Three Reasons Google Analytics is Worthless for Small Business

Three Reasons Google Analytics is Worthless for Small Business - Duct Tape Marketing

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If you own a small business that has a website, you probably want to know how many people are visiting your site.  In fact, you probably want to know a lot more than that.  You want to know how they got to your site, how much time they spend on your site once they get there, how many pages they look at, and lots of other things.

The go-to tool for tracking all of this information is Google Analytics.  It’s free to use, tracks just about everything you could possibly want to know about traffic to your website, and seamlessly integrates with other services like Adwords.

Of course, being the savvy business owner that you are, you either installed the Google Analytics tracking code on your website yourself or had your webmaster do it for you so that you could have access to all the data it provides.  Now, you can log in to your analytics dashboard and see, at a glance, all the information you need to know to judge the effectiveness of your on-line marketing efforts….right?

Wrong.  The fact is that if the previous statement describes you, the data you see in your analytics account is probably complete garbage.  Here’re three reasons why.

#1: You Probably Didn’t Exclude Traffic from Known Bots and Spiders

In 2014, Google made a change that allowed Analytics users to easily exclude traffic from “known bots and spiders” from the data that you see in your account.  Now, all you have to do is check an obscure box buried somewhere in the bowels of the settings page of your Analytics account, and it will automatically filter out traffic that comes from any site on the IAB “International Bots & Spiders” list.

I’m guessing you didn’t check that box.

After all, you’re not an internet marketing expert, you’re a local business owner.  Chances are you didn’t even know that over half of all internet traffic isn’t even humans, much less know that you had to do something to filter it out.

I’m also guessing that the person or company who designed and launched your website prior to 2014 and installed the Google Analytics tracking code for you (who you probably haven’t talked to in a year) didn’t go back and check the box for you, either.

In fact, there’s a decent chance that even if your website was designed and launched by a professional after 2014, and that person or company set up Google Analytics for you, they didn’t check the box to automatically exclude traffic from known bots and spiders.  They probably either didn’t know about the box themselves, or they just didn’t bother to take the time to do it.

The result is that right off the bat, the numbers you see in your Analytics dashboard probably include quite a bit of traffic from non-humans, which of course is not doing you any good.

Here’s a question I’d love to ask Google: Why the heck don’t you exclude traffic from known bots and spiders by default, and make people check an obscure box to include it, instead of the other way around?

At the very least, why didn’t you create a big flashing message at the top of the Analytics dashboard that asks people “would you like to exclude traffic from known bots and spiders?”

Perhaps you were trying to give thousands of internet marketing bloggers something to write about.  Hey Google, here’s a news flash for you:  if thousands of people are writing instructions about what the average user of your Analytics service needs to do in order to properly use your product, it means you’re failing.

#2: You didn’t do all this other stuff either

Perhaps you are slightly more savvy than the average small business owner, or perhaps your webmaster is a little more on top of things than most, and the secret box in your Google Analytics account has been checked.  You might be thinking that in that case, the data provided by your Analytics account would be more useful to you.

If that’s the case, you’d probably be wrong…because checking that box only filters out some non-human traffic.

In order to even begin to get accurate data from your Analytics, in addition to checking the secret box, you’ll also have to do the following:

I’m going to go out on a limb here and guess that you haven’t done all of that.

I’m also going to guess that if you’re paying someone to help you with your online marketing or search engine optimization, they probably haven’t done that either….meaning any reports they provide you probably don’t mean much.

In fact, in Google’s Analytics Academy, which is the learning center designed by Google to teach people how to use Analytics, there aren’t any lessons on how to filter out spam and bot traffic.  Perhaps that’s because if Google added lessons about that topic, it would be a tacit acknowledgment of the massive flaws in their tool.

#3: There are numerous other problems with the data that you have no control over

Let’s pretend for a second that you have way more time on your hand than the average small business owner, and also an above-average level of technical ability, and you actually took the time to do everything listed in above.

Alternatively, perhaps you have a larger budget for webmaster services than most small businesses, and you were able to hire a webmaster who actually understood how to do everything I listed and could afford to pay them to take care of it.

Surely, now you can begin trusting that your Analytics data is accurate, and start using it to make important decisions about your online marketing, right?

Not so fast.  Unfortunately, even assuming that your Analytics data is only reflecting human visitors to your website (which it almost certainly isn’t), there are still numerous problems with the data.  Here’s just a few:

There are actually many more ways that the data in Google Analytics is either fundamentally flawed or less than completely accurate, and that’s assuming that you have the tracking code properly installed on every page of your website.

These problems have been widely reported on many marketing blogs, so anyone who is “in the know” when it comes to online marketing shouldn’t be surprised by that statement.

The problem is that most small business owners, and most self-proclaimed “digital marketing experts” who work with small business owners, are not very well-informed about this subject.

They either aren’t aware of how unreliable the raw data is, or don’t have the technical expertise to sort through all of the issues listed above.  That’s why Google Analytics is just about worthless for the typical local small business.

Imagine if there were so many flaws in the popular small business accounting software Quickbooks that even most CPAs didn’t understand how to get good data out of it.  Would anyone actually pay money for Quickbooks if that was the case?  The answer, of course, is that they would only use it if there wasn’t any better option…and that’s exactly why people continue to use Google Analytics.

kevin JordanKevin Jordan is a member of the Duct Tape Marketing Consultant Network and the owner of Redpoint Marketing Consultants, a small business marketing agency in Christiansburg, VA.  He’s also co-author of the award-winning book The Small Business Owner’s Guide to Local Lead Generation and the host of the top-rated video podcast The Small Business Marketing Minute Show. You can connect with Kevin on Twitter @RMCVirginia.

The Cost of Customer Acquisition: How Much Can You Spend to Earn New Business?

The Cost of Customer Acquisition: How Much Can You Spend to Earn New Business? - Duct Tape Marketing

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Marketing has become a very data-driven discipline. Marketers spend a lot of time and energy looking at the metrics that illuminate the costs of finding new customers and keeping current customers. In other words, in addition to being a master at the fine art of persuasion, today’s marketer must also be part data scientist.

I recently spoke with Jeff Allen, a Senior Director at Adobe Analytics, about the role data plays within marketing. He compared what we as marketers do with data to the way Billy Beane approached managing the Oakland Athletics in Michael Lewis’ book, Moneyball: The Art of Winning an Unfair Game.

Like many of my peers, I grew up playing baseball. In baseball, you count everything—hits, runs, times at bat, on-base percentage… and wins. Especially wins. Beane’s data-driven approach was created to look at all those statistics and identify the data points that made the most difference in how many times the A’s won—so his team could better compete with bigger rivals with bigger budgets. Beane knew he needed runners on base to get points on the scoreboard and ultimately win. That was a very important metric for him.

“What’s the ‘one metric to rule them all’ in your organization?” asks Allen. “What’s your end goal metric? Is it revenue or is it bookings? In sports, it’s winning. Beane knew if he could improve his team’s on-base percentage and hitting, he could win more games. If you win, you’ll have all the success that’s possible.”

An Important Marketing Metric That’s Often Overlooked

In marketing, like baseball, there are lots of things to measure. Some data points have more value than others. It may or may not be the “one metric to rule them all” in your business, but I think the cost of acquiring a new customer is one of those data points that is critical to understand in any business.

It’s not often that I pull a dusty old marketing book off my bookshelf to talk about a more current marketing topic, but almost 20 years ago I stumbled upon Jay Abraham’s book, Getting Everything You Can Out of All You’ve Got, and I think what he shared in 2000 is still relevant today. When this book was published, Abraham was considered by Forbes to be one of the top five executive coaches in the country. He’s primarily known for successful direct marketing strategies he developed in the 1970s, but I think his insight into this topic is still incredibly valuable.

According to Abraham, “The most profitable thing you’ll ever do for your business or career is to understand…the marginal net worth of a client.”

In other words, the single most profitable thing you can do for your business is to understand the value of an average customer over the course of their relationship with you. So what is the lifetime value of your average customer? Do you know?

“It’s the total profit of an average client over the lifetime of his or her patronage—including all residual sales—less all advertising, marketing and incremental product or service-fulfillment expenses,” says Abraham.

Once you understand the lifetime value of a customer, you can determine how much you’re willing to pay in new customer acquisition costs. For example, if the lifetime value of your average customer is $1,000, anything you spend under that in new customer acquisition costs will be profit—or the marginal net worth of your average customer.

Abraham also provides advice on how to calculate your clients’ marginal net worth. Here’s what he suggests:

  1. Compute your average sale and your profit per sale
  2. Compute how much additional profit a client is worth to you by determining how many times he or she comes back
  3. Compute precisely what a client costs by dividing the marketing budget by the number of clients it produces
  4. Compute the cost of a prospect the same way
  5. Compute how many sales you get for so many prospects (the percentage of prospects who become clients)
  6. Compute the marginal net worth of a client by subtracting the cost to produce (or convert) the client from the profit you expect to earn from the client over the lifetime of his or her patronage

This calculation will work just as well for those who only do business with a new client once. Nevertheless, regardless of how long the average lifetime of your customers is, this metric helps you determine how much you can justify spending for a new customer and how much you can justify spending to keep your current customers. Every additional sale over the average is additional profit for your business and increases the marginal net worth of that customer.

Metrics-Based Marketing Increases Marketing ROI

“Many companies increase their clients and profits merely by shifting their focus from trying to make a huge profit on the acquisition of a new client to making their real profit on all the repeat purchases that result from those new clients,” says Abraham.

If the average lifetime of one of your customers extends to several sales over several years, this approach might even make sense for you. It’s human nature to improve what you measure. Being aware of the lifetime value of a customer will not only help you determine appropriate acquisition costs, it will also help you take efforts to keep your customers longer. You may even be able to justify an investment in keeping them satisfied and coming back for more—basically increasing their marginal net worth.

Ty KiiselTy Kiisel is a contributing author focusing on small business financing at OnDeck, a technology company solving small business’s biggest challenge: access to capital. With over 25 years of experience in the trenches of small business, Ty shares personal experiences and valuable tips to help small business owners become more financially responsible. OnDeck can also be found on Facebook and Twitter.