Chapter 20
IN THIS CHAPTER
Making sense of e-commerce data
Applying analytics to optimize an e-commerce business
Deploying web analytics to drive growth
Testing, testing, and more testing
Segmenting and targeting your audiences
Big data and analytics aren’t really new topics to most people these days. However, the creative ways in which big data and analytics are being used to transform lives and businesses are new. Businesses are quickly catching on to the fact that in this fast-paced era, an organization’s survival hinges on its ability to integrate data science and analytics into every major decision that’s made — particularly in relation to strategic marketing decision making. In fact, the demand for marketing analytics practitioners has increased by 136 percent in the past three years alone. Marketing analytics professionals use data science and analytics to drive sales growth and user adoption rates for today’s e-commerce business — a business that sells products or services on the Internet.
These days, even the most traditional, old-fashioned business enterprise has at least some sort of web presence that would qualify as an e-commerce operation. Other e-commerce businesses are 100 percent digital and have no real on-the-ground presence to speak of. Because many businesses use blogging to build a well-branded online space where visitors receive access to insightful or entertaining content in exchange for their website visits and brand loyalty, even an individual blogger who has a website and a strong social presence can be considered an e-commerce business.
In recent years, the practice of using marketing analytics and data science to develop tactical strategies for e-commerce business growth came to be known as growth hacking — growth hacking is also referred to as growth engineering, or simply growth. Growth hacking is particularly well suited for start-up growth because of the lower-cost, more-innovative methods that growth hackers generally employ. In marketing, the word conversion describes the scenario in which a marketing effort is successful in getting a user, or prospective user, to take a desired action. Examples of conversions include the act of getting someone to visit your website, subscribe to your newsletter, follow your social media channel, or purchase your product.
In the growth game, the only goals are to get visitors to convert and to move them along in a swift and steady flow through all layers of the sales funnel. This chapter provides you with some simple concepts and methods you can use to get started in growing your e-commerce business. This chapter gives you only the tip of the growth iceberg. For brevity, I’ve omitted many of the more advanced and complicated tactics.
True growth hacking is a hybridization of the following fields:
In this chapter, I discuss the data science that’s involved in growth hacking, and how you can use it to supercharge your online business growth. Just keep in mind that marketing analytics professionals who engage in data science for e-commerce growth may have to wear many hats — for example, Digital Analytics Consultant, Web Analytics Engagement Analyst, Digital Web Marketing Analytics, or Optimization Manager. For simplicity’s sake, I refer to all of these roles as e-commerce data science.
Here’s a look at the data science that’s involved in this line of work:
Data scientists in e-commerce generally use applications for their analyses, although sometimes they need to use coding to carry out a customized analysis. E-commerce data scientists use data science to formulate highly focused, results-oriented business strategies. They do not focus on exploratory data analysis. In e-commerce data science, your job is to use data in order to better understand users so that you can devise ways to drive growth results. You use algorithms and data visualizations only to achieve these goals. It’s all about how you as a data scientist can derive insights from a wide variety of software and web applications — many of which I discuss in the section “Appraising popular web analytics applications,” later in this chapter, by the way.
Data scientists in this field are often asked to analyze click-stream data, site performance data, and channel performance data in order to provide decision support on the effectiveness of tactical optimization strategies. They often have to design, develop, and manage tag deployments — the placing of code snippets in the header of a web page used to collect data for use in third-party analytics applications. Data scientists in this field also work on A/B split testing, multivariate testing, and mouse-click heat map analytics (all explained later in the section “Checking out common types of testing in growth”).
Advanced data scientists in this field may also be expected to build personalization and recommendation engines. Practitioners need to communicate data insights in a clear, direct, and meaningful manner, using written words, spoken words, and data visualizations. Lastly, any data scientist who works in growth has to have a solid understanding of e-commerce and Internet marketing.
Data science in e-commerce serves the same purpose that it does in any other discipline — to derive valuable insights from raw data. In e-commerce, you’re looking for data insights that you can use to optimize a brand’s marketing return on investment (ROI) and to drive growth in every layer of the sales funnel. How you end up doing that is up to you, but the work of most data scientists in e-commerce involves the following:
Time for a (brief) primer on how you can begin using web analytics, testing tactics, and segmentation and targeting initiatives to ignite growth in all layers of your e-commerce sales funnel. Before getting into the nitty-gritty of these methods, though, you first need to understand the fundamental structure and function of each layer in a sales funnel. In keeping with a logical and systematic approach, I’m breaking down the e-commerce sales funnel into the following five stages: acquisition, activation, retention, referral, and revenue.
Here are the functions of each stage of the sales funnel:
Web analytics can be described as the practice of generating, collecting, and making sense of Internet data in order to optimize web design and strategy. Configure web analytics applications to monitor and track absolutely all your growth tactics and strategies, because without this information, you’re operating in the dark — and nothing grows in the dark.
Web analytics provide fast and clear results that gauge e-commerce growth strategy effectiveness. You can use web analytics as a diagnostic tool, to get to know your audience, to understand their preferences, to start doing more of what works, and to stop doing the things that clearly don’t work. If you want to devise growth strategies that actually grow your business, you need to make sure you’ve configured web analytics to track and monitor all stages of the funnel, as well as every touch point between your brand and its prospective customers.
Data scientists working in growth hacking should be familiar with (and know how to derive insights from) the following web analytics applications:
www.google.com/analytics
): A free, easy-to-use, powerful web analytics tool, Google Analytics is great for monitoring not only the volumes of traffic that come to your website over time but also the demographics and summary statistics on your visitors, your website referral sources, your visitor flow patterns, real-time visitor behavior analytics, and much more. Google Analytics can show you benchmarking analytics that provide insights about how your website’s performance compares to the performance of other websites in your industry.www.adobe.com/solutions/digital-analytics/marketing-reports-analytics.html
): You can use Adobe Analytics for marketing attribution, mobile app performance, social media marketing performance, return-on-investment (ROI) investigation, and real-time visitor monitoring.www-03.ibm.com/software/products/en/digital-analytics
): The perfect platform for integrating performance data from all your business’s web channels — from data generated by website guests visiting using personal computers to mobile visitor statistics, and even social media channel performance — IBM Digital Analytics offers powerful analytics capabilities to keep you informed of real-time and historical visitor behaviors, as well as relevant cross-channel interactions. The platform also offers marketing attribution and tag management capabilities.http://webtrends.com
): Offering advanced multichannel analytics, real-time visitor behavior monitoring, and the technology you need to reclaim lost sales from shopping cart abandonment via email remarketing tactics, Webtrends is a powerhouse web analytics application. It even goes the extra mile by offering a campaign optimization feature that you can use to track, monitor, and optimize your search engine marketing efforts, as well as your search and social advertisement campaigns.www.google.com/tagmanager
): Website tags — code snippets that collect data for use in your third-party analytics applications — can help you measure and manage the effectiveness of your Internet marketing campaigns, but the process of deploying tags is error-prone and requires coding. Google Tag Manager is a free tag-management tool that offers a code-free interface and a rules-based system that allows you to easily manage and deploy your website marketing and tracking tags.www.sendible.com
), which has ample options for tracking statistics from your Twitter, Facebook Page, Instagram, and Google Analytics metrics on one custom dashboard; Facebook Page Insights (www.facebook.com/Your_Facebook_Page_ID/insights
); Pinterest Analytics (https://analytics.pinterest.com
); Iconosquare Statistics for Instagram (http://iconosquare.com
); and Google URL Shortener for link tracking (https://goo.gl
).While a cookie is not a web analytic application, per se, it is a text file that tracks the activities, interests, and browsing patterns of a website’s visitors. Almost all large-scale e-commerce businesses use cookies to collect visitor information that helps the business improve the overall user experience and optimize advertising efforts.
Analytics for acquisitions provide a measure and gauge of the effectiveness of your user acquisition tactics. If you want to optimize your brand’s channels, to glean a deeper understanding of your audiences, or to evaluate the performance of your growth tactics, look to user acquisition analytics. In this list, I describe some means by which you can use web analytics to begin boosting your user acquisitions:
User activation analytics provide a measure and gauge of your user activations over time. You can use activation analytics to gauge how your user-activation tactics are performing, allowing you to optimize your user sign-ups, even on a per-channel basis. The following are a few ways in which you can use web analytics to optimize your user activation growth rates:
Average session duration: You can easily derive information on average session duration by taking a quick and basic look at your Google Analytics. Average session duration is a good gauge of how compelling your visitors find your website. And the more compelling your site, the more likely it is that your acquired users will convert to active users — and active users to refer their friends and convert to paying customers.
If you’re working on growth for a client or employer, you can access their Google Analytics account by having them add your Google account as an authorized user of their Google Analytics account. If you’re working on growth for your own brand or website, you must sign up for a free Google Analytics account (at www.google.com/analytics
) and then install the Google Analytics Tracking code into your site.
Whether you’re working on behalf of a client or yourself, you must have your own Google account. You can get one of those by registering through Google (at https://accounts.google.com/SignUp
).
www.sessioncam.com/website-heatmaps
) and ClickTale (www.clicktale.com/products/heatmap-suite
) offer mouse-click heat map data visualizations that show you how your customers and user segments are using your website — in other words, what website features and areas are most attractive to users. This information tells you about the effectiveness of your activation tactics and your overall web design. If you see that user attention flow isn’t focused toward your call-to-action areas, you should perhaps redesign your page in a way that helps to redirect user focus.Retention analytics provide a measure of your user retention tactics. Retention analytics can help you boost customer loyalty or increase the amount of time your users spend interacting with your brand. Boosting user retentions is, in large part, a function of marketing strategy and psychology, but web analytics are also an integral part of maintaining and growing your brand’s retention rates. Here’s how you can use web analytics to optimize your user retentions growth:
In growth, you use testing methods to optimize your web design and messaging so that it performs at its absolute best with the audiences to which it’s targeted. Although testing and web analytics methods are both intended to optimize performance, testing goes one layer deeper than web analytics. You use web analytics to get a general idea about the interests of your channel audiences and how well your marketing efforts are paying off over time. After you have this information, you can then go in deeper to test variations on live visitors in order to gain empirical evidence about what designs and messaging your visitors actually prefer.
Testing tactics can help you optimize your website design or brand messaging for increased conversions in all layers of the funnel. Testing is also useful when optimizing your landing pages for user activations and revenue conversions. In the following sections, I introduce the testing strategies that are most commonly deployed in growth and discuss how you can use those strategies to optimize your efforts. I also provide you with a few tips on what applications are available to make testing easier and more fun.
When you use data insights to increase growth for e-commerce businesses, you’re likely to run into the three following testing tactics: A/B split testing, multivariate testing, and mouse-click heat map analytics.
An A/B split test is an optimization tactic you can use to split variations of your website or brand messaging between sets of live audiences in order to gauge responses and decide which of the two variations performs best. A/B split testing is the simplest testing method you can use for website or messaging optimization.
Multivariate testing is, in many ways, similar to the multivariate regression analysis that I discuss in Chapter 5. Like multivariate regression analysis, multivariate testing allows you to uncover relationships, correlations, and causations between variables and outcomes. In the case of multivariate testing, you’re testing several conversion factors simultaneously over an extended period in order to uncover which factors are responsible for increased conversions. Multivariate testing is more complicated than A/B split testing, but it usually provides quicker and more powerful results.
Lastly, you can use mouse-click heat map analytics to see how visitors are responding to your design and messaging choices. In this type of testing, you use the mouse-click heat map to help you make optimal website design and messaging choices to ensure that you’re doing everything you can to keep your visitors focused and converting.
Data scientists working in growth hacking should be familiar with (and know how to derive insight from) the following testing applications:
http://webtrends.com
): Offers a conversion-optimization feature that includes functionality for A/B split testing and multivariate testing.www.optimizely.com
): A popular product among the growth-hacking community. You can use Optimizely for multipage funnel testing, A/B split testing, and multivariate testing, among other things.https://vwo.com
): An excellent tool for A/B split testing and multivariate testing.Acquisitions testing provides feedback on how well your content performs with prospective users in your assorted channels. You can use acquisitions testing to help compare your message’s performance in each channel, helping you optimize your messaging on a per-channel basis. If you want to optimize the performance of your brand’s published images, you can use acquisition testing to compare image performance across your channels as well. Lastly, if you want to increase your acquisitions through increases in user referrals, use testing to help optimize your referrals messaging for the referrals channels. Acquisition testing can help you begin to understand the specific preferences of prospective users on a channel-by-channel basis. You can use A/B split testing to improve your acquisitions in the following ways:
Activation testing provides feedback on how well your website and its content perform in converting acquired users to active users. The results of activation testing can help you optimize your website and landing pages for maximum sign-ups and subscriptions. Here’s how you’d use testing methods to optimize user activation growth:
Retentions testing provides feedback on how well your blog post and email headlines are performing among your base of activated users. If you want to optimize your headlines so that active users want to continue active engagements with your brand, test the performance of your user-retention tactics. Here’s how you can use testing methods to optimize user retention growth:
Revenue testing gauges the performance of revenue-generating landing pages, e-commerce pages, and brand messaging. Revenue testing methods can help you optimize your landing and e-commerce pages for sales conversions. Here’s how you can use testing methods to optimize revenue growth:
The purpose of segmenting your channels and audiences is so that you can exact-target your messaging and offerings for optimal conversions, according to the specific interests and preferences of each user segment. If your goal is to optimize your marketing return on investment by exact-targeting customized messages to entire swathes of your audience at one time, you can use segmentation analysis to group together audience members by shared attributes and then customize your messaging to those target audiences on a group-by-group basis. In the following sections, I tell you what applications can help you make user segmentation easier and how you can use segmentation and targeting tactics to grow the layers of your sales funnel.
Data scientists working in growth hacking should be familiar with, and know how to derive insight from, the following user segmentation and targeting applications:
www.google.com/analytics
) contains a Segment Builder feature that makes it easier for you to set up filters when you configure your segments within the application. You can use the tool to segment users by demographic data, such as age, gender, referral source, and nationality. (For more on the Segment Builder, check out the Google Analytics Help page at https://support.google.com/analytics/answer/3124493
.)Adobe Analytics (www.adobe.com/solutions/digital-analytics/marketing-reports-analytics.html
): You can use Adobe Analytics for advanced user segmentation and customer churn analysis — or analysis to identify reasons for and preempt customer loss.
Customer churn describes the loss, or churn, of existing customers. Customer churn analysis is a set of analytical techniques that are designed to identify, monitor, and issue alerts on indicators that signify when customers are likely to churn. With the information that’s generated in customer churn analysis, businesses can take preemptive measures to retain at-risk customers.
http://webtrends.com
): Webtrends’ Visitor Segmentation and Scoring offers real-time customer segmentation features that help you isolate, target, and engage your highest-value visitors. The Conversion Optimization solution also offers advanced segmenting and targeting functionality that you can use to optimize your website, landing pages, and overall customer experience.www.optimizely.com
): In addition to its testing functionality, you can use Optimizely for visitor segmentation, targeting, and geotargeting.www-01.ibm.com/software/marketing-solutions/products-recommendation-solution
): This solution utilizes IBM Digital Analytics, customer-segmentation, and product-segmentation methods to make optimal product recommendations to visitors of e-commerce websites. IBM Product Recommendations Solutions can help you upsell or cross-sell your offerings.You can optimize your acquisition efforts to meet the exact preferences and interests of your prospective users. If you want to maximize your user-acquisition return on investment, you can use segmenting and targeting to group your prospective users and channels by interest and style preferences, and then use those groupings to send out exact-targeted messaging to prospective users en masse. Acquisitions segmentation and targeting helps you build your channels by providing solid facts about the preferences of particular segments. After you have prospective users grouped by preference, it’s just a matter of marketing to those preferences and avoiding messaging that’s unfavorable within the segments.
Prospective user and channel segmentation and targeting is the low-lying fruit of acquisitions growth because after you figure out what works with each segment, it’s just a matter of continuing to provide that content in order to make your user acquisition numbers grow. Here’s how you can use segmentation and targeting tactics to optimize your user acquisitions (which is the same goal as the tactics discussed in the section “Accessing analytics for acquisitions,” earlier in this chapter):
You can increase your user activations by understanding and responding to the interests and preferences of your website users. If you want to optimize your website and its content for increased user activations, segmentation analysis can help you get a better understanding of your audiences’ interests. Here’s how you can use segmentation and targeting tactics to optimize your user activation growth:
You can increase your user retentions by understanding and responding to the interests and preferences of your website users. To help increase user retention by reducing customer churn, you can deploy user segmentation and targeting strategies. Simply segment your customer-churn data into cohorts — subsets that are grouped according to similarities in some shared characteristic — and then analyze those cohorts to uncover trends and deduce the factors that contribute to churn within each of the groups. After you understand why particular segments of users are churning, you can take preemptive measures to stop that churn before you lose the customers for good.
You can increase your brand’s revenues by understanding and responding to the interests and preferences of your e-commerce customers. User segmentation and targeting strategies can help you increase revenues and sales volumes. Here’s how: