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Using Web Analytics: Fundamental Principles You Need to Keep In Mind

Using webanalytics is one of the most interesting recent developments in the business world, especially as it gets easier to collect and analyze data.

We are now able to look at thousands of data points in just a few clicks and use that data to make better decisions.

However, most businesses arent approaching analytics with the right mindset and are simply wasting their time trying to analyzetheir data. Lets look at where things went wrong.

Easy Technical Setups Lead to Bad Results

Setting upwebanalytics tools such as Google Analytics or Mixpanel is extremely easy. You add a few lines of code to your website or product and you start receiving data within a few minutes.

Information such as:

and much more all becomes available almost in real time. As time goes on, you have even more data which is good for makingbetter decisions right? Thats not always the case as a lot of businesses can attest to.

The issue is that these easysetups lets businesses avoid the proper planning needed when using analytics. You cant come to your data and look for answers. You need to come with your data with specific questions and try to find answers to those questions. To come up with the right questions, you need to put some thought into what those questions should be.

Are these metrics good or bad for business? Without the right context, it’s impossible to know.

 

Expecting your analytics tools to give you all the answers right away is unrealistic and will simply frustrate you.

Imagine opening Google Analytics and thinking Ok Google, tell me what is wrong with my website?. Are you supposed to look at where your customers are coming from? Or perhaps you should look at what pages your customers are looking at? Maybe the answer is in the pricing page.

There is simply no way to answer that vague and broad question with the data in front of you. You need to become more specific in the questions you ask your analytics tool.

Starting With The Right Assumptions

Lets go back to the beginning and look at the right way to start using web analytics. It all begins because you have a business problem that you hope analytics can help you solve. Analytics will not give you the complete answer but it should be able to point you in the right direction.

For example, you want more customers for your business. After talking to other people and reading some articles online, you think that your website could help you bring more customers. You also read that you need some kind of analytics tool to track how well your website is doing and you find out that Google Analytics is a pretty good option and it’s free. You excitedly install Google Analyticsand wait patiently for the data to come in.

After a few weeks of randomly opening the Google Analytics dashboard, you give up and never open it again. There’s tons of numbers and metrics but they aren’t helping you solve the original problem: more customers for your business.

Theres a few assumptions that we went through in the above example which led us to installing Google Analytics in our website but lets look at other solutions that we could have explored too.

Assumption #1: We want more customers for our business

Other possible solutions: You could have also looked into hiring sales reps, setting up a referral program among your existing customers, looking for companies to partner with or sell something else to your existing customers.

Assumption #2: Online marketing could help us bring customers, specifically through our website

Other possible solutions: You could have look into paid advertising such Google Adwords or Facebook or you could set up social media accounts and connect with potential customers there.

Assumption #3: We need an analytics tool to track how well your website is doing

Other possible solutions: You do need an analytics tool but you also need a lot of other things like traffic, some way to convert traffic into customers, and a way to do this all in a profitable way.

The point of the above reasoning is that there are always several options to any given problem that we may encounter. We need to be aware of the assumptions that we are making because they will determine which solutions we end up undertaking.

We shouldnt just blindly follow something that we read online or something someone else told us about. We need to evaluate everything through the lenses of what makes sense for our situation and our business.

Principles Behind Using Web Analytics

Lets continue our example and assume that analytics will play a key role in our online marketing strategy. We also decided that we first need to evaluate how well our website is currently doing which will then let us figure out what is the best course of action for improving it. We learned that Google Analytics should be enough at this stage of our planning.

We now need to look at a few principles behind analytics to ensure we get the most out of our tools and time.

1. A Metric Needs to be Actionable

The first principle is that for a metric to be important and useful, it needs to change how we act. This is a great point provided by the guys behind the Lean Analytics book and it will help avoid focusing on vanity metrics.

If you are looking at a specific metric and wondering if its important, simple ask yourself will a change in this metric affect my actions?. If a metric doesnt change how you act, then it’s simply a vanity metric.

For example, you could look at time on site as potential metric for your business. However, improving this number may be irrelevant to your current goals and thus a waste of time. In this case, time on site is simple a vanity metric. If you report this metric to your colleagues or boss and tell them Look, our time on site went up by 30%, you are wasting everyones time.

A metric like Time on Site is only relevant to your business if your goals are affected by it

If however, you are focusing on increasing the signups from your pricing page, then focusing on time on site on this specific page might be useful. The difference comes from what goals you are trying to achieve and how specific help you get closer to that goal.

2. Start with Less

The second principle is to start with less metrics that you think you need. Tools like Google Analytics capture everything on your site and then simply overwhelmed you with information that just isnt relevant to your business. You then have to dig through the data to find the information that matters to you.

Its fun to look at your data for things like: how many of our customers use iPhone vs Android, how many of our customers browse from their phones vs their laptop or where do our customers from? However, all these may distract you and take you down the wrong paths.

Tools that force you to define what to track from the beginning are better because you have to put some thought into what is important to your business. The time you spend thinking what metrics are important to your business right now will save you a lot of time in the long run. Its much better to start tracking 1 metric and improve your business right now than to track 100 metrics and never improve anything.

3. Ask Your Data Specific Questions

The third principle is that you should always ask your data specific and actionable questions. Asking broad and vague questions will simply frustrate you and waste your time. Questions like What is wrong with my website? and How I can make more revenue with my website? are examples of questions that will not give you actionable results.

However, coming to your analytics with questions such as Where in the funnel do my customers get stuck the most before signing up for my product? and Which specific products generate the most revenue for my business? are examples of questions that are specific and actionable. You can take the above questions and then start digging through your analytics tool until you find the right answer.

4. Create a Feedback Loop

The fourth principle is that analytics is part of a bigger feedback loop within your company. Analytics isnt something that you look at once a month or once a quarter. It should be something that confirms or denies a hypothesis and then you use that answer to form a better hypothesis and then the cycle starts again.

 

The data you receive from your analytics tool changes how you act which should then create more questions and the cycle continues. This feedback loop is constantly working to improve your marketing, product or any part of your of business that could benefit from data.

Its All A Journey

Once you set up your analytics tool and define which metrics matter the most to your business, the journey doesnt end there. Using analytics is a never ending journey as you learn to become better at coming up with hypothesis and becoming better at finding the answers to those hypothesis.

Making mistakes in the early stages is expected and you will become better as time goes on but only if you keep working at it. There is simply no way to get around the work needed to become good at analyzing and using analytics. As you get better, you will become quicker at these two steps and you can then become quicker at improving your company.

Have you ever felt like you were wasting time when looking at analytics or perhaps you got frustrated at your analytics tool? Let me know in the comments or tweet me @ugarteruben.

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