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Why Retailers Should Use Goals in Google Analytics

by Tim Leighton-Boyce

Eye-candy: picture of a table football goalI got a surprise at a recent ecommerce conference.

For the price of a coffee in the break, I offered to show people how to use Google Analytics Custom Dashboards to see all their key ecommerce goals in one place.

I was shocked to discover that many retailers don’t have any goals set up. So there was nothing to put on that dashboard. They couldn’t take me up on my offer.

Instead, people asked me “why do you need goals in Google Analytics if you’ve already got the transactions and ecommerce conversion rate?”

Here’s my answer. There are many things Google Analytics goals can do. But I’ll confine myself to just one:

Google Analytics goals can help on-line retailers increase their profits.

That’s a big claim.

How can goals lead to increased profits?

Without needing to know anything about your margins, I can show you how using goals can increase your profit by reducing the cost of acquiring new customers.

Getting new customers is vital. No matter how good your retention rate, your business will go down if you don’t attract new customers.

But the cost of getting new customers is high and it’s often not easy to tell whether the money you spend on reaching those customers is paying off or not.

To paraphrase a well known saying, “half the money I spend on customer acquisition is wasted, the trouble is I don’t know which half”.

Let me explain the problem.

When you look at your visits in Google Analytics you can instantly spot two groups of visitors without needing any goals.

  1. There’s a big group of maybe about 30% of your visitors who bounce straight off the site. They’re not interested in you right now, or they’ve seen exactly what they need to see on that page and are finished for now.
  2. There’s another very small group of maybe 5% or less who make a purchase on this particular visit. You know a lot about these people from the standard GA reports.

But neither of these are useful sources of new customers. What about the other 65%, forming the bulk of your visitors? They didn’t buy this time, but they didn’t bounce straight off the site either.

This group will include people who are existing customers, or people who already know about you from previous visits. You can spot these people because they have come from your emails, or they have come via a brand keyword or ‘navigation’ search.

But it will also include people who have come from generic non-brand searches, or from referring sites, or from other forms of on-line acquisition campaigns.

This last group are really interesting: they’re your potential new customers. You’re probably spending a lot of money on attracting these people, but since they didn’t buy anything this time round, how do you tell whether the money was wasted or not?

Using Goals in Google Analytics will allow you to make an informed decision on which sources of potential new customers are more valuable than others.

Which means that you can cut the money you’re wasting on sources of ‘bad’ prospects and invest your resources in the sources which are bringing you more valuable prospects.

Which means that your cost per acquisition goes down and your profit goes up.

How to Use Goals to Zero In on the Best Sources of Potential Customers

  • Create goals for micro-conversions on the ecommerce journey, such as viewing product details, or adding to cart and you’ll be able to identify people who are showing strong signs of intent to buy
  • Create engagement goals for people who view more than a certain number of pages. They may not be as valuable as people who reach one of the micro-conversions. But they’re more valuable than people who see only 2 pages, for example.

Use these goals to compare different sources of visitors in the GA ‘All Traffic Sources’ report. The best view for the comparison is the ‘performance view’, so switch over to that and then use the drop down menu on the right to examine the individual goals.

Screenshot: Google Analytics all traffic report in performance view

This view of the report makes it easy to spot the sources which are sending you visitors with high conversion rates for these goals. You now know which sources are worth investing in. Sources which send lots of vistitors but with low conversion rates for these goals are less promising, so move your resources away from them.

Using this technique you can get a good idea of which “half of the money” is being wasted and which is bringing you in real potential customers.

Other Ways of Using Goals

In this article I’ve concentrated on just one way retailers should use goals because I wanted to make it clear how you can link this approach to profit.

But of course there are plenty of other reasons why ecommerce sites should use goals. Here are some related articles on the subject

Checkout Funnel Reporting

The classic ecommerce funnel and goal report is the one for the checkout. This report is used to monitor the performance of your checkout system and learn which stages are causing your customers problems and possibly costing you sales. Here’s a power-user tip: for day to day monitoring of your checkout you can create a custom dashboard showing the checkout abandon rates from each stage of your checkout.

Error Reporting

Every error your visitors see is like a slap in the face. You’re investing money in getting people to your site. That money is wasted if the visitors have a bad experience. So you should smooth the path to the cash desk by sweeping errors out of the way. Using goals for error messages is a great way of seeing where your customers are having problems. This approach means you can even use GA Intelligence Custom Alerts to let you know when there’s something wrong and maybe even suggest the cause.

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