Six 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?
This article first appeared in Internetday March 21, 2002.
| 
