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Drilling Down Newsletter - April 2001 - Web Log Analysis, PPC, Visitor Value

In this issue:

#  Best of the Best Customer Retention Links
#  A Little Housekeeping: 
    Thank You, Newsletter & Update
#  *** Special Focus ***
     Practice What You Preach: Web Log Analysis
Hi again Folks, Jim Novo here.  I got a boatload of questions this month on web log analysis, so I decided to devote most of this issue to the topic, including special charts to demonstrate the concepts.  Is this the new accountability speaking though my humble site?  I always go where the customer data tells me to, so you're in for a down and dirty customer behavior tracking lesson this month. 

Let's do some Drillin'!

Customer Retention Links
The following are must read articles on measuring and managing customer retention.  Their "free status" on the DM News website expires 30 days after the publication date listed.  If you don't read them by then, you'll have to pay $25 to read them in the DM News archives.

Note: I provide links to many more articles like these as they become available on the Drilling Down site.  If you don't want to miss any of them, you might want to check this page weekly for updates to the article links:

You can use one of those free change detection robots to do this.  It sends you an email at a frequency you choose when the page has changed (daily, weekly, etc.). I like this one:

By the way, the new publishing implementation at the DM News web site creates URL's so darn long they get all broken up in the newsletter, so I have to "link to the link" on my site to get you a clickable link.  Sorry for the "doubleclick."

Note to web site visitors: These links may have expired by the time you read this.  You can get these " must read" links e-mailed to you each month 2 weeks before they expire by subscribing to the newsletter.

CRM Starts With Defining The Customer Strategy
April 9, 2001  iMarketing News
Another person separating the strategy from the technology in CRM.  You don't need fancy technology to do CRM; in fact, if you test through some of the fundamental concepts BEFORE you buy, you'll be much better prepared. 

Note:  If you're interested in Pre-CRM testing for Marketing ROI, read my article on it:

Using the Information Economy
April 17, 2001  DM News
The march away from mass marketing to database marketing continues, and is picking up speed.  Mind you, I didn't say one-to-one or CRM - that stuff's way too complicated for most people who haven't done simple database marketing before.  That's why CRM has such a high failure rate; it's like trying to get a Ph.D. without ever going to high school first!

This one isn't at the DM News site, so it doesn't expire, but it's chock full of hard-to-find CRM implementation cost metrics and frank discussion of the challenges; I wanted everybody to be aware of it:

SPECIAL REPORT: The Hidden Costs of CRM
March 30, 2001   Direct Magazine

A Little Housekeeping
Thank You
Owners of the Drilling Down book may have recently received an e-mail from Richard Hoy at Booklocker.com asking for your feedback on the book, any success stories, and requests for additional support.  They've starting arriving and all I can say is, Thank You for the kind words.  Those looking for assistance in "tweaking" for their business or commercial project will be hearing from me shortly.  Please continue to send any feedback to Richard, it's very important to Booklocker, and to me.

Newsletter & Update
Just trying to synch things up between the newsletter and the "expiring links" update; apparently I confused some people when it went out for the first time, and I understand this newsletter is coming only a week later (at the usual end of the month time).  From now on, you'll only get something from me every two weeks, alternating between the newsletter and the "must read" link list of articles about to move to the paid archive status at DM News.

Practice What You Preach: Web Log Analysis
Well, it's been a while since we've done a Practice What You Preach.  The PWYP concept is this: I show you how all this stuff I talk about works using my site as an example, and provide the stats to back it up.  Sort of like being forced to eat your own cookin', I guess.  The last PWYP focused on attracting high value customers with the _ proper_ use of Google AdWords and GoTo
pay-per-click.  If you're interested in this, see:

I'm getting more and more requests for information on how to use log analysis to improve profitability.  This goes hand-in-hand
with a lot of grumbling lately about "no industry standard metrics" for measuring performance.  Much of this is related to the advertising world, but as the Web begins to embrace the database marketing approach as destiny, it's going to be increasingly important for site owners to understand visitor behavior and have a set of metrics to measure it.  This article is a good overview, including comments from some of our peers who are now using the techniques described in the Drilling Down book (modified RFM).  I just love it when they talk Recency and Frequency (I need to get out more):

Look, I'm a data guy, always have been.  What I'm best at is taking reams of seemingly random data, organizing it in a productive way, and finding patterns in it that suggest high ROI marketing programs.  Or looking at the data from poorly performing programs, and suggesting ways to fix them. Sort of like the human version of data-mining software, only I've
already been trained!  (That's a joke, folks: most data-mining software has to be "trained" to provide meaningful information, and the training can take 3 months or longer...)

Log analysis is very important, and it seems like few people are using it in an _actionable_ way.  By actionable, I mean something other than just cranking out reports for the sake of it.  When you generate reports, they should tell you something that leads to taking an action (or reversing an action taken).  So I'm going to show you some of the WebTrends data I use and the metrics I create from the data, along with explanations, to give you a place to start.

There are a bunch of log analysis programs out there, why use WebTrends?  It's the closest thing to a "standard" the industry has, it is fast, and scalable.  Good enough for me.  At $700 for all the horsepower most single sites would ever need (40 million hits a day), it's not cheap for small hobby sites.  There's a free HTML based web-bug version, but I'd rather have access to the raw log data.

People seem to complain a lot about the quality of web data.  I say, get used to it and control for it.  What matters most in tracking interactive behavior is _trends_ , and even if the data is not 100% accurate in some way, as long as you continue to use data collected in exactly the same way each time, you can still build trend charts.  IMHO, people obsess way too much about finding an _absolute_  answer (hard defined numbers), wasting time and resources, when a _relative_ answer (is it getting  better or worse) can be just as insightful, if not more insightful.  Trend charts are a great way to look  at relative performance stats; that's what I use.

WebTrends doesn't really create metrics.  It generates raw numbers you can use to build metrics.  It is worth the time to really understand how these numbers are generated, so when you
create metrics with them, you understand exactly what you're looking at.

In the following examples, I'm using numbers generated by WebTrends in the "Default Summary" setup, and creating my own metrics from these numbers in an Excel spreadsheet.  Here are some of the metrics I use, created with numbers taken from WebTrends daily...

Percent Single Home Page Access
If I only had the time to look at one metric, this would be it.  It's extremely important and demonstrates several concepts, so we'll spend more time on it than the others I will show you.

WebTrends tracks the number of times visitors entered and exited the site on the same page without viewing any other pages under Resources Accessed/Single Access Pages.  This stat by itself is worth getting Webtrends for, because it can be an indicator of poor design or weak content, and is great for testing design and
copy changes.  Each page will have some "beginning" number, and what you would like to see is the percentage of visits to this page which are "single access" fall over time as you tweak
design and copy.

On my site, the home page is of primary importance, so I focus my efforts there.  As time allows, I move on to other pages, tweaking the message to minimize single access visits. 

To screw this idea down a little tighter, I compare these single access visits to the total number of visitors who _entered_ the site through the home page, not total visitors to or total views of the home page.  This number is under Resources Accessed/Top Entry Pages, which counts the number of visitors who entered the site through a particular page.

Being a good database marketer, what I'm interested in is _conversion_ - how many people saw the home page and clicked through?  If I divide the single access number by the entry number for a page, I get a percentage which most accurately measures the effectiveness of my design and copy on that page.  If I used total views of the page, I would be introducing "noise"
to the conversion ratio concept, because some of these people would have seen other pages before they see the home page. Then I track this percentage daily, and look for trends.  

As a behaviorist, I don't trust what customers say, I watch what they do.  It's a simpler and much cleaner form of testing.  If I write what I think is killer copy, and the ratio of single access
visits to entries for the page rises, I was wrong.  If this ratio falls, I was right.

IMHO, too much time is spent on agonizing over surveys and other inconclusive evidence. Track the customer data.  It will "speak" to you and tell you the answer.  If you want to further qualify
the behavior, then do your surveys.  But always get the behavior first so you understand the issues and ask the _right_ questions.  Here is a graph of my Single Home Page Access stats:

You can see the trend is down over time, which is good.  The percentage of people hitting the home page and not clicking though is falling.  What's quite interesting is the first trend down ending around day 70.  This was the end of optimizing the original site, because it was  replaced with the new site, which caused a sharp spike upward again.  But over time (and lots of 
re-writing), I've been able to bring it back down.

The other interesting feature of this chart is the wide fluctuations within the general trends.  You know what those spikes up and down are caused by?  Weekends.  I get much higher "abandonment" of the home page on weekends, and much higher penetration into the site on weekdays, especially midweek.  Don't ever let anybody tell you time of day or day of week don't matter - the audience changes significantly, and it may be in your interest to move with those changes, moving featured articles, products, or site functions.   It's not for me, I'm too much of a "niche player," but if you're running a more general interest site, it could be in your interest to test this.

Percent One Page Visits
This metric is not page focused, but site focused, and is tied to ease of navigation issues.  Since you often can't control which pages people enter your site through, you want to make sure if they don't find what they're looking for on the first page they hit, they know how to get to the information they want.  Navigation is both a design and copy issue, since you can always write hyperlinks into copy that lead to related topics in other areas of the site.

Under Activity Statistics, you will find By Number of Views, where you see how many visitors looked at 1 page, 2 pages, 3 pages, etc.  I take the 1 page visits and divide by visitor sessions, since the visits by number of pages number is defined by a "session."  A session ends when a certain number of minutes elapses between page views for the same visitor, in my case 30 minutes (you can set it to whatever length you want in Webtrends; 30 minutes is a common standard).  The result is the percent of visitor sessions resulting in only one page view, and is tracked over time and graphed for trends.

Here is why I use sessions.  It's the biggest, most reliable number available, so whatever "dirt" there is in it, it s not as dirty as unique  visitors, which is complicated by AOL and other ISP issues.  I don't want to complicate things at this level, or create bias by using cookies - they're unreliable, and for various reasons, using them may tend to screen out certain types of customers more than others.

You could argue that sessions is inaccurate, because someone at work might only be able to read one page at a time, but might read 3 pages in a day more than 30 minutes apart.  This would have the effect of making the metric look worse than it really is.  And I would say, does it really matter?  What does that level of hand-wringing get you, is it actionable in any way?  What's important is the trend, and as long as you use numbers calculated in the same way each time, the trend is actionable.  Here is what my Percent One Page Visits graph looks like:

Again, the trend is generally down, meaning people are finding what they're looking for and navigation is improving.  You can also see the distinct change around day 70, when the new site went up, and the spikes up and down due to weekend activity being of low quality.

An interesting feature on this chart is the 2 spikes around day 50 - know what that is?  Untargeted advertising.  I primarily advertise by buying specific keywords, but decided to test some text-based display ads in targeted content areas of About.com (an option under the Sprinks pay-per-click program from About).

Huge click through, bogus customers, ruined my stats - and very expensive.  Do you see why  tracking this stuff is so important?  I don't have to calculate the ROI on that ad spend to know it's worse than I normally get - the customer behavior tells me it is.  By switching dollars out of About back into Google, I automatically increase ROI - without ever having to calculate it.  Again folks, _relative_ performance rather than absolute (calculating the ROI to the last cent).

Percent One Minute Visits
A very similar idea to the one above, only using length of visit instead of page views as the controlling number, found under Activity Statistics/By Length of Visit.  Divide this number by sessions, as was done above, and track the percentage over time.  For an info-site like mine, you would assume that the longer people stay, the better you are serving them.  It would also imply they are high quality prospects for my book given the site content, don't you think?  You would want the percentage of one minute visits to fall over time; here is it looks like:

You can really see the change in performance around day 70, again, when the new site went up.  This was a very significant change, and confirmed my suspicion that even though many people don't want a lot of "fluff design" on a web site, they may not trust a site that is so bare that only a "celebrity" like Jakob Nielsen can pull it off.  The old site is pretty sparse on design, but is still around to service people with slow connections and alternative or older browsers:

Around day 151, you can see the effect of a  home page re-write I did that dramatically increased one minute visits. Interestingly, this was an attempt to drive down one _page_ visits by shortening the home page length, figuring people were not making it though and abandoning the page before they saw content they wanted.  Wrong; the customer behavior tells me so.  One page visits didn't really budge; but one minute visits climbed substantially due to the shorter page.  And Single Home Page Access was flat to higher!  So the shorter page hurt more than it helped. 

The deep spike down at day 21 was the posting of one of my articles on a highly targeted CRM site, and it looks like it worked as a high quality customer acquisition tool.  People coming from  this site stayed a long time, driving down the percentage of one minute visits, and this was an indicator of their "quality" - I sold a ton of books the next several days.

Are these stats great?  Well, they are for my site, because they're getting better.  I don't think you can specify across different businesses with different ad strategies that 60% Single Home Page Access is bad, or 40% 1 Minute Visits is good.  What matters is where you are today and where you're headed.  For example, think about my site and customers. 

Since I am using the most rigorous metrics possible (daily and very tightly defined), some of these numbers may seem high.  But what if I told you I have a 70% repeat rate over longer  time frames (30 days)?  That close to 50% of visitors bookmark the site?  Now you have a different picture of the user and how they  behave.  By focusing in laser-like on the key conversion metrics, I know if I can fine tune those, the longer term metrics will take care of  themselves.  When you're looking at interactive behavior, "point of first contact" measurement is one of the most important metric areas you can study, because it very frequently has implications for longer term behavior.

You have to track this stuff, folks.  Otherwise you're flying blind.  The customer data will tell  you most everything you need to know.  And  you'll notice, not once during any of this have I personally identified a customer, or asked for any personal information.  I don't need to.  I know what advertising I'm running, I know what  changes I'm making to the site, and I make sure that I only change one thing at a time.  Then I watch the stats, and look for a reaction to the changes I make.  If they improve, the changes were good.  If they get worse, the changes were bad.  The customers in the aggregate tell me through their transactions what the best course of action is.  And that's what the Drilling Down book is all about!
If you'd like to see more on web log analysis or any other topics in future newsletters, be sure and let me know.
That's it for this month's edition of the Drilling Down newsletter.  If you like the newsletter, please forward it to a friend!  Subscription instructions are at the top and bottom.

Any comments on the newsletter (it's too long, too short, topic suggestions, etc.) please send them right along to me, along with any other questions on customer Valuation, Retention, Loyalty, and Defection to me.

'Til next time, keep Drilling Down!

Jim Novo

Copyright 2001, The Drilling Down Project by Jim Novo.  All rights reserved.  You are free to use material from this newsletter in whole or in part as long as you include complete attribution, including live web site link and/or e-mail link.  Please tell me where & when it will appear.


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