Podcast 15 – Measuring what matters (with Neil Patel from Kiss Metrics)

Neil Patel is kind of a big deal

Neil Patel is kind of a big deal. By the age of 21 he was named a top 100 blogger by Technorati and one of the top influencers on the web (according to the Wall St Journal). These days he runs Crazy Egg and Kiss Metrics as well as his own site Quick Sprout. I chatted to him about metrics, what people should measure and other stuff relating to his work at Kiss Metrics.

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Find Neil

Metrics

  1. People focus too much on page views and vanity metrics that won’t increase the bottom line
  2. All about ROI – who is coming, who is paying or signing up
  3. Offline businesses need to first track the origin of leads to your website and track in a CRM which leads become customers.
  4. Vanity metrics includes bounce rates, page views, time on site etc.
  5. Better things to track are things like lifetime value of a customer, churn rates, conversion rates
  6. Track people not ‘visitors’
  7. Analytics can track individuals but Kiss Metrics can track specific people

Kiss Metrics’ marketing

  1. Don’t hard sell people
  2. Help them out, provide a ton of free knowledge
  3. Educate customers on things that will affect their business that is somewhat related to you
  4. You don’t need to only focus content around your exact area of business
  5. Kiss Metrics are about metrics but they give advice on SEO, social media, traffic, content marketing etc.
  6. Educating through email, prove to people how they will make more money or save money
  7. Utilises guest authors for the Kiss Metrics blog
  8. Blog has no clutter and optimised for opt ins, limited widgets
  9. Most blog readers are looking for knowledge and advice not a system so they aim for opt ins not immediate signups
  10. Email content gets people back to the blog and builds the problem in the eyes of the customer
  11. Much easier to build the relationship over time than to see at once
  12. Kiss Metrics always mention their own product

Google Analytics vs Kiss Metrics

  1. Google Analytics is great for basic metrics
  2. If you want lifetime value, churn, conversion rates and what is causing them to go up or down then Kiss Metrics.
  3. Repeat buyers aren’t captured by Google Analytics (i.e. lifetime value) and what actions are causing them to repeat their purchase.
  4. Kiss Metrics is great for transactional businesses, ecommerce, software as a service, subscriptions etc.

Metrics for SAAS app

  • Measuring stickiness, how people are using the app. You can measure your activities then make some changes and measure it again. You can use cohorts to compare the second group against the first group.
  • Active users – These can be measured through event tracking, logging in, engaging with the app etc.
  • You can also look at individual users to find out who your advocates are and your best customers etc.

Other stuff

  • They are spending close to $100k a month on hosting fees. Yikes!

Full transcription

Dan Norris: Web Domination is brought to you by my startup Informly. My app shows you a simple one page live report on all of your important business information. It talks to your favorite services like Analytics, MailChimp, Zero, and more and centralizes the important info on one page accessible by a mobile or the web. The basic plan is free. Feel free to check out inform.ly/podcast for more info about the app or about the show.

Welcome back to Web Domination episode 15. This week I am having a chat to Neil Patel who’s the co-founder of Crazy Egg and KISSmetrics, and I talked to him mostly about KISSmetrics in this interview. He also does a lot of his own content and has a site called quicksprout.com, which I’ve been reading a lot of the e-books and the content stuff on up there. He’s really great at producing his own content. The KISSmetrics blog is a real standout if you want to look at content marketing and their whole approach to engaging customers. I talked to him about metrics and what companies should be measuring and have a chat about analytics and KISSmetrics.

I hope you’ll like the interview. The other thing I am doing is every Friday I am putting out a video; it’s called five minute Friday. I am going to be giving some tips on the web in general or a news item or something that I think is useful every Friday. If you go to inform.ly/5minutefriday, then you’ll find those videos there. The first one’s going up on Friday the 21st of September, and that will be a podcast in iTunes as well once it gets added. I hope you like that, and I hope you like the podcast. If you do, please feel free to leave an iTunes review and I’ll read it out on the show. All right, let’s get started in the interview. I started by asking Neil about how he came to be involved in KISSmetrics and why he started the company.

Neil Patel: With the KISSmetrics stuff, it came about because me and my co-founder running a consulting company and Crazy Egg back in the day, and we realized that there was a big problem. People were looking at analytics, but they’re focusing on page use and vanity metrics that didn’t necessarily affect their bottom line. They’re trying to make those metrics go up, but at the end of the quarter when they look at the revenue, they’re like, ‘Hey, it didn’t really change much.’ We’re like why is everyone focused on improving these vanity metrics when it doesn’t affect the metrics that are really important to the business. That’s the goal we did or had when we first started KISSmetrics, and we have a similar goal, but it’s changed over the years, of course.

Dan Norris: I was guilty of this with my last business. I was probably guilty of … because I had a web design business … Guilty of even encouraging people to measure some of this stuff that … Things like traffic and Google rankings and that kind of stuff that if you don’t really know who’s coming to your site and what they’re doing when they get there and then what they do after they become a customer, then tracking that stuff is pointless right?

Neil Patel: Exactly, it’s all about ROI, right, who’s coming and which of those people are actually paying or signing up.

Dan Norris: One of the hard things is with my new business, it’s a SaaS business, and I am using KISSmetrics. We’ll talk about that later. What appeals to me about the business is that you can track everything quite easily, especially if you use something like KISSmetrics. A lot of businesses don’t lend themselves that easily to tracking everything. What advice do you give people who use their website to generate leads but they do most of their actual business offline?

Neil Patel: If you’re doing your business online, I mean generating your leads online and doing your business offline, which a lot of companies do, you need to first track where are those leads coming from. More so, you need a track in your CRM which of those leads actually pan out into customers. You have to start correlating that with those traffic sources that are coming to you, that are causing the good leads because then it’s not a pure numbers game. It’s a pure numbers game of qualified leads, right, which is what you need to start measuring on whether they’re closing based off then so forth so on. You can tie online and offline together in many ways. Marchex does it with paper call. It’s a really effective tragedy if you want more phone calls to your business. It’s more so trying to figure out the goals you’re trying to impact and try to track them so that way you can improve them.

Dan Norris: Let’s go back and start with the vanity metric. What are some of the vanity metrics that you try to encourage people to move away from?

Neil Patel: Bounce rates, page views, time on site, metrics like that because if your page views go up, unless your ad network, you don’t really care for page views, but other than that … You shouldn’t care for things like bounce rate. If your bounce rate goes up through the roof, who cares? If you double or triple your conversion rate, right, so to me, it doesn’t really matter.

Dan Norris: If you’re looking at more advanced metrics, then where is the best place to start?

Neil Patel: It depends on each business, but I usually like tracking things like lifetime value of a customer, churn rates, conversion rates. I like tracking people, which is a basic metric but I think it’s really important. If you have a thousand visitors coming to your site and only ten conversions, it’s not as great as having 200 people to your site and ten conversions. It’s about knowing those numbers because people use different devices and different laptops and so forth so on and browsers. Just because someone Google analytics or someone shows that you have 20 visits to your site, it doesn’t necessarily mean you have 20 visits, it could just be one person who came to your website.

Dan Norris: That’s why the sort of a big differentiated with KISSmetrics, isn’t it? Because you sort of know, especially if they’re logging in or opting in or something, then you know who they are. With analytics, you only really know that they … You know that possibly a single person, but even that may not be correct.

Neil Patel: You got it.

Dan Norris: In the second part, I wanted to talk about what you guys do with KISSmetrics because I’ve just been really impressed with just everything you do with your content marketing and the way you educate prospects in kind of warm them up to a sale. I just went through the whole process myself, so it obviously works. Can you give us a bit of an idea of what you’re thinking is there and what your strategy is?

Neil Patel: Our strategy is this. You don’t necessarily have to hard sale people to get customers. You can help people out to get customers. What I mean by this is provide them a ton of free knowledge, educate them, not just on your product, but anything that would affect their business that’s somewhat related to you right? If you know your potential customers are looking for X, Y, and Z and those three things, X, Y, and Z, isn’t related to your business, you should still help them out with it and give them free advice on it because then, when they’re looking for your solution, they’ll come to you because it’s like, oh, this company is great.

They helped us out with all this other information. Whereas KISSmetrics, we provide analytics but anyone who’s looking for analytics tends to be a marketer. Those marketers are looking for more traffic, so we give advice on social media, SEO, so forth so on, but we also provide analytics data as well and knowledge. It’s just all about education because that way our brand name’s in their mind all the time. When they need an analytic solution like ours, hopefully, they sign up for ours. We educate them. Once we collect our e-mail, we educate you on analytics and what you should be tracking, what not. We don’t necessarily do a hard pitch on KISSmetrics, but more so, we get you in the right mindsets so you understand why you need this type of solution and how they’ll either make you more money or save you money.

Dan Norris: That’s something I want to talk about. Just before I get to that, with the content, that’s interesting because I think a lot of people think they have to specialize in one particular thing and become an expert in that. I noticed with the content on your blog, I should say you’ve got a whole range of stuff to do with social media or an SEO and core marketing and traffic stuff, all sorts of stuff. You get a lot of guest’s posts in?

Neil Patel: That’s correct. We have a ton of guest authors who contribute and hit us up and try to write for the blog, so it’s great.

Dan Norris: Is that mainly because you can’t be an expert in each one of these topics or it’s just a model that works better for you?

Neil Patel: Works better for us. It’s hard to crank out all that content internally. Sometimes, you had to go outside the company to get more content.

Dan Norris: The way your blog is structured is quite clever as well. It’s really clear. There’s no clutter on the page and there’s no … The content’s really good, but once you get there, it’s very easy for you to sign up for e-mails, and it’s not that easy for you to get distracted with a whole bunch of other stuff. I am guessing that’s intentional.

Neil Patel: Definitely, it is intentional.

Dan Norris: Your main funnel is getting people first to sign up for e-mails and then later on sign up for a trial, is that right?

Neil Patel: That’s correct because most of blog readers aren’t looking for a product. They’re just looking for knowledge or advice. You provide that first and then the easiest way to do so is e-mail because that way you can get them to keep coming back to the website, then from there, we will sell them on our product through a drip system.

Dan Norris: Do you think if KISSmetrics was a free product, do you think people would be more likely to just sign up and try it, or do you think that funnel of building up their need for via the e-mails is still a better way to go?

Neil Patel: It could go either way. For us, we offer free trial as our version of free product, and free trial doesn’t require a credit card. You can sign up, no commitment, no credit card needed. If you like it, continue using it. We also did it this way because for us to offer free product, our hosting fees would go through the roof where we already spend … We’re getting close to six figures a month in hosting fees.

Dan Norris: Nice. I guess it would be pretty intensive having all of that data being tracked and what not.

Neil Patel: Exactly right, so that’s why it makes that really hard to say, hey, we’re going to release a free program or free solution and offer to everyone because then our fees are going to go through the roof. Sure, a lot of those will turn to paid customers, but there’re a lot of unknowns in that yet. Right now, as a company, we’re not willing to take that risk.

Dan Norris: I think your services fairly specialized as well. It’s not like a generic thing where there’re 100,000 companies that do it for free and you have to as well, so that’s probably part of it too.

Neil Patel: Exactly.

Dan Norris: One thing that’s interesting to me about the way … That the content on your blog is amazing, but the content in your e-mail is also really … It’s integrated with the blog. It gives you lots of good content, and then it sends you back to the blog. Over time, it takes you through a process of educating you on different metrics and gives specific examples of tests you guys have done and why measuring people is important. All of it, as you say, it’s not a hard sale, but all of it encourages the customer. It builds up their need. It builds up their problem I guess, doesn’t it?

Neil Patel: It does. It’s the best way to get someone really engaged because if they’re continually reading your information and learning from you, then they’re going to be more likely willing to try your product out.

Dan Norris: Since you’re getting to them regularly, it’s probably a lot easier to build that up than it is on just a single sales page.

Neil Patel: It is. It’s much easier to build up a relationship over time and close the sale than it is to sell them all at once.

Dan Norris: Probably even I was guilty of in my last business, but a lot of people, they’ll put out good content, but they’ll fail to mention their own product. I think you guys aren’t afraid to do that. It’s not that you’re selling it, but it’s like you’re passionate about it and you know that it works. Therefore, you know it’s the best solution for someone who’s interested in what their rating.

Neil Patel: It’s a bit of both. If you try a bit of both out, you’ll figure out what works for you and, from there, continue leveraging it more.

Dan Norris: When you say a bit of both as in some just general helpful content and other specifically related to the product?

Neil Patel: Yeah, exactly, it’s all about AB testing it with your content.

Dan Norris: I guess in the last bit I just wanted to talk about Google analytics and KISSmetrics and the difference between the two. If I’ve got people listening who have thought about KISSmetrics, have heard about it, then what are the main downfalls with analytics or with just using analytics by itself and what’s the main point of using something like KISSmetrics?

Neil Patel: If you want to know your page views per visitor because for, let’s say, ad businesses, that’s really important, but if you want to know your basic metrics, like which keywords are driving you traffic and so forth so on, Google analytics is great for that. We’re not there to replace them. If you want to figure out your lifetime value, your churn, your conversion rates, what’s causing those metrics to go up and down and how to improve them so that way you can maximize your revenue, that’s what we’re good for. It’s not necessarily that one works better than the other. It’s just they solve two different purposes.

Dan Norris: Churn is customer’s signing up and then how long it takes to leave right?

Neil Patel: That’s correct.

Dan Norris: If people think that measuring that conversions with analytics, even using like e-commerce tracking or something is doing it, then they’re missing part of the problem right?

Neil Patel: That’s correct because even with e-commerce, there’re repeat buyers. Google analytics will not tell you which people are repeat buying. If you want to understand what’s causing people to continue to rebuy, and which ones rebuy versus which ones don’t and which actions people take who rebuy versus which actions people don’t take which is causing them not to buy again or come back to the site, that’s the stuff explained so that way we can help you maximize your income.

Dan Norris: What sort of businesses get the most out of it? Is it only businesses that have people logging in so they can identify them or …

Neil Patel: Any transactional business, e-commerce, subscription, software’s a service. Those are a lot of the main ones that are using us right now.

Dan Norris: If you’re taking someone’s e-mail address, is that the point where it becomes useful to use something like KISSmetrics because you can tell who they are and you can then use KISSmetrics to learn how they got to that buying decision?

Neil Patel: Potentially, you don’t even need e-mail address. We can put unique identifiers across anyone. Pretty much if you’re selling anything, we’re good for you. If you’re collecting any cash from your website other than ads, we’re a great product to use. If you’re just an ad-based business, we’re not for you.

Dan Norris: I’ve got a couple of selfish questions as well because I’ve been using it, and I’ve been trying to work out which metrics to use to track for different things. I’d be interested in getting your insights on that. My business is a SaaS app that I am launching. I am interested in the metric around stickiness so looking at …

Neil Patel: sub-cohorts?

Dan Norris: Keep going.

Neil Patel: If you’re looking for stickiness and you’re trying to figure out how people are engaging and how to improve that number, you want to look at cohort analysis. A cohort, let’s say, one of your stickiness points is … how many people are leaving comments.

You can make changes to application and you can compare by time zones. People who signed up during this week, here’s how they engaged throughout the whole process or a course of three months, a year, or whatever it maybe versus people who signed up after we made the modifications and how did they engage. Cohort analysis helps you compare two different time zones and see how those users engage. The reason that’s important is if you just look at number of signups, of course you’re going to get … Let’s say the metric has more comments or video uploads, You’re going to get more of that because over time, you naturally get more users, but the percentage of users who actually uploaded may decrease, which is why you have to segment and group them into buckets.

All right, I want to compare all the users who signed up the first week of September versus the second week of September, and I want them in two separate buckets and look at how they interacted with the site and application over the next six months. You can say the first week of September, we’re going to show them X, and then the second week, we’re going to show all these users Y. The users who signed up in the first week of September still see X, and they see it for the next six months. The second group see Y over the next six months, and you can see what’s causing people to engage more or less of what’s causing people to be sticky versus not be sticky.

Dan Norris: Every time you start working on a new feature or you release a new feature, you can use that?

Neil Patel: Yes, exactly.

Dan Norris: The other one was a measure around active users. Do you have any thoughts around that? I think a lot of people probably just use analytics and look at how many people or how many visits they get to the site, but I guess there’s a better way to measure how active people are or how many people you have that are active in your sort system.

Neil Patel: We do event tracking. You can see how many people are doing specific events, and those events could be logging in or whatever it maybe that you want to see. That’ll help you determine how many of your people or customers are active versus not active.

Dan Norris: Basically, every action within the system you just add a little bit of java script that logs the events, so you know exactly what they’re doing.

Neil Patel: That’s correct.

Dan Norris: The other cool thing is you know who’s doing it too right? I feel like a bit of a stalker looking at my KISSmetrics because I see all these people have logged in and I know exactly what they’ve been doing, but it’s pretty helpful to know who your best customers are and who’s using it the most and who your advocates might be.

Neil Patel: You’re right on that. That’s the stuff we’re trying to provide and help out.

Dan Norris: If people want to learn more about KISSmetrics and about you, what’s the best place for them to go for that?

Neil Patel: kissmetrics.com, k-i-s-s-m-e-t-r-i-c-s.com, that’s the company site. If you want to learn more about me, you can visit my blog at quicksprout.com, q-u-i-c-k-s-p-r-o-u-t.com.

Dan Norris: Awesome. I’ll put those in the show next week as well. I’ve been checking out your site, and there’s a lot of good stuff on there, lots of like pdf traffic strategies and all sorts of stuff that I’ve been reading that it would be really good for my audience as well.

Neil Patel: Awesome.

Dan Norris: Thanks so much for doing this.

Neil Patel: No problem. Thanks for having me.

Dan Norris: All righty, all the best. See you Neil.

Neil Patel: Bye.

Dan Norris: Hey guys, thanks for listening. Make sure you check out inform.ly/podcast to learn more about the Informly app and more about the show. Thanks. See you next time.

 

About

Dan Norris is a co-founder at WP Curve and a passionate entrepreneur with an obsession for content marketing.

  • http://explainafide.com.au Robin Jennings

    Another great chat. I’ve been reading KissMetrics for a while now- always great reading.

    • http://inform.ly/ Dan Norris

      Hey Robin, thanks yeah their blog is the best!