Take a step back 20 years, and pretend you’re the owner of a neighborhood bookstore. Being there everyday, you can count how many people came into the store day, how many picked up a book and looked through it, and most importantly, how many people actually bought a book. You can easily determine the demographics of shoppers and observe which books they peruse and which they neglect, how much you spent on advertising to pull each customer into the store, and analyze the data to increase your bottom line.

Fast forward 10 years to the days of the dot-com bubble. Companies were raising tens of millions and spent obscene amounts of money on acquiring eyeballs (bringing customers into the store aka customer acquisition). Cookies and user tracking were in their infancy. More importantly, tools which informed webmasters of who was coming to their site and what they were doing were very basic.

Now let’s fast forward to 2008. Investors in consumer facing businesses are looking for those with extremely low customer acquisition costs. Businesses that can’t keep these costs low while showing traction will not succeed in today’s environment. User identification has become very sophisticated and simple HTTP log analyzers (aka traffic meters) have grown into advanced analytical tool sets. We can capture almost all the same data that a retail store can capture about it’s users, and it’s practically effortless. I don’t think any retail store would operate blindfolded and neither should a consumer facing website. Every website should want to know what percentage of users engage in each activity, how long they do it for, how they found the site (google search, link from another site, etc.), how often they visit, what time of the day is popular, where they’re located…

Analytics provides a pulse on your business, and there are some great and free packages out there such as Google Analytics. Most importantly, you can count on the competition already running analytics. Occam’s Razor provides a great, formal definition:

• (1) the analysis of qualitative and quantitative data from your website and the competition,
• (2) to drive a continual improvement of the online experience that your customers, and potential customers have,
• (3) which translates into your desired outcomes (online and offline).

Next time you or anyone you know is making anything public on the web, be sure to have analytics tracking every move.

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