Years ago I read a post by Avinash Kaushik, Google’s Digital Marketing Evangelist, that had a big impact on the way I use web analytics. Avinash urged companies not only to measure conversion goals, but also to “identify the economic value added to the business when [conversion goals] are met.”

In other words, the number of conversions in and of itself doesn’t tell us much. Instead, we need to ask how different conversion actions align with our business goals and advance our relationship with site visitors. How can we put a dollar value on those benefits and give our analysis a sense of proportion?

Avinash recommended that businesses think beyond obvious macro-conversion goals, like lead form submissions and donations, when assessing value. We also need to consider micro-conversions, such as catalog requests, newsletter subscriptions, and campus tour sign-ups:

“If [the analyst] does not value any of these micro-conversions is she not doing a disservice to her organization by only having them focus on online conversions (remember just 2% for most sites) and not the holistic site value? For websites I work with, the economic value of micro-conversions is routinely 3 to 4 times the macro-conversion. Let that sink in.”

I did. And over the last few years, we’ve worked with a number of clients to adopt monetary goal values for both macro- and micro-conversions. Below is some of what we’ve learned.

From No Conversions to Micro-Conversions

We’ve seen companies’ metrics pass through 4 stages on their way to advanced web measurement:

  • Focus on traffic
  • Focus on macro-conversions
  • Include micro-conversions
  • Add monetary values

Stage 1: Focus on Traffic

In the beginning, you mostly pay attention to traffic-related metrics like visitors and visits. These metrics do encourage action, but it’s often the wrong kind—such as marketing campaigns that drive lots of low-quality traffic.

At some point you realize that site traffic has little connection to your larger business goals.

Stage 2: Focus on Macro-Conversions

You shift to analyzing core conversion goals, such as:

  • Sales for e-commerce sites
  • Leads for lead generation sites
  • Donations for nonprofit sites

This is big step up from Stage 1, since these metrics often have a strong connection to business objectives. It’s not a bad place to hang out for a while.

However, tracking only macro-conversions is too limiting for most sites.

Most people don’t purchase, donate, or fill out a lead form the first time they visit a site. But visitors are more likely to complete a macro-conversion later if they complete a few micro-conversions beforehand. Just as you’re more likely to marry someone if you’ve been on a few dates.

Stage 3: Include Micro-Conversions

To prevent valuable information from slipping through your web analytics, you add micro-conversions to the list of metrics you’re tracking.

Let’s say you work on Harry & David’s website. In Stage 2 you focused on web sales. In Stage 3 you start tracking things like:

  • Email newsletter sign-ups (since those users might respond to a promotion)
  • Clicks on “get directions” on the store locator page (those users are likely to visit and shop)
  • Catalog request form submissions (those users might call later to buy gift baskets)
  • Calls to talk to a corporate gift consultant (those callers have a high probability of buying gifts for clients)
  • People who find answers to their support questions online (and therefore save time for your call center reps)

If you’re managing the website for the nonprofit organization Feeding America, in Stage 3 you move beyond donations and start tracking things like:

  • Clickthroughs to a local food bank
  • Volunteer opportunity sign-ups
  • People who sign up to host a virtual food drive for their company
  • Messages sent to a Member of Congress through the site
  • Job application form submissions

Stage 4: Add Monetary Values

While tracking micro-conversions has great potential, it makes your web analytics more complex. You go from tracking 1 or 2 conversion goals for campaigns, features, and A/B tests to tracking 10 or more goals.

Is your head spinning? Here’s the solution: assign dollar amounts to conversion actions, based on their value to your business or organization. That way, you can easily prioritize findings.

By contrast, treating all 10+ metrics equally will lead to bad decisions.

Let’s return to the Harry & David example. Imagine that the company is A/B testing 2 landing pages for a marketing campaign. Here are the results:

a-b-test-without-monetary-values

If you look at the conversion rate as the key metric, you’d conclude that Landing Page A is far superior to Landing Page B.

But what if you’ve crunched the numbers in your customer database and assigned monetary values to each conversion goal?

Let’s say you’ve calculated that the typical corporate gift lead spends $200 over her lifetime. The typical user who signs up for the email newsletter spends $10 over his lifetime. So the average corporate lead is worth 20 times the average newsletter lead in terms of lifetime value.

Now that we apply that research, the A/B test results tell a different story. In terms of overall value to the organization, Landing Page B blows away Landing Page A.

a-b-test-with-monetary-values

If you run the email newsletter team, maybe you prefer Landing Page A. But if you’re the CEO, VP of marketing, or website czar, your job is to rise above your department silos and assess a page’s overall performance. And, through that lens, picking A is a mistake that would cost your company a lot of money.

Whether they realize it or not, organizations are making choices like the one above every week. Those decisions might involve the following questions:

  • Should we invest more in SEM or social?
  • Should we increase our bid on this keyword or that keyword?
  • Should we use this headline or that headline on the homepage?
  • Should we keep or cut the new feature we introduced last month?
  • Should we write more of content type A or content type B?

The best way to simplify things—and to achieve a proper focus on holistic web performance—is to use monetary goal values. You can sum up performance and identify problems based on these weighted conversions.

Once you set up monetary goals, you’re on the path to making much smarter website and marketing decisions.

Caveat: Take It Slow

Alas, it takes time to get your measurement approach to Stage 4. Metrics need to be stable and reliable for companies to trust them. The first couple years of working with micro-conversions and goal values will require a lot of tweaking.

Brace yourself for trial and error. You’ll change your mind about which metrics to track. You’ll realize your initial monetary values were off the mark. Your tracking tags might break. And so on.

Here’s my advice: once you have a firm handle on macro-conversions, start playing around with micro-conversions and goal values. Identify goals. Start tracking them. Assign some best-guess values.

Then take a shot at using the resulting metrics—total value, page value, per session goal value—to compare and evaluate marketing campaigns, channels, landing pages, keywords, content and more. Share your results with trusted colleagues as experimental analysis, not as official reports.

As you gain more practice and buy-in from others, refine your list of metrics and dig deeper into your business data to assign more accurate monetary values to them. Over time you’ll move toward a powerful measurement model that will guide profitable choices for your website strategy.