How to Understand Google Analytics
When it comes to digital marketing, you need to understand web traffic, the conversions that are happening on your website currently, and how to track web traffic properly and accurately. You also need to look at the real value of your customers, not as onetime purchaser, but as their lifetime value.
The first part is to really have a clear understanding of the foundation. And before you dig into the foundation and the framework of a digital marketing strategy, it’s important to understand how it actually works.
When you break down all of your individual pieces, they all need to be able to fit back together. And so often, things get overlooked or not really understood. We see clients that jump into anything because it looks shiny or they heard that it might be the next cool thing, but there is a very basic formula that works in almost every single case.
So, the revenue is the end product, but how do you get there? You need website traffic before you can take an action, and you need that action to take a value.
Let’s say you have website traffic of 1,000 visitors in a month. You figure half a percent will take an action that you want that will turn them into a customer. That customer now has a value. And when you combine those three elements, that value needs to be worth at least as much as the revenue generated.
We find that a lot of clients go into a “digital marketing plan” without actually having a plan. The strategy is the core element that will dictate the outcome of any social media, or paid search or website effort.
Going into something blind leads to wasted money, both in time and opportunity cost. It leads to frustration. And overall, it just leads to a lot of confusion, with no clear direction. When you take a step back and the results aren’t really laid out — you have a little bit here, a little bit there — it just doesn’t really make for a good experience.
At the end of the day, who your team is, is extremely important. The people that you work with, the people that you are entrusting with your marketing dollars and the potential success of your business to is a really important decision. It’s not one that should be taken lightly.
And the issue we’ve seen is that there is very little barrier to entry. There is no licensing. There is nothing to help consumers find out if somebody knows how to optimize Google analytics. Anybody to call themselves a web developer, or anybody can say they’re a digital marketing or a paid search management person.
There are a few elements we can take when looking at the website side of things. What do you need to look for when you say, “I want a website”? Unfortunately, many people start with the content and the design. There is no really clear roadmap defined.
You have to outline what you need as a business and what the end result should be. Only then can you reverse your way back to the start and see what the path should look like. But often people don’t consider getting traffic or where that traffic is going to come from. This path must be considered and entrusted to the right people.
When discussing AdWords with any potential client we say, “Hey, AdWords is a fantastic tool. It’s also a license to throw money out of the car as you’re driving down the freeway if you don’t do it correctly.” We’ve seen the waste of showing ads in cities that you don’t do business in. Absurd things that are just very common. We just saw a local service provider from North Carolina showing ads in Las Vegas. Just think about the insanity of that for a moment.
The purpose of the website is to drive business, revenue, transactions, exposure, etc. Now, most businesses have a website with the single goal of attracting more business. Whether you’re a plumber, or you’re a lawyer, or you sell something, you’re looking to make a sale. And so often the actual conversions are not factored into what’s going to count for a conversion.
Let’s say you’re an accounting firm. Sure, you want someone to go to your website, pick up the phone, and call you so you can do their accounting, file their taxes, etc. However, when a customer comes to that website and they fill out a form to be a part of that newsletter or browse your About Us page, there is still a value. And even though those are what we like to call micro-conversions, they need to be factored in as well.
At the end of the day, you’re either optimizing for a onetime purchase, or you’re optimizing for the lifetime value. Getting someone into your funnel and creating these micro-conversions have big value for businesses.
At its core, we obviously need a certain level of traffic to be directed to our website in order to potentially have an opportunity to create a conversion. If you don’t have any traffic to the site, it doesn’t matter how good it is or what features you have, you’re not going to be successful with digital marketing. If nobody is coming to the website, nothing is going to happen.
You need to think of website traffic like fuel for our car. You need your car to go somewhere. Traffic alone is not going to get you where you want to go. Just like having a full tank of gas, if you don’t have a destination in mind, you’re just going to drive around and burn the fuel.
Oftentimes we’ll have a conversation with a client who wants to build a website. The question we ask is, “What are we doing with this website that we’re building?” It’s one thing to spend time, effort, resources to create something, but we need to direct relevant traffic to it in order to achieve some goal.
Now, you can drive this traffic through an email list. You can drive it through Google Ads, you can drive it through a Facebook page, or a group or Instagram ads. There are many ways to drive traffic. But driving traffic to a website is only good if it’s relevant traffic.
Just because you get 1,000 visitors in a month or 2,000 visitors in a week, it’s only good if those are people that are potentially your customers. Otherwise, you’re going to turn into another billboard business where you’re factoring in the millions of people seeing the thing for no reason.
And once you have the right type of traffic, all the traffic in the world does nothing unless you can actually convert those leads into sales. And that sale doesn’t necessarily have to be a tangible dollar amount.
Now, a micro-conversion can be anything from an email signup to someone spending X amount of time on your About Us page or scrolling down. That micro-conversion ultimately has a value on it and that value gets applied in small ways towards the goal of being able to turn that prospect into an actual customer.
Let’s say someone goes to an insurance advisor’s website. They’re browsing around, they sign up for a newsletter. That’s the first step in that insurance advisor being able to have the opportunity to turn them into a customer.
And just because someone went to the website, it doesn’t mean that they’re going to be a customer, obviously. But getting them to sign up to the newsletter is the first step because then you can offer content, engage with them, send them reminders, send other content relevant to what they’re looking at, etc. Although there isn’t a transaction of money, there is a value applied to whatever micro-conversion you’re talking about is.
Let’s say you have an eCommerce site gets 1,000 visitors a month. And out of those 1,000 visitors, five of them turned into sales. That is half a percent for your conversion rate. Now, what happens if you’re able to turn that half a percent into 1%?
What does that do for most people’s business? It doubles, with the same traffic that they’re already getting. And that can happen through multiple micro-conversions and multiple touch points that the customer is inadvertently taking on this customer journey.
For most businesses, they’ll be able to double their sales without any sort of increase investment, if you will, and they’re turning it in from content that they already have from advertising, SEO, social media, etc.
You have the potential of significantly increasing our bottom line from the traffic that you already get to the website. That’s a very exciting potential. And that comes down to making optimizations to your content, layout, and structure, and of what you have going on to direct a customer or potential customer better.
So often proper tracking isn’t in place. Businesses are driving blind because Google Analytics is not set up properly on the site with Tag Manager and all the other tools. It’s like trying to drive a car without a speedometer or a fuel gauge. You’ll never really know how far or how fast you’re actually going, or how much longer it is to the conversions.
Just because you have a website and you can collect newsletter signups, or get phone calls or form submissions, it doesn’t mean you understand what’s happening in the background. If you don’t have the proper tracking in place, you don’t know where any of that traffic is coming from. You don’t know what happens after they arrive on your site.
How long is that customer spending on your website? If someone is spending 10 minutes of their time on a website, it certainly makes it for a much more engaged customer than someone spending 30 seconds.
Google Analytics is the tool that will function as your business analytics dashboard for your website and your digital marketing efforts. It’s put on with a very simple script. That script will load on every page. It provides information about where a user came from, which pages they’ve clicked on, how long they’ve stayed on a site, what city they’re coming from, what demographic they’re a part of, what the user typed in your site search, etc.
All of this is data is gold for us to determine what somebody is doing, and what trends are happening on your site. And we can glean opportunities and create changes to the website to further improve our optimization and conversions.
Google Analytics allows you to get a very clear understanding of who your customer is and how they’re interacting on your site. It’ll merge that big black box, that X factor, in your entire digital strategy.
Now, for the businesses that have print or radio or TV commercials, that’s fine and potentially you can track some of that activity. But from a digital landscape perspective, Google Analytics is going to incorporate all of the website traffic, all of the traffic from their email, anything from their ads, and it’s going to put it in one common place. What often gets overlooked is the value that you can extract from that to apply to your businesses.
Let’s say you own a pool service that charges $100 a month to clean someone’s pool and you get 1,000 visitors a month. If your website converts at half a percent, that means on average one visitor to your website would be worth 50 cents. Now that’s a tangible metric you can look to optimize.
At a certain point, if you’re putting money into any form of advertising, but you don’t acquire one customer out of 1,000 people, you’re going to end up losing money. Now, that’s not factoring in that a pool service has a longer lifetime value. Hypothetically, let’s say it was for a single purchase, the principles are the same.
Now, what happens if you’re able to convert at a higher rate and turn that half a percent into 1%? What would that do for that same amount of traffic? It would instantly decrease the actual cost of customer acquisition.
Essentially, we’re doing more with the traffic that we currently have, allowing the bottom line to grow, then spending more money on advertising to generate even more traffic to the website. This is all seems like a natural flow and the right way of things.
And being able to have that full understanding of where the customer is coming from will allow businesses to understand what channels are effective versus which aren’t. And if you already have the traffic, then you don’t need more traffic. You just need to improve and convert at a higher rate the customers that are already coming.
So with your pool service business, if you’re getting 1,000 people to your website in a month and people are not clicking on your Services page or they’re not clicking on your About Us page, then you can take that data and do something actionable about it. You can find ways to position info about the services or about the company on the homepage, or maybe a different page, or you can have ads with different links.
But without this data, you’re driving blind. You don’t know what to put the focus on. You don’t know if you should have more images. Maybe you need more testimonials. Who knows?
Instead, if you use Google Analytics and find that people always go to your Testimonial page, you can then optimize to see which customers out of everyone who goes to the Testimonial page, then picks up a phone and calls. All that’s tracked through your Google Analytics dashboard. Eventually, we get to the point where we are continuously improving.
It’s like a car engine with many moving parts. The parts individually don’t necessarily have a big impact, but when you put everything together, you have a finished product that works well. There are so many pieces of the puzzle. When one piece is out of line, it needs to be realigned in order to ensure that the thing is working as accurately as possible.
Sometimes we’ll have a conversation with a potential client who’s interested in AdWords management and they’ll say, “Well, what kind of returns can I expect?” And we’ll say, “Look, we don’t know. How could we possibly know? It would be foolish for us to say, you’re going to get X amount from this ad spend, without actually beginning the work and looking at the historical data and ensuring that we’re continuously optimizing it.”
Your digital strategy needs to be thought of as a puzzle with many parts. When you put them all together it works great. But when you’re just starting to put a puzzle together, it doesn’t matter which piece you pick up first. You just need to start with one piece and then you’ll find the rest of the puzzle as time goes on.
The takeaway is that it’s about understanding the traffic that currently exists on your site, looking at what the conversions currently are, optimizing for an increase in percentage of conversions overall, which has a really great impact on your bottom line, then understanding the real value of your customers and being able to track properly to understand who is what and what is who.
The strategy and the framework for your digital marketing efforts need to fit together so you can create a successful plan. Then you can execute the plan and get measurable results.