An Intro to Google Analytics and the Ecommerce Sales Equation

Google Analytics is a reporting tool that allows you to track your website visitors and their behavior on your site. You can use a different software to track this information, but it's important that you track it somehow. If you manage a large site with significant web traffic and more detailed ecommerce capabilities, you might want to look into an enterprise software like IBM Digital Analytics (formerly Coremetrics) or Adobe's SiteCatalyst. For small business website data analysis, I like Google Analytics. It's easy to use and free if have an account with Google.

If you run an ecommerce site, you should be tracking and analyzing your data on a regular basis. Ecommerce sales are composed of the following equation:

Traffic x Conversion Rate x Average Order Value = Total Revenue

If you can improve any item within that equation, you'll end up with more revenue. Google Analytics provides information about each element of that equation.

Traffic is the total number of visitors to your website. Google Analytics can show you how much website traffic you have at a point in time or over a period of time. You can also determine which channels refer the most visitors, and therefore where you should spend additional ad dollars or effort. If the bulk of your social media referral traffic comes from organic pins on Pinterest, you might want to promote additional pins to increase your overall traffic.

You can use analytics data to determine a lot about your audience and their behavior on your site. Google Analytics can tell you where they are located (based on IP address). You can also find out if they are a new user and how many times they have visited your site. Learning more about your audience will help you make adjustments to your website or the products you sell in order to increase the conversion rate or the average order value for your site. If you an increase in traffic from a particular part of the country, pay attention to what people in that part of the country buy. If you broaden or deepen your assortment of those items, you should also see a higher conversion rate or AOV and therefore a sales increase.

Analytics can teach you a lot about your customers if you take the time to learn. I would encourage you to look at your data at least once a week. And especially compare the numbers before and after you make changes to your assortment, content, and promotional offers.