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Are You Following the Money in Digital Analytics?

2014-11-august-money-go-round.jpg

As someone who has been involved in digital — web — analytics since it was an early practice in 1996, I’ve always been acutely aware of the challenge of mapping metrics or analyses to real world measures such as revenue or cost savings.

And I’ve always contended that you need to think in these terms if you want the analysis of your digital channel to be relevant to your organizations.

I took this so far as to open my 2005 book, The Executive’s Guide to Web Site Measurement and Testing with this: Money makes the web-go-round.

What Really Matters

For your organization’s web site, there is only one metric that matters: How much money is it making?

  • This question can only be answered with a $ sign
  • This question cannot be answered with a # derived by visits, hits or clicks
  • This question cannot be answered with a “Yes”
  • This question cannot be answered with an explanation that includes the phrases “they loved it”, or “they really like the colors"

So now you may be wondering: Why don’t more people talk about the web in terms of revenue? The web has been used as a business tool since 1995. Yet when asked how their web sites are doing, most people do not quantify success in terms of its contribution to revenue. They discuss web success in terms of visits or hits.

Why is this?

  • A) Their web sites are not making money.
  • B) They do not know how to calculate whether their web sites are making money.
  • C) They do not care whether their web sites make money.

Or, maybe you answered:

  • A) Our site does not make money. It saves money because it reduces calls.
  • B) Our site does not make money. It only has content.
  • C) Our site does not make money. It is meant only to give our organization a presence on the Internet.
  • D) Our site does not make money. It is there only because our competition has a web site.

It Always Comes Back to Money

If you have a site where you are selling products and merchandise directly, it may be easy to answer whether your organization’s site is making money. For those who have sites that do not sell directly, it may be more difficult to see a direct relationship between the web and your business revenue.

  • Costs saved = lower operating expenses = higher income
  • Customers served = loyal customers = higher income
  • New markets exposure = new customers = higher income
  • Content provided = greater outreach = justification for higher budgets, contributions, sponsorships = higher income

No matter how you use your site, you must identify your financial stake. This is the first step towards increasing the profitability of your web site.

You Can Control What You Know

  • If your organization wants to spend its web budget wisely, and make money from the site, you need to figure out how much money it is making and saving.
  • If your organization wants to make more money from the site, you need to figure out the best way to bring visitors to the site, and how to help them find what they need to find.
  • If you don’t know this information, you will be risking thousands of dollars in the hope that a new design, new content or new functions, will make the site a contributor to your organization’s profitability.

You can increase your site’s profitability if you pay attention to how it’s doing. How do you evaluate how your web site is doing? You set goals and measure performance against those goals.

Measurement is the key to understanding what is occurring on your site. Good measurement gives you information that you can use to make decisions on how to improve your site.

A Good Barometer

I’ve pretty much maintained this philosophy over the years … and it has often sparked disagreement with clients who don’t see themselves as profit-generating institutions. Yet I think that the $ sign is a good barometer for measurement. That's true even if it is an indirect reason such as demonstrating success in the digital channel so you can get more budget to spend on digital programs or proving that you are deserving of a raise for delivering value.

Having the money goal in mind is all well and good if you are in a position to influence strategy and tactics, whether it is for the web portal, marketing campaigns, social media and so forth. But this suggests that there is a digital strategy to influence, and I still see this as a pretty big gap. Many organizations don’t have a strategy, so it’s difficult to have a framework where digital analytics (and now multi-channel analytics) can inform strategy.

Where does this leave you if you want to influence overall strategy with analytics?

 

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