Setting Up an Evidence-Based Business
By James Atkinson, LLB
Web Analytics - Setting Up an Evidence-Based Business: Google is a hugely successful online business. If there is one commercial theme you should adopt from Google, it is this:
Data Beats Opinion!
Virtually everything in an online business can be tracked, tested, and optimized. The web is a goldmine of opportunities just waiting for companies and marketers willing to adopt an analytics culture of - Quantitative Intelligence + Action.
The internet not only gives you a vast amount of data, it also makes tracking and testing fast, easy, and economical. You can track practically anything online. Marketers can measure every step in how prospects behave and react to marketing campaigns.
You can use data to spot patterns, trends, and problems and identify key changes.
Have sales suddenly spiked? Are there higher visitor numbers from a certain geographical area? Are keywords dropping off in usage? What’s the best action to take right now? These sorts of questions can easily be answered with web analytics.
But it’s is not just numbers. Realistic future planning is based on understanding past and present data. A central plank of a track and test regime is optimization - using numeric insights to continuously prove then improve.
Past and Present as a Guide for the Future
You can use past and present data to project future direction. This involves constructing a hypothesis of why patterns occurred in the past, which in turn helps assess present actions and strategies for the future.
An online marketer recently told me he never bothers with analytics because marketing is an ‘art’, he ‘knows’ his customers really well and that’s sufficient.
Yes, marketing as an intuitive art is useful. But, intuitive marketing should remain around 20%. The rest, 80% of marketing and business decisions, can be guided by fact-based analytics.
What I am saying is that the marketing ‘art’ or intuition should be based on facts. Put another way: act on fact - in an artful way.
The next image, adapted from Thomas Davenport, shows how this culture works:
The arrows represent a typical analytic process but in fact the whole system is interlocked as a solid core for marketing and business decisions.
Creating a culture for your online business gives you scientific, objective, evidence-based processes. Analytics can help answer fundamental business questions.
In business and marketing what you don’t measure you can’t analyze - and what you can’t analyze you can’t improve. Many eBusiness owners do not understand or know how internet analytics can really make their business zing! Brian Eisenberg, a renowned eCommerce writer said in 2008:
“For Amazon, success comes from a continuous cycle of optimization (measure, refine, test). Compare this rigorous approach to the fact that over 75% of online retailers don’t do any optimization testing, and you’ll begin to see why Amazon remains the envy of e-commerce marketers.”
It is interesting that 75% of online retailers don’t do any optimization testing! This figure was obtained from a credible survey.
Lots of amazing things flow from this statistic. I am convinced that online retailers would test and optimize - if they knew about the benefits of online testing. And of course, since so few businesses actually test and optimize - there are great opportunities for entrepreneurs who DO learn and take the trouble to test, track, and optimize.
It’s not as if this stuff is expensive! Google provides an amazing array of online testing – FREE. Measurement and evidenced-based marketing is a key to a successful eBusiness.
What you do need to know is how easily internet software and technology can be used to measure, analyze, and fine-tune, all the activities that occur on your sites.
An eBusiness that does not measure, test, and improve is not going to be very profitable and is probably doomed to failure. My own research and a number of polls indicate that a majority of eBusinesses do not use online analytics.
It is so much easier to leverage your eBusiness with analytics. Leverage is getting maximum performance for the same time and money you spend to get mediocre results. It is the ability to optimize performance in everything you do.
It costs the same time and money to write: an ad, an email promotion, and a sales letter that converts at 0.5% to one that converts at 5% or more! One headline in an ad can outperform another by ten times or more. It usually costs you the same to run the ad, but you can get ten times better performance!
Much of internet technology is new. An internet business can do wondrous things – compared to an offline business. Testing will tell you with laser-focused accuracy exactly what works and what doesn’t work. So the productivity and profit potential for eBusinesses using online analytics is enormous.
A process occurs whenever you do something. To create maximum performance, you need to measure what you’re currently doing and test ways to improve it.
Online businesses are in the best position to leverage business and marketing, because just about everything online is easily measurable! Finding new things to test should be an ongoing challenge – make it a game to see how much you can improve and try to beat your own record!
Most businesses never track and test their processes, so ongoing testing will put you way ahead of the game.
There are many ways you can do this. For example, in marketing text you can TEST:
- One headline against another;
- One price against another;
- One up sell product against another;
- One bonus against another …
There is room for improvement in everything connected with your eBusiness. Keep finding new ways to improve performance and you will be way ahead of your competitors and well on your way to achieving exponential growth.
This is not guesswork – it’s the only way to scientifically refine and optimize your business and marketing processes for maximum performance. Remember, exponential growth doesn’t have to just be one big improvement - it’s likely to be lots of little improvements that really add up. I discuss exponential growth below.
Let's look at why you should track test and optimize.
Web Analytics > Setting Up and Evidence Based Business > Track Test and Optimize >
Thomas Davenport, Jeanne G Harris, and Robert Morison: Analytics at Work, Smarter Decisions, Better Results, Harvard Business Press, 2010, p.7.
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