AdWords Conversion Tracking - Don't be Fooled

An associate of mine who dabbles in AdWords for a small business he runs called me this past weekend with an AdWords conversion tracking question. He indicated he had started using the AdWords conversion tracking so he could get a better handle on what keywords were actually generating sales. Anyway, here was his question;

"I noticed my AdWords account showed two conversions yesterday but I only made one actual sale. Is conversion tracking broken or did I miss an order somehow? I spent $100 with AdWords and the Cost/Conversion column showed $50 so I assumed that meant I made two sales. The other reports I created in AdWords show two conversions too."

I jumped into his AdWords account and started poking there and in his logs...then I was reminded of a scenario I had encountered sometime last year. Turns out the scenario I ran into is exactly what had happened to him - a person who made a purchase at his site had clicked on two different AdWords ads prior to making a purchase so AdWords was showing conversions for both keywords.

For example;

Joe searches Google for blue widgets, clicks on your blue widget AdWords ad and arrives at your site. He browses around for a couple minutes then realizes he actually needs a red widget. Joe leaves your site, goes back to Google, and searches for red widgets. Joe clicks on your red widget ad and is back on your site. This time he places an order for a red widget. In a scenario like this, AdWords will show conversions for both blue and red widgets even though the customer only bought a red widget.

My advice: always look at your internal sales reports and use a more robust analytics solution the minute you can afford it. Don't base spending decisions solely on conversion data reported via AdWords conversion tracking.