Sales Revenue falling? – Here’s an Analytics Checklist – Part 3
Over the last two posts we looked at the basics of how to analyse problems in your traffic acquisition channels and some of the sudden conversion failures that can occur as traffic comes to your site. In this post we look at a more subtle problem – that of gradual conversion failure, where your conversion rate falls steadily over the course of a few weeks or months.
What Have you missed – Gradual Conversion failure
This can be the most frustrating and hard to identify problem – as there is likely to be no specific event that has caused the drop off – it will either be a gradual misalignment or a combination of factors.
We talked about stock levels in the last posting, and how reductions of stock can affect conversion. This, of course, can have a similar affect over a longer term period. If you let your stock run down gradually then prepare to see you conversion rate follow it. Customers do not wish to wait for items when buying online, they want it now!
Start with your biggest selling products
Your biggest selling products – are they selling well? These are products that are likely to be in a larger majority of baskets – so problems with these products might affect conversion. If you have a range of products that are significantly more expensive, or convert significantly better, than the norm then this might be a first port of call.
Search Terms
A key problem that often happens is that trends come and go and your site does not adapt to take account of it. So how can you tell whether this is happening? One way is to look at Search terms and Keywords. First let’s look at search terms, and by this I mean the search terms that have been used on site – which you can find under “Content” in Google Analytics. What are the biggest search terms? How are they converting. As people using search are statistically more likely to convert (as they are actively looking for something) this conversion rate should be significantly (2 to 3 times) higher that you site wide conversion rate. If they are lower you should ask why – is it because they are not finding what they are looking for? – in which case you may need to look at your navigation – or is it because once they find the item it is not inspiring them to buy – in which case you need to look at your product offering in terms of pricing and copy.
Landing Pages
You should then compare search terms and Pay Per Click keywords with your landing pages – do they correspond? Do you have your content arranged to match what customers are looking for?
A recent client was having a gradual fall off in conversion, and noticed that they had no specific landing page for their biggest search term. They had plenty of products that were relevant, but they were not arranged in a manner that showed them off to their best advantage when the customer arrived onsite. Creating a specific landing page for that search term had a marked and rapid effect on conversion
Another example of this is a case where it transpired that the top search term was for a product type where they only had 3 items – all of which were priced in excess of the average order value (ie were relatively expensive items). The company knew that this was a problem but had rather put their head in the sand. There were two options – either source a wider range of product (which proved difficult in the short term) or encourage the customer to look at an alternative/substitute product. In the short term they chose the latter course of action – they created a landing page for the search term (and a search redirect), added in the products they had that exactly matched the search term, and also added in some suitable, and lower priced substitute products. The result was that their conversion rate for the search term improved – which dramatically helped their overall conversion.
Keywords and phrases
You should also ensure that your on-site search terms and your PPC terms match each other, or if they do not that you have ensured that your PPC visitors arrive at a fully relevant landing page (and hence don’t have to use search). On site search terms are also a useful guide to keywords and phrases you should consider bidding on in PPC.
Coming Up Next
In the next post we will look at Average Order Value and consider ways to benchmark your performance. If you have any further questions, or need advice or solutions, then email me – justin@grassrootsdigital.co.uk or call 0333 123 0506
Sales Revenue falling? – Here’s an Analytics Checklist – Part 2
Previously we looked at factors that affect the visitor numbers to your site (www.grassrootsdigital.co.uk/sales-revenue-falling-heres-an-analytics-checklist ), but if these have held up then your problem is one of conversion.
Conversion – On Site Performance
If your traffic levels are unaffected and your traffic composition is unchanged then you need to start looking at the performance of your site, and the headline metrics for this are conversion rate and average order value. As the key aim of the site is to convert visitors into customers – being able to systematically analysis on site performance is key – as this represents wasted marketing spend. Again you should first ascertain whether the drop off has been gradual or sudden. If the former then you might ask – “What have I missed”, if sudden ask “What have I changed”.
Getting the tools of the trade right
It all very well identifying the problem when you suddenly have no orders – as something has obviously gone kaput – but its more difficult when your conversion rate has reduced significantly (but not to nothing). It’s back to your analytics (and lets face it – if you’re reading this then its good old Google Analytics!) to ascertain the problem. When it comes to analytics it is identifying change that is the name of the game and to do that you have to know what things were like in the past. This means that your analytics package has to be properly configured before you have a problem – it’s no use getting round to configuring it as the problem starts – as retrospective changes are not on the agenda. So what do you need to configure?
- Goals & Funnels
- Search Query parameters
- Ecommerce Functionality (be careful if you do multi currency transactions!)
- Affiliate URL tags
- Filters to exclude internal traffic
What Have You Changed? – Sudden Conversion Failure
There are a number of potential problems here
Bottlenecks – checkout process/payment methods and Pageload times
Bottleneck somewhere on your site do happen – and the quickest way to identify them is through the Google Analytics ‘Top exit ‘pages (are there any unusual items on the list?). If the checkout process is the problem it will show up in the Funnel Visualisation tool (so make sure you have set it up!). Customers get bored pretty quickly and slow loading pages will do that pretty effectively. If your server is on go slow (either due to traffic capacity or due to database problems) then your customers are not going to hang about. You can check page load times really easily – have a look at the excellent Pingdom for a solution http://tools.pingdom.com/. This problem will usually be accompanied by an increase in the bounce rate.
Stock Levels
One of the biggest “Conversion Killers” is stock levels. As a rule of thumb if you halve your stock then expect your conversion rate to be half as well. An additional issue with stock problems is that they don’t show up on your analytics package. An excellent and recent illustration came from a retailer that was moving fulfilment in-house. In order to save on the cost of moving and to smooth the move process they had new stock delivered to their new in-house warehouse and ran down stock at their operational warehouse. While this produced a smooth handover, it had a disastrous and remarkably sudden effect on their conversion rate – and in the end they lost far more in lost sales margin than they saved in moving costs. The good news was that as soon as they brought all their stock back on line and levels up to their normal level, their conversion rate returned to normal.
Coming Up Next
In the next post we will look at gradual conversion failure – the “What have I missed” section. If you have any further questions in the meantime, or need advice or solutions, then email me – justin@grassrootsdigital.co.uk.
Sales Revenue falling? – Here’s an Analytics Checklist – Part 1
Back to the present though – and assuming you have an analytics package, how can you use it to ascertain where the problem lies? The first step you need to take is to see whether the problem is in traffic levels or conversion – Have the numbers of people coming to your site dropped off or are they still coming to the site in the same numbers but for some reason are not buying? Read more
New White paper – Data Analysis for SME Retailers
This paper aims to help with the first steps in beginning to utlise data and will look at some of the advantages that can be gained from effective use of data. It will also outline some of the difficulties and pitfalls that lie in wait, and some achievable first steps on the road to increased data awareness.
We hope you find it useful
Data Analysis for SME Retailers (166)The Fundamentals of a Business Opportunity
If you are thinking of setting up a new business, or at looking at joining or investing in a start up then assessing that opportunity is critical. How should you assess a potential idea or opportunity? What are the key criteria to consider? This article should help define a suitable methodology to follow. Grassroots Digital have a wealth of experience in assisting small businesses and entrepreneurs in assessing opportunities and developing detailed business plans and financial forecasts, so if after reading this article you need further help or advice then get in touch. justin@grassrootsdigital.co.uk or +44 (0)7980 578 401.
The assessment of business ideas can be summed up very concisely, in a way that fully encapsulates the essential problem in looking at business fundamentals; When does a good idea become a business opportunity? Good ideas occur relatively frequently, but good business opportunities are a much rarer breed. Perhaps the answer to this is that it becomes a good opportunity when it has been fully evaluated with respect to the relevant fundamentals.
Timmons & Spinelli (p119) outline the four main anchors of a business opportunity as being; the creation or addition of value, the solving of a significant customer problem or need for which the customer will pay a premium, the presence of a robust market, margin, growth or IIR and finally a good fit between the business founders, the management team, the marketplace and the risk-reward balance. If an idea is to satisfy any, or all, of these four anchoring principles then it will need thorough investigation and rigorous benchmarking.
This paper will examine how an entrepreneur can extract a good business opportunity from a seedling idea, and will attempt to summarize the fundamental tenets of a viable business opportunity. It will do this by answering the following questions. Firstly, how does one evaluate an idea and in what areas should one gather data? Secondly, how does this information fit into Timmons and Spinelli’s Main Anchors? Thirdly, which of these standards are fundamental and which are less business critical?
For the complete article download it here The Fundamentals of a Business Opportunity (16)
Customer Focused Strategy and Customer Lifetime Value
Customer focus is key for any business but in the past it has been hard to quantify the effects of investment. This paper should help you in “Sizing the Prize” that improving customer focus can deliver. Grassroots Digital have a wealth of experience in assisting small businesses and entrepreneurs in developing their customer focus, so if after reading this article you need further help or advice then get in touch. justin@grassrootsdigital.co.uk or +44 (0)7980 578 401.
Customer Lifetime Value (CLV) is at present being touted as one of the central tools in assessing how well a company is performing with regards to the tactical decisions it makes in handling and extracting value from customers. In concert with this it is, on the surface, through being customer focused that we be build up customer value, via a number of factors that include both tangible and intangible measures. The tangible measures revolve around such things as profit figures, market shares and average revenue figures, while the intangibles include such aspects as brand value, reputation, customer knowledge and service levels.
This paper will attempt to outline a framework for allowing both tangible and intangible results to be assessed and quantified together, allowing financial and marketing measures of performance to be combined seamlessly. It will do this by discussing the following. Firstly it will offer a definition of Customer Lifetime Value, and discuss the implications of CLV on company valuations. Secondly it will examine how a customer focused approach can give improvements in CLV. Thirdly it will outline a model to quantify the effects of a customer focused approach on CLV. It will then take two examples of companies from the same industry, one of which has followed a more customer focused approach than the other, and examine whether any differences in their valuation can be attributed to these difference in customer focus. From this it will make conclusions on using CLV, with these additional customer focus variables, as an alternative valuation method.
For the rest of this article please download at Customer Focused Strategy and Customer Lifetime Value (551)