3Cs of Online Measurement: Conversions

Now that the key aspects of the seemingly infinite world of click data have been covered (Part I: Clickstream), it’s time to move on to the reason many sites exist on the Web – Conversions. Even if you don’t have an ecommerce site, incenting visitors to take some kind of action on your site is often a prime objective.

Macro vs. Micro

The first step to measuring conversions is to identify the primary site goals. What do you want the site to achieve? Or why does it exist? An ecommerce site is trying to generate sales. The goal of a B2B site may be lead generation. The purpose of a content site may be to engage and develop deeper client relationships. These larger, end goals are generally considered macro conversions, or those goals that have the most direct influence on the business.

While macro conversions may be the most important, they don’t tell the entire story. There are many reasons why people visit your website – to review product information, receive technical support or apply for a job are just a few. So your site is likely fulfilling important needs, other than directly generating leads/sales. Sometimes these secondary actions, or micro conversions, are indicators that a user is moving toward a macro conversion. But regardless of whether the action is a precursor to a larger outcome, or simply adding informational value to a user in their online journey, to fairly value the site it should be measured in holistic terms. Common examples of micro conversions include product sheet downloads, email subscriptions or job application submissions.

Think KPIs with Conversions

When it comes to determining which actions constitute a site conversion, I encourage you to think in terms of key performance indicators (KPIs), or the outcomes that truly impact your business. KPIs are usually different for every organization, and sometimes require you to look beyond the obvious.

For example, if your product or service has a longer sales cycle, a key performance indicator may be the depth of user relationships – so think Visitor Loyalty and Recency metrics. Or, if product education is a key driver to selling more products for your B2B technology company, you might initiate a conversion for each full view of a product video. The bottom line is to consider what actions are correlative to revenues and therefore most valuable to your business.

Valuing Conversions

Once you’ve identified your KPIs and site conversions, the next step is to apply a value to each. Valuing conversions is commonly overlooked in analytics implementations, especially on non-ecommerce sites. But it’s paramount to accurately comparing different marketing channels, or other more granular analytics dimensions.

Quantifying business value can be relatively simple or fairly complex, depending on the type of business. For an ecommerce site, it’s a no-brainer (product revenue). For a b2b lead generation company, it’s a little more difficult. Assuming you know the average (net) lifetime value of each new customer and your lead to customer conversion rate, it’s just applying some basic math. So if the average lifetime value of a new customer is $10,000 and your lead to customer conversion rate is $20%, then the value of each newly acquired lead is $2,000. Keep in mind that conversion rates and customer lifetime value may vary offline versus online.

If a revenue valuation is not available (e.g. with micro conversions), consider valuing each conversion from a cost savings or asset standpoint. For example, acquiring a email address or other data provided with a content subscription, could by valued based on your cost to acquire qualified names from an offline mailing list you’ve purchased. Sometimes you need to think a little outside the box, but typically attaching some value to each conversion point is better than nothing.

One final note as you’re analyzing values and comparing the ROI of various channels, Google by default attributes each conversion to the last channel, or marketing activity, in the visitor’s journey (called “last click” attribution). But since customers often interact with a site several times before converting, Google identifies each channel that played a role in the path to conversion through its Multi-Channel Funnel report. And since the channel path to each conversion is captured, you have the option to assign conversion value using a different attribution model, such as the first-click attribution (the value of the conversion is applied entirely to the first channel in the visitor journey) or linear attribution (the value is applied across all channels equally).

Conclusion

You don’t have to rely on intuition to find out determine the value of your site and which channels are performing best for you. Regardless of whether you have an ecommerce site, or a simple blog, there is direct economic value that can be attached to most any conversion. So determine which outcomes are most valuable to your business and make more informed decisions about online strategy.