Analytics Case Study: When your Conversions don’t matter

 

The first question you may ask after reading the headline is,

how it can be possible that conversions don’t matter?

“Conversions always matter. If my website is getting conversions then it is impacting the business bottomline.Period”

Yes conversions always matter if they are ecommerce transactions.

But if your conversions are goal conversions and not ecommerce transactions then there is always a possibility that they are adding little to no value to your business bottomline.  In fact it is more likely than you think.

 

Case Study: Newsletter Signups

Let us suppose that you setup a goal on your website which is triggered every time a person signups for a newsletter.

You set up this goal because you believe that newsletters signup is an excellent way to engage with your target audience and generate repeated visits which could results in more sales and leads.

Say you set up this goal 6 months ago and you are getting like 10 to 20 additional signups each month.

Consequently your website is getting conversions and both the conversion volume and conversion rate are increasing over time.

Everyone is happy “we are getting conversions. We are doing something which is impacting the business bottomline”

Hold your horses right here.

How you are so sure that newsletter signups are adding any value to your business bottomline?

What is the goal value of your newsletter signups?

Is it increasing over time?

If you have not set up any goal value for your newsletters signups, then your conversions are not adding any value to the business bottomline. Why?

Cos you can’t prove it.

You are assuming that your marketing efforts are impacting the business bottomline but you don’t have any solid data to backup your claims.

You have no idea up to which extent newsletter signups are adding economic value and whether you should even bother sending out newsletters in the first place.

 

I know you are very smart and you have added goal value to your goals and your goal value for newsletter signups is $100.

You got 150 newsletter signups last month and they added a total economic value of 150X$100 = $15000 to your business bottomline.

Now my question to you is from where you got that $100 figure?

Please don’t tell me that you made up this number. Because if you made up this number than neither I nor anyone else would trust the made up economic value of $15000. So again your conversions are not adding any value to the business bottomline as your calculations are all wrong.

 

How to compute the true value of Goals

So the smart question to ask here is:

How many people who sign up for our newsletter eventually end up buying products from my website?

Or

How many people who sign up for our newsletter eventually end up hiring my services?

If you have a solid answer to this question then only you can compute the true value of your goal.

Let us suppose that after a deep analysis, you found that 10 people out of 150 (who signed up for the newsletter) eventually end up buying products from your website and they bought products worth $400. So the average value of a newsletter sign up is

$400/150 = $2.67

This is your true goal value for newsletter signup.

The total economic value added by 150 newsletter signups is $400 (150X$2.67) and not the $15000 as reported earlier.

Now let us suppose that the average cost of creating and sending out a newsletter is $3.

In that case should you even be bothered running a newsletter campaign?

What if the average value of a newsletter sign up turned out to be $0?

 Shouldn’t you immediately stop newsletter campaigns?

You are optimizing something which really doesn’t matter in the first place. You can savethousands of man hours by just computing the true goal value of your conversions.

 

What other Goal Conversions you should test today?

Some other goals worth testing:

1. Visit duration – how many people who spend 3 or more minutes on your website eventually end up buying your product or hiring your service?

2. Pages/Visit -  how many people who visit 3 or more pages on your website eventually end up buying your product or hiring your service?

3. Visit to the contact us page -  how many people who visit ‘contact us’ page on your website eventually end up buying your product or hiring your service?

4. Visit to the about us page -  how many people who visit the ‘about us’  page on your website eventually end up buying your product or hiring your service?

 

For all of the above goals you need to determine their true goal value.

If the goal value remains $0 month after month then there are only two possibilities:

1. You are not working hard enough to improve your conversions.

2. You have picked up wrong goals for your business as they consistently don’t add any value to the business bottomline.

 

The Brutal ‘So what’ Test

The number 1 way to set up and track meaningful goals, is to ask the ‘so what’ question.

Ask yourself the ‘so what’ questions till it starts hurting you (because you no longer have any business bottomline impacting answer) or till you have found an answer which can have a considerable impact on your business bottomline.

If you don’t ask this question you may get ‘stone cold stunner’ more often than you think from your marketing efforts.

Let me give you couple of examples:

Example-1:

Marketer: “I will create infographic of Matt Cutts’

Analyst: “so what”

Marketer: “I will let Matt know about it. He will tweet it and we will get publicity”

Analyst: “so what”

 

Example-2:

Marketer: “I will tweet all day long. I will personalize every tweet”

Analyst: “so what”

Marketer: “This will increase the possibility of getting more retweets and attention from other bloggers”

Analyst: “so what”

Marketer: “This will improve our klout score and possibility of getting retweets for our posts in the future”

Analyst: “so what”

Marketer: “This will make us influencer”

Analyst: “so what”

 

Example-3:

Marketer: “We should increase the blog post frequency from 1 to 3 each week”

Analyst: “so what”

Marketer: “This will result in more new and repeated visits to the website. “

Analyst: “so what”

Marketer: “repeated visits leads to user engagement and user engagement leads to brand loyalty “

Analyst: “so what”

Marketer: “brand loyalty leads to more sales and leads “

Analyst: ok. That sounds great. Let us track how blog post frequency improves our business bottomline.

Keep asking these ‘so what question’ till you get a business bottomline impacting answer.

In majority of cases I have noticed that replies started to become more and more vague and they keep getting away from the core business goals.

In some cases I do get replies which can have a considerable impact on the business bottomline. These are the goals that really matter and you need to track and validate such goals.

The ‘so what’ analysis is so powerful that I can guarantee you that it will change not only your business priorities but even your life goals for good.

 

 Takeaways

  • Never track goal conversions without setting up goal value.
  • Compute true value of your goals.
  • Your total goal value must increase over time.
  • Goals which consistently add $0 to your business bottomline month after month are not your goals.  Abandon them and set up new goals.
  • Carry out the ‘so what’ test on your ideas before you even think of tracking them as goal conversions and don’t stop until you get the business bottomline impacting answer which is worth testing.

 

Other Posts you will find usefulMeasuring Content Marketing Success in Google Analytics

 

Himanshu Sharma About the Author: is the founder of seotakeaways.com which provides SEO Consulting, PPC Management and Analytics Consulting services to medium and large size businesses. He holds a bachelors degree in ‘Internet Science’, is a member of 'Digital Analytics Association', a Google Analytics Certified Individual and a Certified Web Analyst. He is also the founder of EventEducation.com and EventPlanningForum.net.

My business thrives on referrals, so I really appreciate recommendations to people who would benefit from my help. Please feel free to endorse/forward my LinkedIn Profile to your clients, colleagues, friends and others you feel would benefit from SEO, PPC or Web Analytics.

 

 

  • http://twitter.com/phil_od Phil O’Doherty

    “So what”…. “So what”. I love seeing what I’m often thinking during these conversations written down. Great post.

  • Nitin Choley

    overwhelming post, an idea how the conversions matter…..
    ‘so what’ theory

  • http://makethemclick.com.au/library Mark @ Make Them Click

    I argued my own take on this quite awhile ago, and illustrated that a site with 2% conversion rate can easily out perform one with a 20% conversion rate. What!@@#$%

    http://makethemclick.com.au/library/conversion-rates/confessions-of-conversion-rate-commando/

    It’s all in the dollars.

    • seohimanshu

      Thanks for the share.