Web analytics is the collection, measurement and analysis of Internet data for purposes of optimizing web presence. The most used service for web analytics is Google Analytics.
You aim to understand and utilize causes-and-effects. Analytics always involves measuring, analyzing and acting. If one of these steps is missing, you are not doing analytics.
When event A happens, you realize that also event B happens. Does A cause the B or is there C that causes both A and B?
Data you collect is either quantitative or qualitative. Most data is quantitative, but qualitative data is just as important.
Quantitative: Something you can count. How many users have visited your site?
Qualitative: Something you cannot count. How users would feel it the service was shut down?
- How many people visit the site? From what source?
- How many stay more than 10 seconds or go to 3 or more pages? Source?
- How many show great interest e.g. signs up or gives email.
- How many fill account profile data after sign up.
- How many reads emails and updates?
- How many friends does he refer this product to? How many sign up?
- How much do we generate from a single user? By source?
Make sure your measurements are context aware. Consider filtering data by related channel; where user came from.
All web analytics should be based around actionable metrics. If you just collect data, review it and do not act upon it, it is not web analytics.
Metrics are generated from the data you collect. You should focus on improving one or two metrics at a time.
Pirate Metrics (AARRR): Activation = How well user enjoys the experience. -> Measurement: Daily Active Users (DAU). -> Improved with: product quality, features. Retention = How well people keep coming back. -> Measurement: churn (portion of users leaving). -> Improved with: Emails, social marketing. Acquisition = How well and by what means do people find you. -> Measurement: signup percentage per channel -> Improved with: SEO, marketing. Referral = How frequently do users tell about you to their friends. -> Measurement: invite rate. -> Improved with: campaigns, social media integration. Revenue = How much money do you get from your users. -> Measurement: User Life Time Value (LTV). -> Improved with: monetization, pricing, advertisements.
Metrics help you to create actionable goals. If possible, try add or change one thing at a time so you can more easily follow which provides the most positive effect.
Encourage Usage: -> Focus on improving activation: -> When user signs up, only introduce the most interesting features. -> Give virtual points from content creation. -> Get user to comment on something. -> Gamification: progress, awards, leaderboards. -> Red Carpeting -> Send 100 shirts to your first 100 customers. -> Give your best users a shout out in an email newsletter. -> Give your VIP users access to exclusive content. -> Keep a Twitter list of your best users and retweet them. -> Focus on improving retention: -> Send an email to promote a new feature. -> Start sending periodic emails when the user activity is lower. -> Send tip emails to customers e.g. 1, 3 and 7d after registration. -> Send an automated email to customers when something happens. -> Send emails to educate users how to create content. -> Follow users that leave and stay, what is the difference? -> Ask users why they quit with a personal email. -> Build a community. Get More Users: -> Focus on improving acquisition: -> Start content marketing. -> Get visitor email address. -> Get visitor to create an account. -> Focus on improving referral: -> Add social media integration. -> Get user to share something. -> Make sharing inside the product easier. -> Offer better customer service. -> Give referral bonuses. -> Gamification: leaderboards. -> Periodically send email discount codes that are valid for 48h. Make More Money From Existing Users: -> Focus on improving revenue: -> Get them to buy something. -> Improve cross-selling. -> Improve your catalogue.
Only watch the metrics you act upon. Hide all the metrics and data you do not act upon. Do not waste time watching useless metrics.
Only act on significant trends. What you consider to be significant depends on the product. But always keep the check-up interval constant.
You are experiencing less user sign ups three days in a row. - If your goal is to increase sign ups 15% per month, wait. - If your goal is to increase sign ups 5% per week, act right away.
Balance is the key. Balance between the short-term and long-term. Check your metrics daily. Take time to understand what is changing and why. But do not make snap decisions. Plan your actions and wait if the event becomes a trend you can analyze.
Trust the metrics, not the effort.
Etsy spent five months creating an infinite scroll. After launching, it caused people to buy less items. They removed the new feature after a week.
Always improve related to yourself. Never use statistics from other products or companies when optimizing your product. They are in no way comparable.
Web Analytics Terms
Funnel: Funnel is the process of converting visitors to paying customers. In pirate metrics, acquisition and referral are the funnel part.
1. 100% of visitors land on the page. 2. 40% of visitors stay more than ten seconds. 3. 10% of visitors register as users. 4. 1% of users pay for the service.
Key Progress Indicator (KPI): The one value that you currently use to track your progress. You should check KPI every day.
How many subscriptions has been sold today? How many people cancelled subscription today?
Monthly Recurring Revenue (MRR): How much revenue you will make next month if you do not lose customers, gain customers and none changes their payment plan.
You have 2 customers, A and B. A has $20 per month plan. B has $120 per year plan. Current MRR is $30.
Churn: Percentage of people that stop using or playing for your product, it is used to measure retention. Note that if a user cannot leave, he should not be included in the calculations e.g. if a customer has a yearly plan.
Number of customers who left / Number of customers that could have left.
Segment: A segment is a visitor group that have something in common. Usually segments are used to separate visitors from which source they came from or when the user joined the service. Calculating CAC and LTV per segment may give you a better insight on which marketing channels you should focus on.
Visitors that came through Facebook. Visitors that came through Google Ads. Users that lives in the United States. Paying users that started paying in February 2013. Visitors that use Android device.
Cohort: Cohort is a portion of your users based on when they signed up. A good way to understand retention and customer lifetime value.
Everyone that signed up in January form the January cohort. If January cohort was much bigger than December cohort, you should look reasons for it.
Daily Active Users (DAU): How many people were online and did something today?
There were 1000 users online today. 700 of them read more more than 3 articles, so they were active. 500 of them commented on those 2 articles.
Viral Coefficiency (K): Viral coefficiency indicates to how many people a person shares or promotes the product or story. You are going viral is when one person recommends the product to more than one friend. You should not focus on going viral, you will go if everything works.
If 50 users bring 100 users, your K is 2.
Customer Acquisition Cost (CAC): How much it costs to get one paying customer. CAC is channel specific e.g. Facebook Ads, Google search results, radio ads.
$500 on Google Ads gives you 2 new customers, so CAC is $250.
Life Time Value (LTV): How much money you expect to earn from a customer during his membership. LTV should always be bigger than CAC. May also tell you what kind of customer you should serve.
Life Time Value = Average Revenue Per Customer * (1 / Churn Rate) 1000 customers (without free trials) that make $25,000 revenue. Average Revenue Per User is $25. 20% of users leave every month so the churn rate is 20%. This means the average length of the relationship is 5 months. (5 * 20% = 100%) LTV = $25 * (1 / 0.2) The LTV is $125.
Trailing Six Months (TSM). Metrics can and should be compared to trailing six month value. This gives a better picture where you are heading as it reduces the noise.
TSM for any metric = (6th_month_value/1st_month_value) ^ (1/6-1)-1.