Web Analytics - Creating Business Growth

Web Analytics:
Creating Business Growth

By James Atkinson, LLB

Web Analytics - Creating Business Growth. There are basically three ways to grow any business. Making continuous improvements in these three areas is a key to exponential growth:

Increase the number of customers
Increase the average value of a sale
Increase buying frequency

I am grateful to Jay Abraham for this idea. Before I show you different ways to grow your business here are some practical examples:

Exponential Growth

Most entrepreneurs grow their business in a slow, linear way – one element at a time. However, there is a better way to grow your online business. Web analytics and internet technology make it relatively straightforward to obtain exponential growth. That is, entrepreneurs can improve multiple elements of their business – at the same time.

Let’s look at lead generation as an example:

Leads per
Month

Conversion %

Sales per Month

Average Value per Sale

Monthly Revenue

Annual Revenue

100

10 %

$100

$1,000

$12,000

The following is how a linear approach increases business revenue. Let’s say you are able to increase the number of leads per month by 10% - you will get 110 leads per month.

The conversion rate remains unchanged at 10%, so you will get 11 sales per month. Annual income increases by 10% to $13,200.00.

So if you increase one variable by 10%, your revenue increases by 10%:

Leads per
Month

Conversion %

Sales per Month

Average Value per Sale

Monthly Revenue

Annual Revenue

110

10 %

$100

$1,100

$13,200

Now, what if you increased twovariables at the same? The result would be the beginning of exponential growth.

For example, if you increase the number of leads per month by 10% and the conversion rate by 10%, your annual revenue is $14,520.00 – a 21% increase. Notice how you get a little “bonus” growth!

Leads per
Month

Conversion %

Sales per Month

Average Value per Sale

Monthly Revenue

Annual Revenue

110

11 %

12.1

$100

$1,210

$14,520

Let’s increase three variables: the number of leads, the conversion rate, and the average value per sale by 10%.

Leads per
Month

Conversion %

Sales per Month

Average Value per Sale

Monthly Revenue

Annual Revenue

110

11 %

12.1

$110

$1,331

$15,972

Your yearly revenue then increases by 33% to $15,960.00!

Your bonus or dividend growth has also increased. The larger the performance improvements you can make in each area, the bigger your “bonus growth”. This is the power of exponential or compound growth.

Now, let’s say you increased three elements of your business by 25% each over the original numbers. This sort of increase is quite realistic for an eBusiness.

This would almost double your yearly income to $23,437.50!

Leads per
Month

Conversion %

Sales per Month

Average Value per Sale

Monthly Revenue

Annual Revenue

125

12.5 %

15.62

$125

$1,953

$23,437

Again, your bonus margin has increased. But it certainly doesn’t stop there. Once you start looking, everything can be improved:

Make these performance increases more than once;
Augment more than three variables across your business;
Enlarge performance by more than 10%?

Your revenue growth could be enormous!

The secret to exponential growth is continuously to improve performance in multiple areas and sustain the improvements. There are many weapons in your arsenal to achieve and sustain improvements. It’s not hard or complicated, but they can truly work wonders when used together to improve results.

For example, you can increase an ad click through rate from 1% to 10% - you can improve your sales letter conversion from 0.5% to 5% - you can get customers who buy twice a year to buy four times a year - you can increase the average dollar value of a sale by 15% with up-sells and cross-sells …

… the combined effect of that leverage is exponential growth!

The key is tracking testing. Online analytics allows you cheaply and easily to test everything you do in your business. Google Analytics allows you to do prodigious testing - for FREE.

The following is not an exhaustive list but once you start the process you’ll find an amazing array of ideas you can implement:

How to Increase the Number of Customers

Let’s look at a few ways of increasing customers. For example, to increase lead generation you can:

Encourage current customers to refer others. Social networking is a highly effective way to do this online. See: "Social Media Strategy" in SEO Strategy.
Use persuasion methods for obtaining eMail opt-ins. See Persuasion Psychology.
Acquire customers at break even on the first sale and with profit on the backend. See Sales Funnel:
Add a powerful guarantee to your product or service – make the guarantee for as long a period as you can;
Add new traffic sources, for example, pay per click ads (PPC), organic search engine optimization (SEO), social networking, joint ventures with other marketers’ email lists;
Improve your performance in the traffic sources you currently use;
Run free seminars to educate prospects;
Increase social networking – this is a most powerful online lead generation source, because your “followers” share your content and dramatically increase your visibility and authority across the whole social landscape;
Educate and build relationships to increase trust and perceived value of your products / services.

How to Increase Conversion Rates

To increase conversion rates:

Do market research to find out the benefits your prospects most value and the language they use to express what they want. See Market Segmentation.
Test different elements in your sales process (for example: prices, headlines, photos, calls to action);
Acquire customers at breakeven and making a profit on the backend;
Add a long guarantee period;
Better targeting of your marketing message / traffic source to your audience. See Prospect Segmentation.
Analyze and improve how visitors use your site. What are the typical pathways they follow?
What pages do they typically enter and leave your site?
Make your site easier to use?

How to Increase Customer Retention

To increase customer retention:

Provide ultra-high levels of service;
Communicate frequently with customers and offer relevant free content to build relationships (social networks are a great way to share your content);
Make special offers to reactivate “inactive” customers who haven’t bought anything for a long time.

See:

How to Increase the Average Transaction Value

To augment transaction values:

Change your brand profile to be more “high end”;
Test increasing your prices:

Offer up-sells and cross-sells. You can offer a more expensive up-sell, like a “pro” version of your product or a coaching service to learn how to use the product better.

Most shopping carts can be set to suggest related products (cross-sells);

Up-sell and cross-sell with email follow-ups based on what the customer has already purchased;
Offer incentives to buy larger quantities – for example: buy two - get one free;
Bundle related products and services together;
Reduce Buyers’ Remorse. See Consumer Psychology.

How to Increase Buying Frequency

To increase buying frequency:

Adopt a strong persuasion strategy, See Persuasion Psychology
Understand why buyers buy

Create Reciprocal Relationships - see SEO Copywriting.

Create products for your backend that you can sell after the first sale;
Craft special events like "limited edition" products, pre-release sales, and VIP sales for your best customers;
Stay in touch with your customers to deepen the relationship. Offer good-quality content through your emails and blog is a great way to do this, plus interacting with customers on the social networks (Twitter, MySpace, etc.);
Offer recurring purchase plans – for example, deliver refills every month;
Give price incentives to buy more often – for example: if customers sign up for a plan to have refills delivered every month for a year, give them 15% off the total price;
Segment customers based on interests and buying history so you can offer them products they are likely to buy - see Market Segmentation.
Offer complementary affiliate products to your list.