How to make decisions based on data, rather than assumptions
Mar 12, 2012
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One of the great enabling factors of the Internet is the quality and the wealth of data we now have to make better, more informed decisions. In years gone by, putting an advertisement in a newspaper or a sign in a street was a “spray and pray” strategy where a marketer hoped that potential clients would see the advertisement and take an action. The famous saying “Half of our marketing budget is wasted, we just don’t know which half” was incredibly true as there was no way of determining the effectiveness of a campaign. The Internet has also revolutionised the way we deliver and distribute software. With much more software being SaaS (Software as a service) it is now possibly to have real time analytics running that can be used to run experiments and make constant tweaks in order to improve the user interface based upon real end user performance.
The Internet has created an incredibly powerful feedback look for testing, experimenting and validating ideas and assumptions. Just about everything you put online can be tested and experimented with in a cost effective way. This means there is now no excuse for launching expensive campaigns that are ineffective or wasting time with assumptions that have not been proved.
Here is a quick overview of the feedback loop, it’s origins and 4 ways you can start collecting data to improve your websites.
The birth of the feedback loop
It’s no secret that Google completely revolutionised the online marketing industry with it’s Adwords service. For those of you that don’t know, Google’s Adwords allows anyone to place a contextual advertisement on Google’s search results. The amount the advertiser pays is determined in an auction and they will only pay if someone clicks on their link. This has a number of big implications;
- Each advertisment price is determined by the market
- The advertiser only ever pays when Google actually delivers a user to the company’s website
- Users are already qualified as they have specifically searched for your key words
So at this stage, an advertiser knows exactly how much it will cost them to get a single user to their homepage. This was revolutionary at the time because before that access to this can of data was impossible.
However Google took it a step further. In 2005 Google acquired a company called Urchin Software for their software called Urchin. Shortly after acquisition, Urchin would be renamed to Google Analytics.
With their Google Analytics software, Google had closed the feedback loop for online marketers. Google made the following possible;
- Place a contextual advertisement infront of a user who is specifically looking for that key word
- Determined the price of a single click based upon market dynamics so that every single advertisement was not a penny over or under priced
- Allowed an advertiser to track that user from Google, through to the landing page and through the checkout process
What Google did was they finally created a marketing feedback loop that allows any advertiser in the world to place an advertisment and see exactly how that advertisment performs through detailed data and analytics.
With this in mind, here are 4 ways you can use the Internet to collect data and run experiments for your website, software or online marketing today.
4 ways to collect data to make informed decisions
1. Google Adwords to pick names
Picking a name for your company or your product can be very difficult. You want something that is easy to remember, represents your product or company but is also appealing to anyone hearing it for the first time. Traditionally you would have to pick a name and then ask as many people as you could to give you their opinion. This isn’t a very scientific way of separating the good names from the bad however, because people won’t always give you good data back. Instead set up multiple advertisements on Google Adwords with your different name suggestions as the main title. You can then set up a landing page with an email capture form, and you will have exact data on which of your possible names the market likes the best.
2. Track search in Google Analytics to see what people can’t find on your website
When designing your website you will have made a lot of assumptions on what content should be displayed and where it should be positioned. However users to your site might be looking for something that is very specific, but there is no obvious path to that page. By setting up Search analytics, you will be able to see what people are searching for on your site. If a number of people are searching for a particular page, it means they can’t find it due to your bad design. Now you have data on your users, you can redesign your site so popular pages are easier to find.
3. Use Website Optimiser for A/B testing
If you are trying to convert your traffic in any shape or form, you should be using A/B testing.
A/B testing, split testing or bucket testing is a method of marketing testing by which a baseline control sample is compared to a variety of single-variable test samples in order to improve response rates._
This is really important for just about any website, even if you aren’t explicitly trying to get a certain action from your traffic.
Once again Google make A/B testing very easy through their Website Optimiser. Here you can set up various experiments and track the effectiveness in order to test your assumptions and raise the conversion rate of your website.
4. Set up Google Analytics goals and funnels
Google Analytics goals and funnels are a key element of getting the most out of your website data. A funnel is the intended path you want a user to take in order to complete an action.
For example, you might want your user to follow this path in your ecommerce website;
Product page -> Checkout -> Payment -> Confirmation
Google analytics allows you to track how a user progresses from each stage, or if they drop off midway. This is important because you might find that your Checkout page is too confusing and so you might be losing a lot of potential customers at this stage. This data would suggest that you should redesign and simplify your Checkout page, an insight you would not have without the data to suggest it.
A goal is simply what you want a user to do. So for example, if you want a user to click a particular link to go to another page, you would add a little bit of code to your link so this could be tracked using Google Anayltics. You will then get data that shows you how many people “completed” that goal. If users aren’t clicking on that link as you would expect, perhaps it’s time to redsign the link or make it more prominent. Again you wouldn’t know this without the insight Google Analytics can provide you with.
Conclusion
There really is no longer an excuse for wasting time and resources on assumptions. Building a websites is not a one time event, you should be constantly looking to refine your website or online software to increase usability and increase conversion rates. The data we now have is invaluable for gaining real insights into your customers and your potential market. Don’t be left behind by your competitors by not making the most out of the data that is available.
What ways do you use data to improve your websites or web based software?
