Ways to Measure Performance and Create Success

Your server logs are a gold mine if you know what to look for and how to analyze the appropriate data relationships. Combined with some basic financial information, the data can produce some valuable insights. Why, without even looking at your actual site, somebody else could tell you a lot about how successful you are just by playing with these numbers.

E-commerce is a numbers game. The trick is to focus on the right numbers so that you can make accurate decisions about how to improve your site and, ultimately, your Customer Conversion Ratio. On our Web site we offer a free download of an Excel spreadsheet that instantly calculates the key metric you need to track as you work to increase your conversion rate. My experience has been that few companies are collecting the right data or are so overwhelmed with data that they don't know what to do with it.

Time to see how well your site is actually doing. These six simple calculations will give a snapshot of where you are, and if you continue to do these calculations over time, you'll be able to track the effectiveness of your improvement efforts.

1. Customer Conversion Ratio (CCR) Divide your number of orders by your unique visitors to arrive at your CCR. The CCR (also called sales closing ratio and sales closing rate) is the bottom line metric out there. It's a measure of how many of your visitors actually complete the action you desire.

2. Customer Acquisition Cost Divide your marketing expenses by the total number of orders you receive from unique new buyers over a given time period. Your cost of acquiring a customer is critical to improving your profitability and also your cash flow. With regard to the marketing expenses component of the calculation, some companies include a monthly amortization of the cost of the website as well as the monthly cost of maintaining the site, while other companies only consider promotional expenses. Use the approach that works best for you.

3. Sales Per Visitor Divide gross sales by the total number of unique visitors. This is similar to CCR, except that instead of showing you the percentage of visitors you "close" into becoming buyers, the Sales Per Visitor shows you the actual average amount purchased per visitor (not per order).

4. Cost Per Visitor Simply divide your marketing expenses (or your marketing expenses plus your Web expenses) by the number of unique visitors. Cost per visitor measures the effectiveness of your marketing and your conversion processes. The objective is to minimize cost per visitor and increase sales per visitor.

5. No Sale Rate: Home (or Landing) Page Divide the number of one-page visits to the home (or landing) page by the number of visitors entering the site through the home page. This metric is crucial; if you have time to track only one thing, track this one. If you have other high volume entry pages, they should be tracked instead of, or in addition to, the home page. For any site you can imagine, if visitors are not making it past the home page or other high volume entry page, something is wrong. If the marketing is on target, the problem centers on usability -- visitors simply cannot find what they want to find, or the design (including the way offers are presented, the speed of page load, the copy in text links) is simply not working. This metric is especially effective for hunting down copy problems on a specific page. Unquestionably, falling percentage is good here.

6. No Sale Rate: All Pages Divide the number of one-page visits to the entire site over a period of time by the total number of visitors over the same period of time. While focusing on top entry pages is more important in the short term, because that is where the traffic is happening, this more global metric is likely to point to global design flaws in navigation or page layout. When you make global design changes, pay attention to this one -- you want it to be forever falling.

These metrics, in the aggregate, may not be giving you the numbers you're looking for. You may need to get more specific to get the actionable information you need. This is important to understand because there are no "average" visitors. There are specific visitors from specific places, and, to maximize each visitor's value, he should be given specific treatment. To reach the required level of granularity, you should subdivide your macrometrics into their component micrometrics. By monitoring and optimizing these "conversion" metrics, you can begin to improve your results. This isn't that hard; certainly, it's not rocket science. With a little education, anyone can calculate basic Web metrics and understand and use these numbers to maximize results. Are you just gathering data, or are you gleaning valuable information that impacts your bottom line?

 

Tracking and Analysis Make Your Website Work Harder

 

 Even if your website does not have e-commerce functionality, it still must have 'salability' - the ability to create the desired response from its visitors. If your company has developed a solid web strategy, you already know whether the desired transaction (or conversion) is online sales, potential customer inquiries or getting visitors to become registered users. With these objectives predetermined, it becomes easier to identify where a website is successful and what areas need improvement.

First and foremost, user tracking and analysis should be built into your online marketing program in order to identify these areas. It is foolish to invest significant resources in a website only to walk away from it without evaluating its performance on an ongoing basis.

A 'hands off' approach can only hurt your company's chances of future growth, whereas continual monitoring and user feedback can identify new opportunities.

Online Sales - What's the Problem? You've built the store and are still waiting for the orders to start flooding in. The first question to ask is whether or not the right customers are finding your site. Have you optimized your site for the search engines by using keyword-rich copy? Have you listed your site with the key directories: Yahoo, LookSmart, and the Open Directory Project? If not, then you need to start here.

Writing for the web is difficult - not only must your copy include your key search terms, but it must also convince the user to buy products from your site. If the first pages visitors see do not immediately make clear the benefits of buying from your site, then they are likely to leave before ever finding your order page. Here's where your website's traffic statistics come into play - how many visitors get to your order page compared to the homepage? If the number is considerably lower, then visitors have determined you don't have what they want or the copy did not convince them to buy.

Now let's look at the buying process:
· Can visitors buy in 5 clicks or less?
· How many visitors get to the order page and buy?
· How can you streamline the buying process?
· What incentives can you offer buyers?
· Are your prices competitive?


The standard e-commerce conversion rate of visitors to buyers is reported at 3-5%, yet judging your site's performance by those numbers can be especially difficult if you are in a niche or highly competitive market. Understanding user behavior on your site and analyzing feedback from customers can drive successful changes to your site functionality. Case studies show simple modifications to order forms and sales copy results in significantly improved conversion rates - as much as 25%. If yours is a dynamic website, making products within the database available to search engines allows those users looking for a product by name or model number to find it on your website.

Registered Users
Whether you're an e-commerce site or not, an effective way of attracting repeat visitors is by creating a free or paid membership program. In the case of an e-commerce enterprise, asking users to register for a free membership provides a pre-qualified email list of potential buyers to which email newsletters showcasing new site features or special offers can be sent. By creating your own targeted opt-in email list, you have an engaged audience who has already established a level of trust in your products or services and will return higher response rates than a non-targeted list.

Paid memberships are most effective with services publishing a high-quality newsletter that offers in-depth information for a highly interested audience. Can you offer your current customer base any value-added services via email? Is there an opportunity to create a subscription-based, password-protected area of additional content covering industry specific information and topics? Either of these options would require significant employee resources to maintain a regular update schedule and produce quality content that meets subscribers' expectations. However, you may be able to efficiently develop the content needed by way of other materials that are produced in normal workflow. If your business is seeking an added revenue stream, you might consider setting up one of these programs to attract both new and repeat users to your website.

Customer Inquiries
Most traditional businesses simply use their website as online collateral describing services offered, encouraging users to contact the company for details. In this case, a successful site will draw qualified users based on the content within the page, which should be optimized with key industry search terms. Placement in appropriate industry directories and portals will further increase chances of being found by interested users. Ideally, the website will drive potential customers to call you for more information, yet will educate users enough to minimize time spent on sales calls. Again, tracking mechanisms should be in place to allow your business to effectively calculate ROI for costs spent on building and marketing your website. Each sales call should collect information about how the user found the site and what they were looking for, even if they did not find the desired product or service. Mining this type of data will not only provide new ideas to make the website perform better, but also identify new opportunities for business growth overall.

Increasing Salability
If you can identify areas in the above scenarios where your company is not achieving maximum performance, it's time to revisit your online marketing strategy. Start by reviewing the competitive marketplace and look for potential growth areas. Review your content:

- does it need updating? Does it reflect company goals and reach the desired audience? Do you know if the right people finding your website and how are they reacting to it? Solutions to these types of issues range from simple changes to complete website overhauls; however, long-term success comes from continually analyzing and improving overall performance.