1.Harness Your Site's Stats to Measure Your Success
One thing all successful businesses have in common is that
they test everything, and assume nothing. But in order to
test, you have to be able to measure results.
After all, if you don't know your site's vital statistics
-- also called metrics -- you won't see the danger signs until
it's too late. Plus, if you're not measuring the numbers that
matter most to your business, you could be missing huge opportunities
The good news is that, with e-businesses, tracking results
is a snap. But there's a lot of conflicting and confusing
information out there about web site statistics, so in this
issue, I'm going to give you a primer on keeping a finger
on the pulse of your venture.
To really know where your business is and track its health,
you need three sets of information:
Your sales figures,
Your subscriber and customer statistics, and
Usage details from your web site.
I'll assume you already have your sales, customer, and subscriber
info handy, so that leaves us with web site usage details.
Every time someone requests one of your web pages and the
files associated with it (i.e. graphics, audio, banner ads,
buttons, etc.) from the server that hosts your web site, these
details are recorded in a file called a server log.
Here are just a few of the things your web logs can tell
Which search engines bring your site the most visitors.
What keywords visitors are using in the search engines to
find your site.
Which linking partners and ads are bringing you the most traffic.
How long your visitors are staying on your site and on individual
Which pages your visitors are most interested in.
Where visitors are entering -- and exiting -- your site.
But the truth is, some of these numbers are meaningless on
their own. After all, there are plenty of dot-coms out there
who get loads of traffic but still don't see many sales!
Frankly, it's combining your site stats with your existing
sales and subscriber information that makes these metrics
Critical Stats You Should Be Tracking
In general, the most important statistics are called "conversion
rates." These are ways of measuring how successfully
you are achieving the goals of your site, such as converting
curious browsers into buyers or converting first-time buyers
into repeat customers.
You'll likely have several conversion rates to focus on as
you guide your customers through the sales cycle, but here
are some key formulas:
1. How many visitors are you converting into customers?
Your Visitor-to-Customer Conversion Rate is one of the easiest
stats to gather, but also one of the most powerful. It's a
quick indication of how effectively you're convincing visitors
to buy from you.
# of sales /# of visitors x 100 = Visitor-to-Customer
So if you get 10,000 visitors a month and 472 of them become
customers, then your conversion rate is 4.7%.
472 /10,000 x 100 = 4.7%
2. How many visitors are signing up for your newsletter?
Known as the Visitor-to-Subscriber Conversion Rate, this
metric tells you how attractive your subscription offer is.
Keep an eye on this figure as you test different positions
and copy for your sign-up form.
# of subscribers /# of visitors x 100 = Visitor-to-Subscriber
If you get 10,000 new visitors to your site in a week and
2,730 of them subscribe to your free newsletter, then your
conversion rate is 27%.
2,730 /10,000 x 100 = 27%
3. How many of your newsletter subscribers are becoming
Your Subscriber-to-Customer Conversion Rate is a good test
of how effective a sales tool your newsletter is. This is
especially important if your main product is a paid newsletter.
# of customers /# of subscribers x 100 = Subscriber-to-Customer
If 120 of your 2,730 subscribers end up buying something
from you, then your subscriber-to-customer conversion rate
120 /2,730 x 100 = 4.4%
4. How much revenue are you making from each visitor?
Very simply, this Revenue per Visitor stat shows how much
you're earning from your average visitor. This is particularly
valuable since this number helps determine how much you can
spend to acquire a new visitor while still earning a profit.
sales /# of visitors = Revenue per Visitor
If you sold $6,000 worth of inventory this month and had
39,000 visitors to your site, you would know your revenue
per visitor is $0.15.
$6,000 /39,000 = $0.15
5. How many people are clicking where you want them to
Your Click-through Rate shows the percentage of people who
"click through" from your salesletter to your order
form (or any other link you want to measure).
clicks on link x /# of visitors to page with link x x
100 = Click-through Rate
For example, if you get 10,000 visitors to your salesletter,
and 650 click on the link to your order form, then your salesletter
has a click-through rate of 6.5%.
650 /10,000 x 100 = 6.5%
Advanced Stats You Should Be Tracking
Beyond the basic metrics I've covered above, there are some
more advanced measurements you should be aware of. This powerful
information will give you even more insight into your business
and ways you can bring it to the next level.
1. How are your customers moving through your site?
For any site that has more than a page or two, this is a
crucial -- but often ignored -- set of metrics, referred to
as Clickstream. It basically involves tracking how visitors
move through your site, including where they enter, where
they exit, and what pages they view along the way.
Included in this category are stats like your homepage "bounce"
rate: How many visitors to your homepage leave (or "bounce")
without going any deeper into the site. If 75% of your visitors
don't click a single link off of your main entry page, you
need to find out why, or you are wasting valuable traffic.
The clickstream will also show which pages people are leaving
your site from. For example, if more people leave the site
from your order form than any other page, you might need to
assess how "user friendly" this form is. This can
be a crucial way of seeing how effectively your navigation
system is guiding your visitors toward your products.
2. How much is it costing you to attract new visitors
to your site?
The Cost per Visitor (CPV) stat tells you how much it costs,
on average, to get a visitor to your site. If you're using
paid advertising, this can be a particularly valuable figure.
Just compare your cost per visitor to your revenue per visitor,
and you'll know whether or not your advertising is profitable.
marketing costs/# of visitors x 100 = Cost per Visitor
If you spent $1,200 on a campaign and it brought 2,700 new
visitors, then your cost per visitor is $0.44.
$1,200/2,700 x 100 = $0.44
3. How much are you paying to gain each new customer?
This Cost per Customer (CPC) is a key number to track to make
sure you aren't paying more to attract each customer than
you make in profit from each sale.
marketing costs/# of customers x 100 = Cost per Customer
If you spent $1,200 on a campaign and it brought 327 new
customers, then your cost per customer is $3.67.
$1,200/327x 100 = $3.67
Quick Tip: I recommend setting up a spreadsheet in
Microsoft Excel, where you can plug key sales numbers and
stats into one "dashboard" to track all of your
key metrics over time. Once you figure out all of the formulas,
you can just type in your new details each week to track your
Tracking your results is one of the most important things
you can do to ensure that you are always increasing your profits.
After all, if you don't know what the problem is, how on earth
can you expect to fix it?
But make sure the key metrics you're focusing on apply to
your site's specific needs, and continue tracking them as
you test various solutions to the problems you've identified.
Of course, numbers won't always tell you the whole story,
so you may want to consider combining these results with other
sources, such as usability studies, customer satisfaction
surveys, and focus groups.
If you have a custom-built ordering or database system on
your site, it may well produce data of its own, so make sure
you can capture that as well. If you've got technical resources
available to you, a simple customized solution might also
capture the specific metrics that you need to track.
Those businesses that do take the time to carefully track
their results are going to be the most successful, and it's
for the simple reason that they are able to fix problems as
soon as they discover them. If they find that their revenue
per customer is lower than the cost of acquiring those customers,
they can search for less expensive ways of attracting new
customers while trying to boost the amount each existing customer
spends. If they're getting lots of visits to their salesletter
but not converting sales, they can make changes to the copy
This is why marketing over the Internet is so exciting and
so lucrative. It is the only medium where you can measure
your success in real time, and then make changes based on
what you've learned -- all within just hours or days!