Most of you reading this will already know of our Website Review Process. I describe it as a small dollop of consulting to help those considering our services locate the major road blocks to online success.
We always start these sessions with a look at a client’s Google analytics account. (And if they don’t have one we set them up and let it collect data for a few weeks.) Most we talk to have either a) not seen their reports for a number of weeks or months or b) not seem them at all because they delegated the task to someone else after being baffled with what they saw having looked once.
Nevertheless, it’s critical to start here because without knowing how a website manages its visitors, we will have no idea what’s working and what’s not. Fortunately, in all cases those working through the Website Review are successful business people who know their way around a set of accounts.
So we translate our findings into the equivalent of a standard Profit and Loss report, referring to what in the Website Analytics world represents Revenue, Expenses, Profit and Tax. For the brave, we also delve into the Balance Sheet, pointing to where the Assets are in this online world.
The analogy is sound, as what people do on your website helps line (or not line) your pocket. That’s obvious with an e-commerce website. For lead generation websites things are more subtle. For
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instance, prospect visitors could complete the enquiry form, or call your 0800 number, or even download your PDF buyer’s guide. All of these actions qualify them as willing to move further down the sales process.
Every business needs a reliable way to record revenue. The same applies to optimising your website – you need a complete and accurate way to capture all the “revenue” your site generates.
So every time someone completes a sale in your shopping cart the same order information that goes to your website’s order processing area also goes into your web analytics tools. And if your Contact Us form is being completed 13 times a week then your analytics tools need to know this too. By capturing both you will be able to locate which piece of website traffic delivered these nice juicy actions so you can try to get more of it.
Funnily enough, most websites are sloppy at tracking “revenue”. For instance, e-commerce websites may track the number of sales, but not the value or the products purchased. As a result, while they may know that each sale cost $50 in Paid Advertising clicks, they won’t know the ROI for this spend.
In the real world business are generally great at tracking revenue but sometimes not be so good at tracking expenses. When it comes to managing a website, the opposite is true.
For instance, every business pays for website hosting. What comes next depends on your level of sophistication. For some the list will include Google Paid Advertising, Facebook Advertising, Content Writing Services and even Website Optimisation Services from companies like ours. You just need to list them out and the costs next to them and you have a list of monthly expenses.
As in the real world, Revenue minus Expenses = Profit. Lead generation sites have a harder time than their e-commerce friends to match revenue to leads, but it can be done. Now the super-duper tracking work of website analytics can help you match the line items of expense with their commensurate revenue.
For example, your credit card was debited $150 last week by Google’s Paid Advertising system. Was that value for money? If the “revenue” of your website was being measured accurately then answering questions like this is a breeze. Just log in to your Google Analytics account and filter your traffic by only those visitors delivered by this stream of traffic and see how much was created.
E-commerce websites make this a breeze, as you simply compare sales versus costs. In lead generation land it could be five contact requests and two report downloads – all for $150 – which could be a steal. Imagine if Google told you there was twice as much traffic available for another $150. Then it would be a 10 second decision to double your advertising spend if you could see the matching revenue, something that those without such tracking would struggle to do.
And that brings me neatly to the subject of Tax – and how it applies to online marketing.
Basically, this is the cost of not knowing. I’ve heard it disparagingly called the “stupid tax” of online marketing. It applies especially to Paid Advertising but across every facet of website optimisation. For instance, let’s say you set up your first Paid advertising account with Google and, as you were in a hurry, you did it in just 15 minutes from keyword selection to ads running live.
By moving at speed and not gathering sound advice you could well pay twice as much for every click than you should – for the life of your account. That’s a lot of tax. The more time you take to learn what’s happening on your site, the less tax you’ll pay, and therefore the greater your profits.
And of course you can do two things with profits – pocket them or spend them on assets.
Let’s be clear on the spaces you own in online marketing compared those you rent. First off, you rent Facebook, YouTube, Google+ and any other space on the Internet that is not your website. Now you can decide to invest thousands into a rented space if you want. But I think owning what you invest in is the more prudent choice.
Like all assets, a website depreciates. (Please don’t take any of this as a take on accounting advice – look to your professional CPA here, thanks.) That is, you need to put aside a bit each year to invest in a new one – especially if it is responsible for delivering a sizable amount of revenue into the business.
And that’s it. You have Revenue, Expenses, Profit, Taxes and Assets – each relate to Website Analytics in its own way. And if Website Analytics has been placed in the “too hard” or “headache inducing” pile for a while, then why not pull it out this month and use these terms to give it a freshen up. I would hate to see you pay more tax than you should. Call us if you need help along the way.