I am sort of amazed to hear there are people selling online who don’t track their conversions. You can’t have a marketing program that’s informed and effective if you don’t know what your conversion rate is, what your cost per acquisition is or where your conversions come from.
What is a conversion?
Every time a visitor on your website takes a desired action, that is considered a conversion. Most often when we talk about conversions, we are talking about a visitor buying something. This isn’t the only thing considered a conversion though. You can also count activities like joining your mailing list, following you on a social network, etc.
Why Cost Per Acquisition (CPA) Matters
You need a general handle on your CPA so you know what marketing efforts are sustainable and which ones are not. If I run an Adwords campaign and I am paying 10 cents/click and getting a 1% conversion rate on that campaign, I am paying $10.00 per conversion. If my average order value is $5.00 this isn’t sustainable, I’m losing money. If my average order value is $50.00 and my product cost is $20.00 I am making $30.00 on each conversion.
So when you run any kind of marketing campaign, you want to keep an eye on CPA so you know if you want to continue with that form of marketing. Now, to make things more complicated…
Conversions are Tricky to Track
Conversions aren’t always easy to track. Imagine you run a banner ad for $90, you get 500 clicks and 3 sales. You paid an average of $30.00 per conversion there, at least that’s how it seems. Now imagine 10 of the people that clicked got on your mailing list and another 20 of them shared your website on Twitter, Facebook, blogs, etc. A few months later 2 of the people who got onto your mailing list make purchases and a few weeks after that someone finds your site via a Tweet and buys. Now you’ve got 6 conversions so that ad actually cost you $15 per conversion.
My point here is that marketing is a cumulative thing and conversions can be tough to nail down. That doesn’t mean you shouldn’t bother though. Google Analytics has made it easy and FREE to track conversions. Even if the tracking might not be perfect, it’s better than nothing. So now that we understand the limitations of conversion tracking, here’s how you set it up:
Step 1: Set up Google Analytics
Before you do anything, you need to set up Google Analytics. If you haven’t done that, go here and create an account. Creating an account is super easy! You just fill out the fields as requested and at the end you’ll get some tracking code you can paste into the template of your website. (If you plan to use Google Adwords you can check the box that lets you track Adwords campaigns.)
Once you get that code, paste it into your website’s template below the </head> tag and you’ll be able to start tracking all the activity on your website.
Step 2: Set up Goals
Once you have set up (or logged into) Analytics. You’ll want to click “edit” under the “actions” column. This will take you to “Profile Settings” and this is where you can create goals. Under “goals” click “add goal” (you can just go with goal set 1).
(We are going to set up a goal of selling a product, but you can repeat this process for tracking people who sign up for your mailing list or create a wish list, or take any other action you’d like to track.)
On the goal screen, give the goal a name like “sale” and leave “active goal” set to “on.” Then leave goal position as is. In the final field, select “URL Destination.” This will cause more fields to appear.
For match type, go with exact match. Then in the goal URL field paste the URL that customers see when they complete an order (something like http://www.yoursite.com/thankyou.html). Leave case sensitive as is and leave goal value as is.
Step 3: Create a Goal Funnel
This isn’t required, but it’s useful. The goal funnel is the path a user must take to complete the conversion. You may want this information so you can see what your shopping cart abandonment rate is like, or see where in the process customers are abandoning. In the example I’m doing today, let’s say the person must visit the cart page, the check out page and then they land on the thank you page after payment is taken. That means there are 2 steps to complete this goal. Here’s how we add them:
On the goal set up screen click “Yes create a goal funnel” and some new fields will appear. In the “URL” field we’d want to enter the URL of our cart page so we’d enter something like /shoppingcart.html. In the “name” field we’d call this “add to cart”.
We click “add goal funnel step” and then enter /checkout.html as the URL for our payment page. We name this step “check out” and then we click “save goal.”
That’s it, we’re done. Now we can log into Google Analytics tomorrow and start seeing conversion data!
In case you’re not sure how to see it, you’ll want to:
1. Log into Analytics and click “view report” next to your domain.
2. On the menu on the left click “traffic sources”
3. From here you should see 2 columns, one for keywords and one for referring domains. To see which referring domains are getting you conversions click “view full report” in that column
4. Now you should see a listing of all the sites that sent you traffic and on top you’ll see 3 gray tabs (“Site Usage” “Goal Set 1” and “Ecommerce”). You want to click on “goal set 1”
5. Now click the “sale” column and you’ll see the rate at which each source of traffic delivers conversions.
You can now click on keywords (under traffic sources) from the left menu and click the “goal set 1” column again and see which keywords are giving you conversions. You can tinker around with other areas of Analytics like the “goals” area. You can see things like conversion rate and cart abandonment rate (if you set up your goal funnel).
Note: Goals do not go backwards, so if you got 100 sales yesterday that won’t shop up in your conversion tracking on Google Analytics if you didn’t set up the goals until today. Also keep in mind that there is a 24 hour delay in updating Google Analytics data so you’re not getting real time information.
Lastly, there are more sophisticated ways to track conversions. I wrote software for my website that uses a combination of cookies and IP addresses to gather my visitors’ data. This helps me get more detailed information about my conversions. I can tell how many times a customer came to my site before buying and all the different things they did to get to my site. (For example, I can tell that a customer first found my site from a blog post, then googled my site name a month later and then made a purchase.)
I like having this information because it gives me a more complete picture of how we get sales. That said, having a solution like this isn’t something that comes out of the box with Google Analytics. You’d need to pay for a more advanced analytics program or hire a programmer that can write code to do this. This system isn’t perfect. It doesn’t account for people who have changing IP addresses, change devices or delete cookies. I don’t get 100% of the information I want, but I get a lot of information and it helps me get a more complete picture of how our marketing efforts are going.