For years, companies have been trying to understand the effectiveness of their offline advertising and which campaigns generate web site traffic. I recently saw a good example of an attempt to track offline advertising efforts.

I was listening to a local AM talk radio station when I heard an ad for a “I got rich, you can too” offer. While I wasn’t terribly interested in getting rich using the ad’s method, I did find it interesting that the ad asked the listener to go to a web site to sign up for a free book. The web site was 4freekit.com.

I heard the same ad a few days later on XM satellite radio, but I noticed that the web site address had changed to 3freekit.com. I typed these in and you can see what I got:

• 2freekit.com
• 3freekit.com
• 4freekit.com
• 5freekit.com
• …and so on.

I then realized that the advertiser used a different web site address to track performance of ads on different radio stations. He assigned 2freekit.com to one station, 3freekit.com to another, and so on. By doing this, he can measure web site traffic and begin to understand effectiveness and profitability for each channel.

You can do the same thing, but you don’t need to use different domain names. If you advertise in the offline media, start a spreadsheet in Excel and list the media outlet and a memorable, unique web site address for each. For instance, you might use http://www.yoursite.com/newspaper for the local newspaper and http://www.yoursite.com/radio for the local radio station. By putting landing pages at these locations on your web site, you can use your web analytics software to see how much traffic each page gets. If your web analytics software is powerful enough, you can even measure conversion rates and revenue/leads generated from each page.

Use this tactic to understand the effectiveness and profitability of your offline media spend.

Recently there was a story on the ABC News web site regarding web analytics. While this story is good for those that have had no exposure to web analytics, the real value of the article to me is that perhaps web analytics is starting to become a more mainstream, accepted practice. From personal experience, many online business owners still don’t use web analytics to make decisions, and many don’t use web analytics at all. In fact, many people still just want to know how many “hits” they get, which when taken alone is worthless data. (If you want a designer’s take on hits, read the more candid Smiley Cat post dealing with hits).

There are now two good free analytics solutions for those wanting to dig deeper and learn more about the many design and marketing intricacies of your web site. There’s Google Analytics, which I’ve spoken at length about, and now there’s a new free service from Clicktracks called Clicktracks Appetizer. While I haven’t installed and used this yet, I have experience with the Clicktracks Analyzer package and was very happy with the data I got from it. Additionally, there’s a new, more specialized package called CrazyEgg that is due out this month.

For the smaller retailer without extra funds to spend on analytics, the advent of Google Analytics is a godsend. Google Analytics allows you to set up analytics for your site for free. Now, even the smallest retailer can afford a powerful statistics package.

It’s a fact that roughly half of all online retailers don’t know what their conversion rates are. Conversion rates are easy enough to calculate (customers/orders), but cart conversion can be a different story. Until now, only retailers with a complex tracking system could measure cart conversion.

Cart conversion is the percentage of customers that complete an order after visiting the shopping cart. It defines how many people start and finish the checkout process.

Cart conversion is important because it measures how effective your checkout process is at getting the sale. Google Analytics gives you a visual representation of your checkout conversion, one step at a time.

Enter the concept of a checkout funnel. A funnel is wide at the top and narrows as you go down, and an online checkout process tends to work the same way. The top of the “funnel” is the shopping cart (there’s some controversy as to whether the cart is part of the checkout process, but we’ll assume it is for this example). Only a subset of the people that hit the shopping cart will proceed to the shipping screen, and only a subset of those people will reach the billing page. At the end of the process is the order confirmation screen, which typically sees an even smaller number of people.

The ultimate goal, of course, is for 100% of your customers to drop through the funnel and purchase, but that doesn’t happen realistically for a number of reasons we won’t go into here. In a perfect world, the funnel would appear like a cylinder.

As long as you’ve added your Google Analytics code snippet in your pages to allow for tracking, you can create a checkout funnel. Google Analytics allows you to set up “goals,” so you’ll want to set up a goal called “Cart conversion” and paste in the URL for each step in your checkout process.

After you’ve set this goal up, you’ll find the report under Content Optimization > Goals & Funnel Process > Defined Funnel Navigation. Once you have received data for the goal you’ve set up, you’ll see the number of visitors that have hit each step and the success rate.

What you do with this information is up to you. Obviously, you want to reduce dropoff from one step to another. I’ve completed many checkout optimization studies, so if you’re interested in how to use this information, drop me an e-mail.

Not long ago, I read an article on steps you can take to convert visitors to buyers on your online retail web site. This 5-point checklist for increasing conversion made a lot of sense to me, and I wanted to share some thoughts on the first item on their list — checkout.

Simplify your web site’s checkout process

One of the top reasons that users abandon their shopping carts is because the checkout process is too long. Other reasons cited in a Global Millennia Marketing Study include requiring too much personal information, poor navigation, poor download times, confusing checkout process, and requiring registration to purchase.

Checkout is a key area of your online retail site because when people decide they want to buy, your site shouldn’t prevent them from doing so. Here are some ways to reduce checkout complexity and make the user experience better:

Don’t make a user log in or register

People don’t use your site every day, so chances are they will not remember their login or password for their site account. Allow people to bypass this step, but let them know that they may be losing advanced capabilities like order tracking or viewing order history. Instead of requiring registration pre-sale, incent them to create an account after the sale.

Keep it simple

Ask for the minimum amount of information it takes for the user to complete the sale. Anything that distracts your user from the task of checking out is taking money out of your pocket.

Additionally, you’ll need to find a balance between the number of screens you’ll need in your checkout flow and breaking the information up into manageable chunks. Hint: don’t make your checkout flow one long screen since this requires scrolling through many pages and reading through cluttered text. Also, seeing one large form may scare a user away — remember, they don’t want to have to fill in a bunch of personal information. Breaking up screens can give the perception that you’re collecting less information.

Finally, now’s not the time to ask a user to fill out a marketing survey. Information that users fill out during checkout should be mission-critical data only. Save the survey for after the sale.

Reduce download times

Make sure your server is equipped to handle the demand that people will put on it, and make sure your pages are “lean and mean.” Reduce graphics as much as possible. Many sites do this effectively by simplifying their navigation at the top of the page and not displaying what a user would see if they were outside of checkout. Pages should load in two seconds or less.

Measure checkout effectiveness

So how can you measure the effectiveness of your checkout flow? The most common measure is called “cart conversion,” or the ratio of the number of people that order and the number of people that begin the checkout process. Theoretically, you would expect 100% cart conversion, but this isn’t the case. High shipping costs and other factors cause cart abandonment in checkout, and you’ll have to find ways to combat these barriers elsewhere.

Higher cart conversion has a direct effect on your bottom line — it’s not hard to monetarily justify investments aimed at improving the checkout process.

Examining your checkout flow and correcting even small issues and usability problems can have a positive impact on your bottom line.

Clickz has word of a new study out this morning from iProspect. The study finds that only 40% of search marketers are being evaluated on actual business goals. Instead of being evaluated on campaign ROI or total sales generated, success of search marketing campaigns tends to be based on total traffic to the web site as a result of the campaign or top search engine ranking.

The study goes on to surmise that search marketing campaigns are evaluated by intermediate results because marketers can’t tie conversions back to a campaign.

Unfortunately, this is the story with so many small-to-medium sized businesses. In one online marketing forum I belong to, many web site owners have given up on paid search marketing due to the inability to tie conversion and sales to paid campaigns.

Even many large corporations don’t have enough focus and resources dedicated to making sure they are tracking sales, conversion and ROI from their campaigns.

If you’re a beginner to paid search or online marketing, it’s imperative that you track sales, conversion and ROI from each marketing campaign. You should be able to track your paid search activities separate from your natural search activities, your banner advertising separate from your email marketing. I usually go a step or two further, evaluating each keyword I bid on in both Yahoo Search Marketing and Google Adwords, for example. After all, I don’t want to spend money on terms that aren’t producing a return on my investment.

Another ecommerce find today is a study by ForeSee Results. The finding is that factors other than price have a significant impact on the buying decisions of online shoppers.

This study examined consumers’ satisfaction with different online retail sites and considered these factors: price, available selection, and overall experience (look and feel, navigation, function, performance and site capabilities).

Netflix.com, Amazon.com, QVC.com, Newegg.com and LLBean.com were highest in customer satisfaction and had a 36% higher conversion rate than retailers with the lowest customer satisfaction.

The study did not find a significant correlation between customer satisfaction and overall sales, but noted that customer satisfaction measures were an indicator of the future success of the online retailer.