Do you know your numbers?

I’ve had a couple of conversations today about using Google analytics and stats in general – and I really want to get over here just how important it is that know the numbers in your business.

First thing is that it really doesn’t matter what tools you use – there is no “right” tool – you can keep a whiteboard with a record of how many visitors and how many sales you make each day – that works just fine.  The point is that you need to be capturing numbers on your business that enable you to see what is going on.  Without that information – you are just guessing at what to improve and at what works and what does not.

Let’s take an example:  imagine you have an e-book – doesn’t matter what the subject is, but you make $20 every time you sell a copy.  That could be your own e-book, or part of an affiliate program.  Bottom line – you get $20 in profit or commission each time someone buys that e-book.

So you set up your advertising – let’s say you are using adwords for this.  It costs you about $0.30 per click, and it’s taking you 100 clicks to make that sale.  First day out – you hit awesome keywords, e-books are flying out like crazy and you can hardly keep up with your Paypal account – this is exciting, you’re in business!!

Until you get your adwords bill and realize that you’ve been spending $0.30 x 100 = $30 for every $20 e-book that you’ve sold.  Great job of getting your book out there and (hopefully) building a list, but no points for actually making money!

This is a really simple example.  If you do use adwords, then there are tools out there to show you which keywords and which ads are performing the best – which you should keep, which you should drop and so on.  But just at the highest level like this, it is crucial to keep on top of your numbers – imagine if you had just been able to drop two of the most expensive keywords and reduce your cost per click to $0.15 – suddenly you’re making $5 per e-book instead of losing $10 each time.  When you track your numbers – you can make those smart calls.

I’m off to check my adwords campaign now…  More later!