VANCOUVER, British Columbia — Neil Patel didn’t start web analytics company KISSmetrics because he loved the product, or the idea, or the customers. Very simply, he wanted to make money, as he told the crowd here at GROW 2012 yesterday.
After revealing his motivation, Patel proceeded to reveal the methods behind his madness — the metrics he measures that have driven KISSmetrics to 100 percent year-over-year growth. Patel says every entrepreneur needs to track 10 specific areas of metrics:
- People, not unique visitors
UVs are not a valid measurement of activity. Customers might visit your site from multiple browsers on their laptop, plus a tablet or a mobile phone. In Google Analytics, they all look unique … so you need to start tracking people: log-ins, credentials, and usernames.
- Time to buy
Some people need time before they buy, says Patel. Give them that time, but be looking at marketing attribution — the first entry source, all the referrers in-between, and especially the last one before they buy. KISSmetrics tire-kickers need seven touches — blog, website, Twitter, Facebook, ads, and so on — before they convert to customers. You will find some interesting things, Patel said. Originally, the KISSmetrics team thought that Twitter didn’t convert. On a closer look, they say that there was no conversion if they viewed the data episodically, but customers did convert over time. Better tracking also enables better assessment of marketing ROI … now you really know the process that people take before buying.And one more tip: retargeting is important. Patel related an example of a mattress he was interested in buying that was $1,000, then $800, then $700 as he continued to occasionally click on the ad and became more and more likely to buy.
- Targeted feedback from ideal customers
Getting feedback from all the people who visit your website is useless, says Patel. Instead, ask the people who are your ideal customers … the insights will be much more valuable. Exit surveys are one of the tools KISSmetrics uses for this purpose.
- Engagement level
When Patel analyzed site engagement by traffic source, he saw that people from Twitter were spending almost two minutes on site, and that people who arrived at the website from a search engine using the keyword “heat map” were engaging much more than others. That enabled KISSmetrics to focus on those visitors who were already engaging the most.
- Site and app events
Tracking events is critical to knowing what part of your application users are actually using. For example, by adding event tracking to basically everything on the site, Patel determined that the addition of live chat on the site — talk to a sales rep — killed conversion. If something in your app or site is not being used, strip it away, Patel says. It’s extra, clutter, and distraction.
- Real conversion rate
Conversion doesn’t end when someone signs up. Free users can convert into paid users, so you need to track where free users originally came from, says Patel, and maintain that tracking over time. For one of KISSmetrics’ client, Bing and Google converted the same in terms of free trial users. But people who came in from Bing were almost five times more likely to enter their credit cards and buy the product. Knowing that helped the client focus their marketing efforts. Patel likes to track not just where customers came from but also what they did before converting — and then look for patterns.
It’s easier to keep existing customers than get new ones, Patel says. That’s not rocket science, but knowing in detail what’s happening with cancellations and why is critical to growth. “You may have this big leaky bucket that everything is draining out of,” says Patel. “So stop filling it and start fixing the bucket.” For KISSmetrics, the number one reason people canceled was price, so Patel made cancelers an offer right during the cancellation process. The one-time offer, which gave exiting users the next 12 months at 40 percent off, achieved a 10 percent conversion rate.If users still don’t take that offer, KISSmetrics automatically allows them to ”name your own price.” If that number fit within predetermined levels, the company instantly accepted it.
“If you can reduce churn, you’re going to be making a lot more money,” says Patel.
- Lifetime value of the customer
It’s OK to lose money in the short run, according to Patel, as long as you make it up in the long run. Which is why weight-loss companies offer all those money-back guarantees.
- Cohort analysis
Numbers on a user graph that are going up and to the right are fine, but they can often mask problems as new users join a growing service, says Patel. Entrepreneurs have to check user cohorts, or segments, to see how they are doing. For example: all the users who joined in August 2011 … where are they six months later? A year later?
- User segments
Don’t treat all your customers the same. Some are free, some paid, some are long-term, and some short-term. Then use marketing automation with Hubspot or Marketo to communicate appropriately to those different user groups.
When you track, Patel says, odd things jump out of the data that can make you much more profitable. One final example: Cutting the KISSmetrics demo time in half doubled conversions … probably due to more perceived urgency in customer’s minds.
Which is precisely how metrics can make you money.
Image credit: John Koetsier