Sure, you know that a website is critical to any small business or startup these days. But how closely are you monitoring whether or not your website is actually doing what it’s supposed to do?

Let’s face it, knowledge is power. The better you understand the visitors to your site, the better you’re going to be at converting them to sales, signups or whatever end goal you have for them on your site.

There are two primary methods of analyzing website performance: “log file analysis” and “page tagging.”

Log file analysis

Log files are literally text files that ‘log’ every request made by someone’s web browser to your business’ website server. Let’s just say they weren’t originally designed to help you run your business or your website, and looking at one will make your head spin.

However, any hosting service will offer at minimum a simple log file analysis tool with your hosting package, which should tell you the total number of visits to your website, pageviews, referring websites (including search engines), some demographics (country, type of browser, operating system) of your visitors, search words used to reach your site, and details on error messages returned.

If you’re going to dive into the analytics game, dump the word “hits” from your vocabulary. “Hits” specifically means the total number of individual files requested from your server to deliver your website to a browser. So if I visit a single page on your site, and there’s an html file, a style sheet, and five images, your log files register seven hits to the server. As a result, the only person who should care about hits is your server administrator – forget them as a business metric.

Pros

• You’ve got a past history of this data, you’re always collecting it, and you’ll always own it
• Software (even paid versions) is easy and fast to implement

Cons

• Can miss visits and/or pageviews due to cached pages (the browser or ISP saves or ‘caches’ a copy of a page so that it can load that copy quickly on a return visit – no request made to your server)
• Vulnerable to false counts of visits and visitors, since it looks at IP (internet protocol) addresses, which can be unreliable
• Storage and processing requirements can be huge depending on your website’s traffic

Page tagging

Page tagging involves adding a ‘tag’ or small piece of code to every website page you’d like to track with analytics software. When someone accesses the page, the code is run as the page loads, and all of the relevant data is kicked back to the tracking software.

There are a wide range of software options that use page tagging – Google recently bought Urchin software, and made their website analytics software free to all users. Other examples of vendors selling software that uses page tagging: NetTracker, ClickTracks, WebTrends and Omniture, to name a few. Depending on your website traffic, the detail and sophistication in reporting, and the ability to customize reports, these solutions can range from several hundred dollars per year up to $20K and beyond.

Pros

• No caching or IP address concerns
• Can be better at tracking visitors over time
• Most are hosted solutions – meaning you don’t have to store data or buy additional hardware to analyze your site – minimal up-front costs
• Many options offer near real-time reporting

Cons

• Requires access to all of your website pages and the ability to add the code to each page – if it’s not coded, it won’t be measured
• Since most are hosted, you don’t own the data – switching costs are high
• May not be compatible with all of the sources of data on your site – i.e. various servers, downloadable files

Which tool to use?

No method is perfect, and there’s no one-size-fits-all solution. Like any software decision you make for your small business, you’ll need to weigh the costs of a website analytics product against what you need to measure in order to understand your website and business.

Chuck Fuller is the Online Marketing Director at StartupNation