Far too many businesses fail to track what really matters. All (competent) businesses track revenue, profits, and expenses – as they should. What they often fail to track, however, are the factors that CAUSE profitable revenue to happen.
On average I read one book a week. I alternate between “fun” and “business” (of course, a good business book is also fun to read). One of my all-time favorites is a book called CEO Tools, written by the late Kraig Kramers. First published in 2002, it’s a fantastic read whether you’re a CEO or an entry-level employee. Even if you have zero aspirations of one day ascending to the C-level, this book will give you proper insight into how good CEOs think – which can only help your career.
On the topic of reporting and tracking, Kramers wrote what I consider to be perhaps the most important paragraph of all time as it relates to which metrics (or key performance indicators / KPIs) a business should be tracking. He wrote:
“In just about every business, the activities that cause sales to happen take place at least 30 days before you add last month’s sales dot to the chart. This includes activities like new accounts called on, number of telemarketing calls, responses on a website, dollar value of requests-for-proposal in and/or out the door – anything that must take place in advance of the sale or that drives the sale to happen.”
Twenty years in the business world have confirmed what Kramers wrote 15 years ago. If you’re only tracking revenue after it occurs, you have a (potentially) fatal flaw in your business practices. Think about it. Once that sale happens, what can you do about it? Nothing. You’re too late. On the flipside, once you’ve lost the sale to that competitor, what can you do about it? Again: nothing. Sure, you can follow up and ask about why you lost – which you should – but at the end of the day, you missed your chance somewhere along the way to affect the sale.
Have you ever had to provide a near or medium range forecast? How do you actually know what sales are going to come in at? Simply put, you need to dig far beyond just what you see in your web analytics (although that is a part of it). To do that, you need to work backward from the end result (the sale) and find what really matters. This principle is not new. It wasn’t new when Kramers wrote about it in 2002. It’s simply the concept of tracking and acting on your business’ leading indicators.
Below is a quick example of something useful you can find in your web analytics. When setting up conversion goals, you have the option to develop a goal that you would deem a “quality visit.”
To do this, work backward by looking at the initial site behavior of a visitor that ultimately converted. This is the tire-kicker who was “just looking.” Think about your own buying behavior. On that first exposure to a brand:
- What action do you take?
- How deep into the website do you go?
- Are you on a desktop or mobile device (and does that even matter)?
- What specific content is viewed (and are you tracking it)?
- What does the math look like over time? For example, if you look at a 30, 60, or 90-day window, how many landing page video views do you get versus sales? What is the ratio? In other words, for every 100 video views on that first visit, how many of those users end up later purchasing?
- What does the timeframe look like between the first interaction and the last?
These are all things you can experiment with to really understand what causes sales. But if you’re just looking at your web analytics, you’re most certainly missing the complete picture. The principle applies equally to B2B and B2C scenarios. The metrics may be different, but the principles are the same. Admittedly, it’s more complicated in B2B scenarios because of additional variables like sales reps, resellers, and other non-digital activity, but that doesn’t make it impossible.
For these scenarios, make a list of what is known. Then, track it as far as possible and merge your data. Marketing Automation and CRM tools can (and do) play a valuable role when properly implemented and executed. Before you invest a ton of money and resources into one, try the following:
- Track the sources of your email signups
- Make sure the email has a trackable phone number in it (as well as links, obviously)
- Set up a remarketing list for your email campaign (assuming the volume is big enough to warrant it)
Now, once the sale is ultimately completed, you’ll know the email address of the buyer. (Note: reseller handoffs can complicate this, but things like product registration, asking the question, or connecting the dots in small volume situations can help mitigate that loss). This part is gold. If you have that email address, you have the ability to understand how that eventual buyer initially engaged with you.
With a little bit of math, you can eventually understand:
- What it took to get that email signup
- What an email signup is ultimately worth
- What kind of sales volume you can expect in 30, 60, or 90 days based on the email sign ups you get today
A note about attribution modeling:
You might be wondering where attribution modeling comes into play (or if it even does). This next statement might be blasphemous to some, but I believe that attribution modeling as it’s too often practiced is mostly worthless when it comes to helping marketers understand what “causes” sales to happen. Sure, you gain a better idea of what (visible) tactics were involved, but at the end of the day, it really doesn’t give you something you can pinpoint as the “cause of a sale.” Stare at the figure below all you want and it still won’t really tell you anything valuable:
If you remember nothing else from this post, remember this:
Look for single action events that provide a clue to sales down the line. It usually boils down to a simple number, like email signups, quality first site visits, or appointments set. Do that and you’ll be able to effectively track what causes sales to happen AND do something to positively affect it before it’s too late. Good luck!
Do you know what’s driving revenue for your business? Take a look at our Web Analytics services to see how we can help shed light on your business.