Website analytics might seem like a preoccupation for the company's webmaster, SEO consulting firm or, at most, the marketing department. But that's a short-range view that could let competitors move ahead of you.

Use web analytics to better understand your customers and their behavior.

Your website is often the public face of your company that customers and prospects first see. Every time people go to your site, visitors are revealing enormous amounts about who they are: where they go, live and work; what they do; which things or ideas interest them; when they are most open to communication; how they found you. That's why you need to pay attention to website analytics. The data they provide speaks directly to your relationship with customers and prospects, as well as to your strategy, branding and how both are working. You should also track critical information about the website itself: what people look at, how long they're on the site and what browsers they use to get there.

You'll want to be efficient in how you look at web analytics. There are so many numbers and analyses that you could devote your time to little or nothing else. Here are some tips for reading website data:

Know What You're Looking For

In their most basic form, website analytics provide data on the following:

  • What parts of your website visitors go to.
  • How long visitors are on the website or in particular parts.
  • How much traffic you get per given time period.
  • The search terms visitors use to find you.
  • How well your e-commerce does.
  • At what point in the purchase process people abandon their orders.
  • A breakdown of new and recurring traffic.
  • The browsers visitors use.
  • What part of the world visitors were in when they came to your site.

What this information tells you depends on what you want to know. Traffic patterns could offer insights into deploying computer resources to best handle customer demand. You might compare these patterns with marketing campaign progress to better understand SEO effectiveness, or better yet, ROI. You could also use data to profile average online visitors and compare them to what you know of customers. Visitor data provides insight into the interests and behavior of potential customers. Alongside other technology such as cookies, you could then see which of these people actually do business with you. This is the power of metadata, or the characteristics, descriptions and measurement of specific information.

Know the Limitations

No data is perfect; conclusions from web analytics can be flawed. What you see is often an approximation with some major inherent errors. For example, knowing how many unique visitors come to your site requires estimations by analytics firms. If someone uses one computer at home, another desktop at work, a laptop, a tablet and a smartphone, chances are that they may be showing up multiple times. Or, conversely, a single home computer may make multiple people in a single household look like one. Analytics depend on IP addresses, but those aren't necessarily tied to a physical location or individual user. An ISP or corporation might channel thousands of users through one external IP address that web analytics will miscount.

There are other potential issues. Errors in tracking code can translate into unreliable basic data like bounce rate, or the percentage of visitors who go to one page and then leave. Talk to your SEO experts, website managers or vendors to understand what else can go wrong. You should still use analytics because even flawed data is superior to no data. However, bigger decisions based on the data require more sophisticated software.

Choose the Right Tools

There are many options for analytics tools, including offerings from Google, Adobe, Quantcast, comScore, Nielsen and others. Some tools are free and some cost money. Although free tools may be helpful at the start, paid tools often provide far more of what you'd like to get.

Don't just rely on what someone on staff or at a consultancy tells you to use. They may have experience with a limited set of tools and likely don't know what others offer. As with any important software, you'll want to understand what various departments need from analytics programs. Create a task force to look at product literature, demos and reviews. Get reference accounts from the vendors and find online user discussion groups to see the actual experience other companies are having. Be sure to ask vendors about the total cost of ownership, how well you can integrate data with other sources, data export and support options, and how the paid packages differ from free ones.

Implement

Once you've identified what you want, the context and the best tools to fit your business, gather the information and implement it in your decision-making process. This will involve working with IT, business analysts and the individual business units to determine how to incorporate this new data with existing information. Expect some rough periods at first as you work the bugs out. Over time, track what you learn, compare it to other business metrics and make adjustments as necessary. Data is only a single tool for decision making. It never replaces the decision process.

Have you ever briefed an executive or coworker on analytics data? How did you pick out the relevant information? Let us know by commenting below.

Erik Sherman is an NCMM contributor and author whose work has appeared in such publications as The Wall Street Journal, The New York Times Magazine, Newsweek, the Financial Times, Chief Executive, Inc. and Fortune. He also blogs for CBS MoneyWatch. Sherman has extensive experience in corporate communications consulting and is the author or co-author of 10 books. Follow him on Twitter and circle him on Google+.