Kinnernet 2006 – geek camp

BeyondVC

I just got back from a week in Israel having spent some time in Jerusalem for an Answers board meeting and then making my way to the Ohalo Resort on the Sea of Galilee for Kinnernet 2006. The post Kinnernet 2006 – geek camp appeared first on BeyondVC. Kinnernet is a techie geek camp organized and run by Yossi Vardi (cofounder of ICQ). At Kinnernet, I had the privilege to spend time with some great people from Israel, Europe, and the US.

Seven Steps to Creating a Data Driven Decision Making Culture.

Occam's Razor

The title of my presentation at the Washington DC Emetrics summit was: Creating a Data Driven Web Decision Making Culture – Lessons, Tips, Insights from a Practitioner.

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Excellent Analytics Tip#5: Conversion Rate Basics & Best Practices

Occam's Razor

It is only fair to follow up a post titled " Stop obsessing about conversion rate " with this post. Just in case you have not read the Stop Obsessing post that please read that first for more context). Conversion rate is a very important metric, used properly.

July, 2006 in Review

Spencer Fry

The 10 / 90 Rule for Magnificent Web Analytics Success

Occam's Razor

Numerous studies have pointed out that while almost all Fortune 500 companies have great investments in "Web Analytics" they still struggle to make any meaningful business decisions. Most people complain that there are tera bytes of data and giga bytes of reports and mega bytes of Excel and PowerPoint files. Yet no actionable insights, no innate awareness of what is really going on through the clutter of site clickstream data.

Excellent Analytics Tip #8: Measure the Real Conversion Rate & "Opportunity Pie"

Occam's Razor

The topic of my speech at the E-consultancy Online Marketing Masterclasses 2006 in London ( sign up here ) is "Conversion Rate Optimization: What, Why, How" While working on one of the slides (Tip # 9) the realization dawned that we measure conversion rate rather sub optimally and in a way that grossly overestimates the improvement possibilities. This post will cover how you can improve your Conversion Rate in ten minutes by doing nothing more than applying simple math or by doing some really amazing investigative work you can figure out what your Real Conversion Rate (TM) is and help your company figure out what the actual size of the opportunity you have on your website to convert Visitors. Even though we should not obsess about conversion rate we do. Mostly because short term goals drive a lot of what we do and if you are selling something on your website then it only seems to make logical sense that we measure conversion rate and get it up as high as we can as fast as we can. Another reason is that we over estimate what is possible. Stepping back for a moment here is the definition of conversion rate that is recommended: Conversion Rate = Outcomes / Unique Visitors. [For exhaustive details click here. And no that is not Visits or Total Visitors in the denominator, for my perspective on why that is sub-optimal click here and read the part about Why use Unique Visitors.]. So a random ecommerce website gets 1.075 million Visits from 768,000 Unique Visitors. That results in 16,500 orders giving the website a nice little conversion rate of 2.1%. Seems really low (not really because last quarters shop.org’s study pegged the industry conversion rate at 2.2%). You show that to a Director / VP / CMO and their first thought typically is “ how the heck is it possible that our website is so bad that we can’t get more of 751,500 (768,000 – 16,500) people to convert on our website ” Unique Visitors to Website: 768,000. # of Outcomes (Orders/Leads etc): 16,500. Conversion Rate: 2.1 %. Opportunity Pie : 768,000 minus 16,500 equals 751,500. From there it is just a nanosecond computation that will be given to the person responsible for the website: “If you can just get another One percent of that 751,500 converted, just a measly One percent, then it would increase our orders by a humongous 46%!!!” [(751,500 * 0.01) / 16,500]. It seems very logical (very reminiscent of many entrepreneurs who head off to China dreaming of massive success by converting just one percent of the Chinese population). The problem with the logic is that is presumes that the size of the left over pie is that big (751,500). The reality is very different. The fastest way for you to improve your conversion rate is to figure out what is the number of people who are in play for even remotely being converted. Here are three suggestions on how to do that (and figure out what the opportunity pie looks like): # 1: Use Bounce Rate. Bounce rate helps identifies the % of traffic to your website that “leave instantly” It happens for any number of reasons: wrong clicks in search results or reaction to the website or missing promotion on the page or any other reason. Bounce can be defined as anyone who was on the website for less than five seconds or ten seconds or anyone who has viewed only one page. After analysis of different websites I have recommended using ten seconds as the criteria. That’s the minimum time that someone has to commit to your website, just ten seconds , for you to even have a chance of convincing that visitor of anything. So measure Bounce Rate of your website. A “normal” bounce rate is around 30% ( YMMV ). Here is the impact on Conversion Rate: Unique Visitors to Website: 768,000. Bounce Rate: 20 %. Unique Visitors “in the play”: 614,400. # of Outcomes (Orders/Leads etc): 16,500. Real conversion Rate: 2.7 %. Opportunity Pie : 614,000 minus 16,500 equals 597,900. Using traditional computations you would overestimate the size of pie (folks you could possibly convert) by 153,600! # 2 (If you use Web Logs) Filter out search bots, image requests, 404 errors, website monitoring software "visits" etc. Some analytics professionals are still using weblogs as the source of data for doing Web Analytics. This might be sub optimal for many reasons (more on this one of these days) but one of the primary reasons is that web logs will natively incorporate the visits by search robots (and even if we try to filter these out it is hard because new ones pop up every other day). This inflates visitor counts, if not filtered. Web logs can also contain “visits” by various site monitoring software and inflated number of page views (404’s and spurious requests you might have on your website like dll’s and css and on and on) which will not allow you to compute bounce rate accurately. So do your best to filter all the above stuff out. Normally this can take out between 10% to 30% of your visitor data (depends on many factors so YMMV ). Here is the impact on Conversion Rate: Unique Visitors to Website: 768,000. Crud Filtered Out: 25 %. Unique Visitors “in the play”: 576,000. # of Outcomes (Orders/Leads etc): 16,500. Real conversion Rate: 2.9 %. Opportunity Pie : 576,000 minus 16,500 equals 559,500. Using traditional computations you would overestimate the size of pie (folks you could possibly convert) by 192,000! # 3 Use Customer Intent. One of the biggest mistakes business make is thinking that every visitor to the website is fair game, conversion fodder. Close your eyes and imagine walking into a car dealership. You are greeted by a car sales man whose only objective is to do whatever he/she can to sell you a car today (not even tomorrow, today), mostly because they are paid on commission. The problem is that you are there just to look at the car, maybe take it for a test drive. You have not yet saved up enough to buy a new car. You really don’t want to be sold. To the guy in a suit that does not matter, he is going to bring it on rather than focusing on what you want (and it is not his fault, incentives drive weird behavior). Similarly not every Visitor to your website is there to buy and not very visit by a visitor is a opportunity to convert. Yet we do Path Analysis and measure conversion rate they way we do because we behave like that car salesman. Using Market Research or Website Surveys or other methods attempt to compute why Visitors come to your website (I call this Visitor Primary Purpose). Then segment out Visitors who say they are there to 1) Buy and 2) Research (/learn about your products and services). You’ll find other segments of people who come to your site looking for support or company information or jobs or register their products or update their contract or check status of their orders etc etc. You should be converting 100% of #1 (Purchasers). You’ll never hit 100% but work hard to create a frictionless process for them. You should convert a good amount of #2’s (Researchers / Shoppers), not all want to buy but they are fair game. Normally you’ll find that around 15% of your site traffic is there to buy (Purchasers) and around 20% is there to Research / Shop. Giving you a total of 35% (again YMMV , but I promise you this number is half of what you think it is for your site). Here is the impact on Conversion Rate: Unique Visitors to Website: 768,000. Potential Visitors who can be Converted: 35 %. Unique Visitors “in the play”: 268,800. # of Outcomes (Orders/Leads etc): 16,500. Real conversion Rate: 6.1 %. Opportunity Pie : 268,800 minus 16,500 equals 252,300. Using traditional computations you would overestimate the size of pie (folks you could possibly convert) by 499,200! Let me express that another way: When your Director / VP / CMO asked you to improve conversion rate you were overestimating the amount of Visitors you could possibly convert by half a million ! Something that to the CMO looked “so easy” for you to accomplish is a nothing short of walking on water for you. I am exaggerating a bit of course, but not by that much. You can now imagine that reality of the world is a little bit worse. # 1, # 2, # 3 above are not silos. So some Purchasers and Researchers will Bounce off you site because they landed deep into your site and on the wrong page. You can imagine more scenarios like this. Which means the real number of visitors who had the right intent and who stayed long enough to give you a chance to convert them is small. Now you can easily see why we all work hard on analytics and marketers work so hard on content and copy and offers but we can’t seem to move the conversion rate by all that much. The reason is that our denominator is incorrect (in our standard formula conversion rate equals outcomes divided by unique visitors). Recommended Actions: Measure conversion rate as everyone else does, just so you have it and then ignore that number because it is deeply misleading. Measure your Real Conversion Rate (TM) by applying the above recommendations (or use your own because you'll have unique things that apply to your business). Undertake a repetitive education program in your company to educate your decision makers the size of the real opportunity on your company’s website. Segment the Visitors in the Opportunity Pie to identify what their true levers are (in getting them to buy). Focus on the Why (use Surveys or Lab Usability or Experimentation & Testing for example). Sit back, relax and enjoy the ride because you have achieved the pinnacle of Web Analysis! : ) [Oh ask for a bonus, Jim this one's for you!]. What do you think? Is Real Conversion Rate metric a good one? Do you already use it and this is old news? Do you have suggestions on other ways in which to compute the Real Conversion Rate? Any flaws in the above analysis / recommendations? Please share your feedback via comments. [Like this post? For more posts like this please click here.]. Excellent Analytics Tip #8: Measure the Real Conversion Rate & "Opportunity Pie" is a post from: Occam's Razor by Avinash Kaushik. Advanced Analytics Analytics Marketing Tips Search Engine Marketing Web Analytics Web Insights Web Metrics

Excellent Analytics Tip#1: Statistical Significance

Occam's Razor

We all wish that our key internal partners, business decision makers, would use Web Analytics data a lot more to make effective decisions. How do we make recommendations / decisions with confidence? How can we drive action rather than pushing data? The challenge is how to separate Signal from Noise and make it easy to communicate that distinction. This is where Excellent Analytics Tip #1, a recurring series, comes in. Leverage the power of Statistics.

Experimentation and Testing: A Primer

Occam's Razor

This post is a primer on the delightful world of testing and experimentation (A/B, Multivariate, and a new term from me: Experience Testing).

Excellent Analytics Tip #7: The Adorable Site Abandonment Rate Metric

Occam's Razor

How many metrics can you call adorable? Site abandonment rate is an adorable metric, to me : ), for these reasons: Money, money, money baby.

Trinity: A Mindset & Strategic Approach

Occam's Razor

Some of you have heard me speak at a conference , I always have a deep passion and excitement when I talk about the “Trinity” I wax and wane about it and go on and on about how fantastic the “Trinity” is.

Globalization and the world economy

BeyondVC

I remember 2 years ago the brouhaha over globalization and how every startup needed to adapt or it would die. I truly am a fervent believer in globalization and how offshoring some development work can make a ton of sense from a cost and time advantage (24×7).

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August, 2006 in Review

Spencer Fry

Web 28

Lab Usability Testing: What, Why, How Much.

Occam's Razor

On this blog we have talked about the importance of the “Why” often. Web Analytics usually simply helps us understand the “What” Clickstream data typically does not tell us why something happened.

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Top Ten: Signs You Are A Great Analyst

Occam's Razor

I am often asked what we look for when we hire Web Analysts or what quality do good Analysts possess or how to measure if a resource that already exists is optimal or how to mentor / motivate / guide our more junior Analysts to propel them to become great Analysts.

The Sound of One Hand Clapping - Startups and angels: Along the.

Tim Keane

Calculating Market Share » October 11, 2006. Startups and angels: Along the way to success. By Tim Keane, Angel Investor, Golden Angels Investors, LLC. Archives. Profile. Subscribe. « Increasing the Probability of Success | Main. The Sound of One Hand Clapping.

I Wish I'd Sold More - Startups and angels: Along the way to success

Tim Keane

Planning for a Harvest » September 13, 2006. Startups and angels: Along the way to success. By Tim Keane, Angel Investor, Golden Angels Investors, LLC. Archives. Profile. Subscribe. « Doing Lunch Rather Than Being Lunch | Main. I Wish Id Sold More.

Explaining why TMT M&A deals at highest level since 2006

The Equity Kicker

Over the weekend the FT wrote that the value of TMT M&A deals in Q1 was $174bn, the highest level since 2006 and up 65% on the year ago period. The market is hot right now. No doubt about it. The $174bn includes a bunch of cable deals that aren’t relevant for the startup community, but even with those stripped out I’m sure the picture is still very healthy. ‘Is this a bubble?’ ’ I hear you say. I don’t think so.

Are You Learning Every Day? - Startups and angels: Along the way.

Tim Keane

The Entrepreneurs Financial Toolbox » May 09, 2006. Startups and angels: Along the way to success. By Tim Keane, Angel Investor, Golden Angels Investors, LLC. Archives. Profile. Subscribe. « Getting Over The Capital Hurdle | Main. |

Tips for talking to investors - Startups and angels: Along the way to.

Tim Keane

Compensation for Entrepreneurs » May 18, 2006. Startups and angels: Along the way to success. By Tim Keane, Angel Investor, Golden Angels Investors, LLC. Archives. Profile. Subscribe. « Anticipating The Customers Needs | Main. Tips for talking to investors.

Lessons Learned: A Successful VC Reflects on his Experience.

Tim Keane

The Equality Conundrum: Where 50-50 equals Zero » April 24, 2006. Startups and angels: Along the way to success. By Tim Keane, Angel Investor, Golden Angels Investors, LLC. Archives. Profile. Subscribe. « Questions for Entrepreneurs | Main. |

Overview & Importance of Qualitative Metrics

Occam's Razor

Imagine walking into and out of a supermarket. If you did not purchase anything then the supermarket managers probably don't even know you were there. If you purchased something, the supermarket knows something was sold (they know a bit more if you use a membership card). Visiting a website, you leave behind a significant amount of data, whether you buy something or not.

Thinking about pricing - Startups and angels: Along the way to success

Tim Keane

Due diligence: An Entrepreneurs Perspective » October 19, 2006. Startups and angels: Along the way to success. By Tim Keane, Angel Investor, Golden Angels Investors, LLC. Archives. Profile. Subscribe. « Calculating Market Share | Main. | Thinking about pricing. When mapping a market, its important to study pricing strategy. This seems like an obvious comment. Of course, everyone understands that somewhere in the equation theres revenue, whether directly or indirectly.

Due diligence: An Entrepreneur's Perspective - Startups and angels.

Tim Keane

Dealing with Attorneys and Legal Advice » October 30, 2006. Startups and angels: Along the way to success. By Tim Keane, Angel Investor, Golden Angels Investors, LLC. Archives. Profile. Subscribe. « Thinking about pricing | Main. Due diligence: An Entrepreneurs Perspective. Due diligence by an investor, seen from the entrepreneurs point of view, is all good. Really. Here is an opportunity to really learn a lot about your business prospects and gain perspective.

Looks like we've started something. - Startups and angels: Along.

Tim Keane

Finding Credible Help » September 01, 2006. Startups and angels: Along the way to success. By Tim Keane, Angel Investor, Golden Angels Investors, LLC. Archives. Profile. Subscribe. « Startup Success in Silicon Valley | Main. Looks like weve started something. Yesterdays post drew several comments and a lot of traffic. Seems this whole subject is a hot button.

Who Gets To Break The News That Your Puppy is Ugly? - Startups.

Tim Keane

Reducing Startup Risk: A Video Comment » September 21, 2006. Startups and angels: Along the way to success. By Tim Keane, Angel Investor, Golden Angels Investors, LLC. Archives. Profile. Subscribe. « Planning for a Harvest | Main. Who Gets To Break The News That Your Puppy is Ugly? Im at the National Association of Seed and Venture Funds meeting in Rochester NY today.

The Best Advisors are Teachers - Startups and angels: Along the.

Tim Keane

Paul Graham on Funding Startups » September 08, 2006. Startups and angels: Along the way to success. By Tim Keane, Angel Investor, Golden Angels Investors, LLC. Archives. Profile. Subscribe. « More on Plan Development | Main. The Best Advisors are Teachers. Several of the insightful comments Ive gotten this week asks if I dont see a place for the business advisor in the entrepreneurial business.

Planning for a Harvest - Startups and angels: Along the way to success

Tim Keane

» September 18, 2006. Startups and angels: Along the way to success. By Tim Keane, Angel Investor, Golden Angels Investors, LLC. Archives. Profile. Subscribe. « I Wish Id Sold More | Main. | Who Gets To Break The News That Your Puppy is Ugly? Planning for a Harvest. In a lot of startups (especially good ones) the founder/CEO/leader is a customer-oriented sales person. After the idea/product/service is built, and the market mapped, the company begins to grow.

Listening to Entrepreneurs - Startups and angels: Along the way to.

Tim Keane

When All Else Fails.Manipulate The Data » August 10, 2006. Startups and angels: Along the way to success. By Tim Keane, Angel Investor, Golden Angels Investors, LLC. Archives. Profile. Subscribe. « Do You See The Big Picture? Listening to Entrepreneurs. The consistent feedback each semester during my "New Venture Formation" graduate class is that the guest speakers were the highlight of the course.

Who's Who of Angels - Startups and angels: Along the way to success

Tim Keane

Reduce Your Startup Risk » July 06, 2006. Startups and angels: Along the way to success. By Tim Keane, Angel Investor, Golden Angels Investors, LLC. Archives. Profile. Subscribe. « Managing Investor Relationships | Main. Whos Who of Angels. This is an interesting article from todays VC Experts website (vcexperts.com) that they forwarded to me. Its a discussion of return calculations for angels as well as a description of "types" of angel investors.

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When All Else Fails.Manipulate The Data - Startups and angels.

Tim Keane

Learning from Failure » August 21, 2006. Startups and angels: Along the way to success. By Tim Keane, Angel Investor, Golden Angels Investors, LLC. Archives. Profile. Subscribe. « Listening to Entrepreneurs | Main. When All Else Fails.Manipulate The Data. I saw that on a t-shirt worn by a bartender at the Milwaukee Irish Fest last night. I have no idea why. But I liked it and it got me thinking about entrepreneurs and investors.

Why Seth's "Don't" is 95% Right - Startups and angels: Along the.

Tim Keane

The CEO Needs To Sell…Again » May 01, 2006. Anybody see the Wily Technology deal in early 2006 for one example of how it ought to work?) Anybody see the Wily Technology deal in early 2006 for one example of how it ought to work?) Startups and angels: Along the way to success. By Tim Keane, Angel Investor, Golden Angels Investors, LLC. Archives. Profile. Subscribe. « Bet on the Stubborn Ones | Main. | Why Seths "Dont" is 95% Right.

Testing to Increase Valuations - Startups and angels: Along the way.

Tim Keane

How to assure yourself that no professional investor will ever want to invest in your venture: » June 22, 2006. Startups and angels: Along the way to success. By Tim Keane, Angel Investor, Golden Angels Investors, LLC. Archives. Profile. Subscribe. « If a pig loses its voice, is it disgruntled? Main. | Testing to Increase Valuations. Let me propose that the best use of resources (time and money) in the startup process is to reduce risk.

Advisors are People Too. - Startups and angels: Along the way to.

Tim Keane

» June 07, 2006. Startups and angels: Along the way to success. By Tim Keane, Angel Investor, Golden Angels Investors, LLC. Archives. Profile. Subscribe. « Its always the People!! Main. | Do you know how a banker looks at your business? Advisors are People Too. "OK, so its all about the people, you say," writes Bill. "But dont your criteria include the investors and professional advisors, too?" " Great comment. Of course they do.

Board Seats for Angels in Startups - Startups and angels: Along the.

Tim Keane

» April 21, 2006. Startups and angels: Along the way to success. By Tim Keane, Angel Investor, Golden Angels Investors, LLC. Archives. Profile. Subscribe. « Entrepreneurial Outsourcing | Main. | Who is your competition? Board Seats for Angels in Startups. Should Angels be compensated for work as directors of the companies in their portfolios? I am not sure about this, but here is one view that ought to be worth discussing.

"What Makes an Attractive Angel Investment" - Startups and angels.

Tim Keane

Ten questions the entrepreneur should ask the (prospective) investor » April 11, 2006. Startups and angels: Along the way to success. By Tim Keane, Angel Investor, Golden Angels Investors, LLC. Archives. Profile. Subscribe. « What is the angel pondering? Eight points | Main. | What Makes an Attractive Angel Investment". This is an overview prepared by the Marquette Golden Angels Network for entrepreneurs. Download what_makes_an_attractive_angel_investment.pdf. PDF 1.5MB).

A budget discussion with an entrepreneur - Startups and angels.

Tim Keane

» June 13, 2006. Startups and angels: Along the way to success. By Tim Keane, Angel Investor, Golden Angels Investors, LLC. Archives. Profile. Subscribe. « How do you present your venture to an investor? Main. | If a pig loses its voice, is it disgruntled? A budget discussion with an entrepreneur. When you get to the point in the discussion where projections are relevant, there is a drill-down method here used by virtually every investor.

Questions for Entrepreneurs - Startups and angels: Along the way to.

Tim Keane

Lessons Learned: A Successful VC Reflects on his Experience » April 22, 2006. Startups and angels: Along the way to success. By Tim Keane, Angel Investor, Golden Angels Investors, LLC. Archives. Profile. Subscribe. « Who is your competition? Questions for Entrepreneurs. Id be interested to know what those of you who are entrepreneurs think about these questions. They can be the start of an informative discussion for all of us: 1.

The CEO Needs To Sell?Again - Startups and angels: Along the.

Tim Keane

Competitors and Territory Maps » May 02, 2006. Startups and angels: Along the way to success. By Tim Keane, Angel Investor, Golden Angels Investors, LLC. Archives. Profile. Subscribe. « Why Seths "Dont" is 95% Right | Main. The CEO Needs To Sell…Again. Here’s a post from Jason Caplain , a VC in Ralieigh, NC with another take that adds more meaning to the discussion about the entrepreneur being the chief sales guy.

Pick Your Investor With Care - Startups and angels: Along the way to.

Tim Keane

Pizzas, People and Progress » May 22, 2006. Startups and angels: Along the way to success. By Tim Keane, Angel Investor, Golden Angels Investors, LLC. Archives. Profile. Subscribe. « Compensation for Entrepreneurs | Main. Pick Your Investor With Care. The great day has arrived.    Tomorrow, you're going to close your first professional investment with "Fred," a wealthy individual you met at a networking event. 

Getting Over The Capital Hurdle - Startups and angels: Along the.

Tim Keane

» May 08, 2006. Startups and angels: Along the way to success. By Tim Keane, Angel Investor, Golden Angels Investors, LLC. Archives. Profile. Subscribe. « How Do You Teach Entrepreneurship? Main. | Are You Learning Every Day? Getting Over The Capital Hurdle. "My question is how you get over the capital hurdle when you have a product that straddles the fence between the need for Angel Investors and VC money and your friends and family cannot get you over the hump?"

Paul Graham 2006: Advice to entrepreneurs – Don’t get your hopes up

The Equity Kicker

Someone just linked me to a Paul Graham essay from 2006 titled The hardest lessons for startups to learn. All seven lessons are great, but the last one really struck a chord with me: 7. Don’t Get Your Hopes Up. Startup founders are naturally optimistic. They wouldn’t do it otherwise. But you should treat your optimism the way you’d treat the core of a nuclear reactor: as a source of power that’s also very dangerous.

Lean 94

Ten questions the entrepreneur should ask the (prospective) investor

Tim Keane

» April 12, 2006. Startups and angels: Along the way to success. By Tim Keane, Angel Investor, Golden Angels Investors, LLC. Archives. Profile. Subscribe. « "What Makes an Attractive Angel Investment" | Main. | The best salesperson is. Ten questions the entrepreneur should ask the (prospective) investor. Of course, not all money is created equal. Some comes attached to investors who are making their first investment, for instance.

Having too much money can be a curse, not a blessing

BeyondVC

Trust me, I love having well capitalized companies. However, having too much money can be a curse, not a blessing. More often than not, I see management lose financial discipline and avoid making hard decisions when capital is abundant and not scarce. To many executives, money does solve all problems. And yes, having money allows an entrepreneur to do many things with his business like hire more talent, scale the back-end infrastructure, and ramp up sales and marketing.