Many companies look to macro traffic volume as an indicator of the overall success of their website. However, smart companies are realizing that more traffic doesn’t necessarily mean more revenue, conversion or success. Each website’s traffic is comprised of a variety of unique traffic sources.
Therefore, understanding the sources of your website’s traffic and the impact this traffic has on your conversion rate and revenue are very important. Successful online companies have long realized that it is not the quantity of traffic that converts – it’s the quality.
So, how do you determine which traffic is quality traffic? Here’s four easy steps to help you use your analytics to understand where your traffic is coming from and why it matters:
- Identify traffic sources
- Prioritize based on revenue contribution
- Address issues
- Set a regular review date.
Identify Traffic Sources
Visitors reach your website from four major traffic sources. If you look closely, each source has a story to tell:
- Direct traffic – Visitors who generally know something about your company or products because they care enough to actually type in your Web address or click on a bookmark.
- Search engines – Visitors arrive from search engines in two ways:
- Organic links (Google, Yahoo, Bing, etc.)
- Paid links (Google AdWords & AdSense, Yahoo Overture)
Search engines have been widely thought of as the “Holy Grail” of traffic with reports suggesting anywhere up to 80 percent of Web browsing starts at the search engine.
- Referring sites – Visitors who use links from other websites, blogs, affiliates, Facebook, etc. to get to your site. Knowing who is sending you traffic is a great way to identify business opportunities. Look for the reasons a site is directing traffic to you. In some cases, you might not want the traffic. Without checking traffic statistics, you will never know.
- Other – Email campaigns or direct marketing links fall in this category.
It’s important to evaluate these traffic sources as four individual groups, and also evaluate the components of each group individually. Remember, not all traffic is equal!
Prioritize Based On Revenue Contributions
Because a high conversion rate can be deceiving, especially if it is not generating a large percentage of your revenue, be sure to start your analysis by ranking each traffic source according to the revenue contributed. Look at each source based on the percentage of revenue generated or the revenue per visit.
Follow the Pareto Principle as a rule of thumb by looking at the traffic sources that are making up around 80 percent of your revenue. The reason is simple: the higher percentage of revenue a traffic source is bringing in means the more likely a small conversion increase will improve your bottom line.
Don’t spend time looking at a traffic source with a 50 percent conversion rate if it is only bringing in a small percentage of the revenue and a few sales per month. You will need more time to generate statistically relevant data for those low revenue traffic sources.
In order to fully understand the impact that each of these sources has on your revenue and conversion rate, you need to do two things:
- Correctly identify all the pages in your conversion rate calculation process and properly name them in your analytics program. Full sales funnel tracking from all sources is vital to understanding which traffic source is more valuable than another. Choose how you want to calculate the conversion rate and stay consistent! An earlier blog post discusses this topic.
- Add a tracking parameter to each of your inbound links so you will be able to specifically identify the traffic source after a sale. Once you have added tracking parameters to your links, looking at the conversion rate for each source within your analytics program will be much easier.
A bit of trial and error is necessary to identify solutions to the issues that you see, but here’s an example of how utilizing a quality A/B testing solution can be worth it’s weight in gold.
Begin with the top three sources based on your revenue ranking. Look for pages within your website where visitors exit, the bounce rate for these pages and the bounce rate for keywords visitors used to find you in the search engines.
Understanding where visitors left your website gives you a starting point to make changes. Read your page content, does the information you provide make sense from a visitor’s perspective? Click through the site work-flow, is it easy to get the information you need or does it seem that visitors could become lost or confused while trying to checkout?
If you find that visitors are leaving from your cart or checkout pages, set up an A/B test with some slight changes. This will help you isolate the issue and increase your conversions and revenue. Once you have finished with your top revenue traffic sources, put your attention to the sources that have decent conversion rates but don’t generate as much revenue.
It is always helpful to do a quick analysis of the best converting traffic sources that are not bringing in much revenue because they might need just a little help to become a viable and profitable revenue stream.
Set A Regular Review Date
This whole review process should be performed at least quarterly, as this will truly help to optimize your site traffic and ultimately your bottom line. There is no doubt that this analysis takes time and practice to complete but once you have seen the benefits this will become part of your company’s “Best Practice” routine.
Create a methodology to analyze your site’s traffic and conversion rates. By focusing on the the highest traffic sources, you can optimize conversion rates and increase your revenue. Not all traffic is equal!
Have you implemented a structured process, followed it regularly and seen success? What were some of those “a-ha!” moments when a minor change resulted in major increases?
Chris Hamill contributed to this blog post.