What makes an industry conference interesting or valuable?
Meeting new people. Catching up with old friends. Learning new techniques.
But the best part happens when I take away a few insights. You know, the kind that you couldn’t have gotten any other way and that help you look at your work with fresh eyes.
I participated in the Google Analytics Users’ Great Event (GAUGE) in San Francisco last week. I met many great people. I learned several new techniques.
Here are the takeaways:
Products are morphing into services
Matt Trifiro (SVP Marketing, desk.com) talked about the trend in many markets for people to purchase a service instead of a product. Some examples: you can buy carpet for your office as a service. If a carpet tile is worn, the service provider replaces it. You never have to purchase the carpet. Another example: You can buy toothpaste as a service. Or steak.
The Value Chain of a service business extends well beyond the first conversion
In a service business, the cost to acquire a customer is greater than the cost of the first purchase. The only way to be profitable is to retain the customer for a longer period of time.
Each customer has a lifetime value (CLV). Each customer continues to buy your service for a certain period of time. The shorter that time, the higher your churn rate (bad). The longer that time, the higher your CLV (good).
The key to retention is customer service.
How do you attract more customers and retain them longer?
Look at all the stages in your funnel, from the moment buyers become aware of you, through initial conversion and continued relationship.
At each stage, examine what you could do to increase the number of people who move to the next stage (as opposed to falling out of the funnel). Do those things.
The best tactics and strategies for retention once they become a customer? Great customer service.
Use a rapid sequence of test, learn, and change to improve conversion and retention at each stage of the buyer’s journey
Dan Siroker (CEO, Optimizely, former Director of Analytics for the Obama campaign, former Product Manager at Google) echoed the ideas of testing and optimizing for engagement.
His message: Test different options. Learn from your results. Make the change. Test something else. When you’ve done as much as you can to improve that stage, move onto another stage in the process where you can make improvements.
Siroker recommends a series of A/B tests to arrive at the best option. A/B tests work better than multivariate tests which quickly become complicated and take a long time to achieve statistical significance.
He started a company to support this approach. Optimizely lets you test different pages on a site with minimal involvement from IT.
Google’s product plans for GA align with Trifiro and Siroker
Phil Mui (Google Analytics Group Product Manger) talked about trends in online marketing by asking the question: How do you find the best customers?
Our current campaign-based metrics are broken. We focus too much on conversion. Not enough on:
- Customers with high ROI.
- Customers who buy from us frequently.
- Customers who have purchased recently.
Look at the steps in the buyer’s journey from awareness to evaluation to initial purchase to ongoing purchases. The necessity to maximize ROI at all touch points becomes clear.
Move from emphasis on conversion-only to a broader view of customer interactions.
How can you take a broader approach? Use behavioral analysis. Look at Jim Novo’s work on RFM (Recency-Frequency-Monetary Value).
Study the behavior of your customers.
If you want to know where Google is going with GA, then think about the metrics necessary to do behavioral analytics.
Near term, Google is investing in GA at a torrid pace – adding features, opening the API, simplifying the data model
Rachael Gerson (Analytics Consultant at SEER Interactive) gave a great overview of all the changes to GA in the past year. Google has made so many changes, she needed 140 slides to describe them.
Nick Mihailovsky (Google Analytics Developer Relations) described the work GA is doing to open the API, to simplify the data model and to explain the data model to the developer community.
I heard many other great presentations – from Joe Christopher at Blast Media, Dave Eckman and Corey Koberg at Cardinal Path, and Feras Alhlou at E-Nor – just too much to cover in one article.
But they all pointed in the same direction – the trend toward service businesses, the importance of analytics for a broader view of customer interaction, the need to better understand customer behavior.