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?
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