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Executive Report - By Thomas Baekdal - April 2013

The Decision to Buy, And Defining The Value of The Conversion

Last month +Avinash Kaushik posted the article "Excellent Analytics Tip #23: Align Hits, Sessions, Metrics, Dimensions!", and it's absolutely wonderful.

The article explores the problem of mixing hit based analytics with session based analytics. Avinash explains it really well in relation to what it looks like in Google Analytics (and other tools). But let me take a slight detour and explain the problem in another way, with a sale in a physical store.

Imagine that you own a fashion store, and every single day people walk in and look at different types of clothes before deciding what to buy. You would see behavior like this:

  1. A person enters the store
  2. Looks at the shirts near the entrance.
  3. Looks at a pair of jeans
  4. Looks at another pair of jeans
  5. And another pair, which he decides to buy
  6. Looks at a shirt that might go well with it (but decides against it)
  7. Checks out and exits the store.

So we have seven 'page views' (or interactions), but now we come to the age old problem of analytics. How do you quantify the value of this?

In sales terms the value is $399, which is the value of the jeans that this person bought. But what if you were to look at that per interaction?

What many people are doing is this:

  1. Enter = $0
  2. Shirt = $0
  3. Jeans = $0
  4. Jeans = $0
  5. Jeans = $399
  6. Shirt = $0
  7. Exit = $0

But this is wrong because without all those other interactions, this person would have been unlikely to buy anything at all.

This clearly doesn't work, and if this is how you have setup your custom analytics reports, you will end up with a completely wrong picture of what makes a sale (as Avinash also points out in his article).

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Thomas Baekdal

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"Thomas Baekdal is one of Scandinavia's most sought-after experts in the digitization of media companies. He has made ​​himself known for his analysis of how digitization has changed the way we consume media."
Swedish business magazine, Resumé


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