Testing & Tracking Your Advertising: Website Metrics

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Testing & Tracking Your Advertising: Website Metrics

September 24, 2008

This is core to your success, especially online where there’s no excuse not to track everything down to the penny.

You need to always be well aware what ad campaigns are pulling in the best return on your investment.

There are several key metrics to doing that:

Cost Per Lead – often, this means how much did you spend to get one name and e-mail address from one person? Let’s say you spent $100 to get search engine traffic to go to a certain page on your website designed to ask them for their name and e-mail address to sign up for your newsletter. Now let’s say that $100 brings 200 people to your site, which is a cost of 50 cents per click. Out of those 200 people, let’s say 10 of them decide to take you up on the offer, which is a conversion rate of 5%. In the situation I just described, your total Cost Per Lead would be $10 because you spent a total of $100 to get 10 signups.

Cost Per Sale – More important than Cost Per Lead is your Cost Per Sale. This is how much you had to spend to get someone to open their wallet and actually purchase something from you. Continuing from the example above, let’s say that out of those 10 newsletter subscribers, 4 of them end up buying your new book for $30 a piece – a conversion rate of 40%, which brings in a total revenue of $120. Since your newsletter was an e-mail that (for all intents and purposes) was free for you to send out, your only real expense here is the time it took for you to write the e-mails, your credit card processing fees, and of course the raw cost to produce the book. But let’s keep it simple and say that your cost in this case was simply $2 per book including shipping. Now you’ve still spent the $100 in advertising costs to get the 10 subscribers, and now you have an additional cost of $8 to fulfill the 4 books that were ordered. Your total investment so far was $108 and you managed to bring in $120, leaving you with a whopping $12 profit. Whoopty-doo, eh? Well, not quite. Because next let’s talk about…

Lifetime Customer Value – this is the most important metric of all. The reason why the above example isn’t too bad (and actually is pretty darn good) is because what if, out of those 4 new buyers, 2 of them go on to purchase your more expensive personal coaching program for $2000? That initial cost of $108 has now yielded several thousand dollars in revenue. I ask you: if there were an ATM machine you could go to and for every $108 you fed into it, it spit out $3500 to $4000 back – how many times would you feed it the $108? Now you can easily see how this changes the math considerably and why it’s a good idea to always take into account lifetime customer value before being too rash about your advertising expenditure. In fact, many businesses view the first sale as merely a cost of doing business and are more than happy to break even (or sometimes even lose money) on the front end in order to acquire more subscribers and customers, and make up for all the expense by marketing over and over to the same highly interested, highly qualified group of people.

So if you sell a front end product for $50, what’s the most you should be willing to pay to get a buyer and still be safe?

Answer: $50 (for simplicity’s sake, I’m ignoring costs like credit card transaction fees, etc… and besides, if you need to take such small things into account to be profitable, the venture’s not worth pursuing anyway)

Obviously we’ll always try to make as much of a profit as we can on the front end. But for the most part, think of your front end process as “buying a customer.” Because once you grab that name and address out of the ether, they’re yours to protect, nurture, and cultivate until they either buy, die, or tell you to stop communicating with them.

That’s how the game is played. And knowing your math is key to your survival and your success.

So you need ways of tracking ALL this stuff automatically.

First, this means installing web analytics software on your website. The one I use is the excellent Google Analytics, which is available at http://analytics.google.com for free. They give away what would normally be an expensive software package because they want to increase the number of likely advertisers on their Google Adwords search advertising system.

Second, this means setting up a Google Adwords account and also using their “Website Optimizer” software. This will allow you to test the conversion rates of different key pages on your site and compare the results to multiple versions of the same page so that you can drop the poor performers and continually improve the winners. You must always be constantly improving the conversion performance of your site. (Example: How might our hypothetical example above change if our front end conversion rate doubled and instead of 10 newsletter signups from $100, we now found a way to get 20? The profit numbers are staggering.)

But until now I’ve left out one important part of the profit equation: the source of the website visitor. Where did they come from? Different visitors coming to your website from different sources will behave completely differently and therefore give you wildly different numbers.

Sam coming to you from Google where he typed in “real estate investment course” is going to behave completely different from Mark who came from a banner ad on a gold bullion investment website, who will be different still from Harry who came in off of Yahoo because he typed in “investment advice.”

Each of these 3 guys came from different locations with different mindsets about investing and saw different versions of your ad copy (at least I hope so) before clicking. Getting each one of them to sign up for your investment newsletter is going to require a slightly different approach in what you say to them and how you say it. This probably means sending each one of them to 3 separate pages on your site, each having a different pitch to sign up for your free newsletter. Each mini-pitch will cater to a different set of beliefs and desires – maybe even make different promises of benefits.

This is only the beginning of how you need to think about your web marketing.

All of your keyword advertising needs to be tracked down to the exact phrase and the exact source. Your banner ads on other sites, your promotional e-mails you send out, your website’s most (and least) popular pages – everything – must be tracked so you can be continually improving what’s working, dropping what’s not working, and ignoring everything else.

Each day you’re not testing something new, your sales process gets a tad bit weaker and your business dies a tiny bit. You can go like that for awhile, but sooner or later, even the best ads tire out and even the best websites get old and stale. You’re either growing or you’re dying; there’s no middle ground.

Everything matters on your website; color matters, what you say and how you say it matters, your choice in graphics matter.

Examples of small tests done to different websites that dramatically improved sales:

1. Calling a group of your products “Best sellers” or calling them “Most popular”? Most people don’t like the idea of being “sold” and saying that something is popular implies that “if everybody else is doing it, it must be good” – so “most popular” won by a longshot.

2. On one of my websites, I labeled a section of things I didn’t want people to miss “Must Reads”, then later changed it to “Top Secret” – reading implies work and a lot of people don’t like to work. However, people do like to discover secrets and forbidden things, so Top Secret won by leaps and bounds. Also, you should know that “discovering” implies the answers are already there waiting for them, they merely have to open up the treasure chest and take a look. But learning and studying means lots of work.

3. Saying that a group of products “Start at $50” or are “As low as $50” – well, if something “starts at $50”, you can bet the price can only go up from there. But if its as low as $50, that just has a more pleasant ring to it. Easier on the wallet.

4. “Shop for lava lamps” or “catalog of lava lamps”? A “catalog of” something is passive and boring, while a lot of people associate shopping with a degree of fun and excitement. To shop is also an action verb, which helps too. Anytime you can give your visitor a direct command without sounding threatening is a good thing. (By the way, “shopping” is different than being “sold” something. The seller is in control of selling, while the buyer is in control when shopping. A very subtle but important distinction there.)

5. In one of my marketing pieces I tested calling my prospects “travelers” versus “tourists” – well, everybody knows that a “traveler” is a sophisticated citizen of the world; a person admired and respected by his peers… while a “tourist” waits in line at the claims office and gets mugged immediately after setting foot on the beach. Nobody wants to be a tourist.

6. I once tested the “Hacker Safe” logo versus the Better Business Bureau logo on one of my sites for credibility purposes. Now this was shocker; more than 51% of the site’s visitors responded more favorably to the Hacker Safe logo than the long established reputation of the BBB. When I examined further into this, I discovered something I hadn’t known before; in study after study, a surprising number of people in the United States really have no idea what the BBB is or what they do. On the other hand, with “Hacker Safe” you don’t even really have to know what they are in order to understand… it’s all right there in the name.

7. I’ve tested this on my order forms: big red ugly arrows next to my submit button or just the normal button and no arrows? Time after time, I’m learning that ugly has an appropriate time and place. In many cases, arrows improve conversion. Even different colors of arrows will yield varying results. Yellow and blue tends to make people more anxious and click, while red tends to stop them in their tracks and linger awhile. That’s why I often use a dark red in my headlines and blue and yellow order buttons with big ugly arrows pointing to them. Work a heckuva lot better with them than without.

8. Saying “We ship worldwide” on your site versus putting a string of little multi-national flags along the top? Yup, the flags increased conversion and stopped people from calling to ask “Hey do you guys ship to …” And yes, even though it says something very clearly on your site, you’ll still get people e-mailing and calling you asking about it anyway. That’s just how some people are.

9. Using audio and/or video on your site also usually increases conversion. Remember when doing audio or video that the same AIDA rules STILL apply. You need to use the audio and video to supplement your text sales message, not replace it entirely. Another clever use of video would be showing them exactly what will happen after they order. This gives them a “behind the scenes” look at things without making an up-front commitment.

10. Testimonials – use them often and sprinkle them everywhere you can. Make them as believable and “real” as possible. No “M.H. from Missouri” – say “Mark Hardy, construction worker from St. Louis, Missouri working for Hogan Construction. Then provide a picture, text of his testimonial and if possible even an audio clip of him expanding and elaborating on what the text portion says. Ideally, if you wanted the best kind of testimonial possible, you’d use a video of the guy speaking directly to the prospect via the camera about how great your product is and how much it helped him get over his back problems, make more money, etc etc.

11. Header graphics – always make sure the content of your website begins well “above the fold” (well within the dimensions of the computer screen) and as far up to the beginning of the page as possible. Where a lot of sites go wrong here is by having huge fancy “professional looking” header graphics that not only do not communicate value to the prospect, but also consume valuable website real estate that could be put to work for you in far better ways. On checkout processes, you need to get even more strict with this, sometimes eliminate the header graphic or navigation system of your site completely. Let nothing distract your visitor at the moment of truth when they’re about to give you their credit card number. While you’re at it, you need to remind your dear customer-to-be that her purchase today is protected by secure 128-bit military grade data encryption – the same kind sites like Amazon.com and eBay use. Actually, all sites use 128 bit encryption, but don’t count on your prospects to know that. Most people have no clue about that stuff.

12. Photos – I’ve talked about stock photography in a previous post, but it bears repeating in this one. My personal take is: don’t use it. Ever. Even if your alternative is badly lit, out of focus shots of relatively ugly people, my own personal tests have proven to me over and over again to always opt for highly realistic, believable photos over the clear, crisp “too perfect to be real” fakeness of stock. Not only is it cheaper for you to pull off, but it generates far more attention and commands unparalleled believability among your prospects. Highly realistic photography was my dirty little secret weapon as an eBay PowerSeller for years; while my competitors used stock photos from the manufacturer’s website, took my own photo of the machine running on my bedroom floor with a ruler in front to demonstrate the size of the product. As a result (and combined with a few other secrets), my listings got far more views and far more sales than any other guy selling the exact same product. I was believed and trusted. The others created doubt… and doubt kills a sale.

People buy for their own reasons. As marketers, it’s up to us to figure out what those reasons are, understand them, and then communicate how we provide the answer through our offering. Not everybody gets it right immediately and different appeals are needed for different people.

That’s why we must test. It is our duty to our customers to give them precisely what they want. And in doing so, we make them happier, and they make us happier by giving us more money more often.

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