: "Ohhh that Jennifer is so smart, getting us so many wins, we need to promote her!" Video: Analytics Annotations.]

Ideas For Cool Custom Alerts:

The important word in "custom alerts" is the word custom. As in what you will end up creating will be custom to your business, based on what's important to you.

But I want to close this post with some ideas for alerts I have created recently. My hope is simply to spark your creativity as you use this cool feature.

#1: "Head" Keyword by Bounce Rate.

The "head" of your search terms consists of a few keywords that bring in very large amounts of traffic. A very prudent alert is one that keeps an eye on any ups or downs of these ten or so keywords.

high bounce avinash kaushik keyword traffic

I have set the bounce rate around 10% higher than what it actually is because every little increase in this bounce rate is bad for me, and I want to know that.

If you are running very specific search campaigns whose goal is to attract lots of new visits, then set up a alert for that.

If you, God forbid, are trying to get more page views for people who come from Bing, then set up an alert for that. [Note: The god forbid is for the metric not for Bing!]

Focus: Acquisition. Success: Initial goal met or not.

#2: Campaign by "Things of Real Value".

These are my favorite kinds of alerts.

Far too often we are obsessed with conversion rates in an eCommerce context. Why not focus on things that actually matter, things that might indicate real success or failure?

Like Average Order Value. Or Quantity (of items)?

Here's an alert I create, all the time, to set a higher bar of accountability for my campaigns (especially when I have a lot of people / resources dedicated to them):

google analytics custom alerts campaign quality

Tell me when some email campaigns I am running cause an unusual spike in the number of items ordered. I want to know what I am doing right there.

In this case I am focusing on one specific campaign, you could focus on all your email campaigns to allow you to identify the diamond in the rough quickly.

#3: New Visitor by Revenue (Increase).

Making money from our existing customers is important, but getting better at convincing new customers to do business with us is important as well (especially in the context of the fact that we shamefully ignore all our existing customers and focus all the time on getting new ones!).

I like an alert like this one:

custom alert increase revenue new visitors

Tell me when I have an amazing increase in my daily revenue (not conversion!) from New Visitors when compared to same day in the previous week.

I have set a high enough bar for revenue, a 20% increase, before I am distracted by an email. Note also I have been careful to compare like week days, I don't really want to compare Sundays to Saturdays (for obvious reasons).

As soon as I get the alert I go look at an advanced segment I have already created for New Visitors to dive deeper into the sources (campaigns, direct, search) that might have seen this revenue spurt, the pages or products on my site that are doing well. All to learn what I should do more of.

Of if you apply the condition "% decreases by more than" then things you should stop doing!

#4: Source by Time on Site (Customer Behavior).

I am a movie studio. I have trailers for my movie. I have a blogging strategy. I would like to know when parts of that strategy are causing buzz and word of mouth and viral and …. pick your fav phrase. :)

Here is one small alert:

blogs engagement analytics alert

Thanks to your clever use of event tracking you are able to capture time spent watching the movie trailer optimally. The above alert will show you if there are any sites with the word blog in their name that sent visitors that watched your entire movie trailer (a rare occurrence! :)).

NOTE: Now I know that referral path contains blog will not capture all the blogs (like this one!). Remember this is just to spark your creativity.

#5: Country by Huge Visits.

I don't syndicate the content of my blog. But I did give Sidney permission a little while back to translate some of them into Chinese (like this one). He does a wonderful job.

Almost all of the success of my posts at China Web Analytics will be measured by Sidney, his increased readership or comments or rss subscribers or (sadly) number of times it is copied (pirated?) and posted without his permission on many many other blogs.

But there is a small amount of success for this effort that I can measure.

Do I get any traffic from these posts?

I don't know when it happens (a known unknown!) but I have set up an alert to let me know if there is a big improvement in Visits in context of my current 1,200 averagevisits from China…

increase in chinese visits 1

When this alert is fired off, perhaps in sync with Sidney's publication of my posts, I'll know syndication was a good idea (on this small measure of success).

You can do the same if you have goals / priorities that are geographically focused.

Flip the coin…. and let's say you are the awesome South American giant Mercado Livre and you depend on the US for a good chunk of business.. you can set up custom alerts to know when traffic from the US or Florida or Miami takes a nose dive.

Consider that alert as insurance that if something broke in your online marketing strategy that you will find it quickly.

In Conclusion:

Custom alerts enhance your ability to find surprises in your data, things you might not be expecting.

If you start by using the Web Analytics Measurement Framework it will help bring a focus on what's important to your execution. If you use the Segmentation Selection Framework you'll find that it brings a discipline to your approach.

I hope the above five examples inspire you to go give the feature a whirl, regardless of the web analytics tool you use because all of 'em have it.

Your Turn!

I have barely scratched the surface of what is possible. How do you use custom alerts? Has an alert you had set up saved your bacon? Does your tool provide a particularly clever option? Do you have a best practice you want to recommend?

Share your ideas for custom alerts (for any type of website, using any tool)!


Couple other related posts you might find interesting:

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