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
to improve.
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.
You should
be able to access these files from your web host, either through
their own reporting system or as raw data that you can then
analyze using your own software.
Here are
just a few of the things your web logs can tell you:
- 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
pages.
- 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
powerful.
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 Conversion Rate |
So if you
get 10,000 visitors a month and 472 of them become customers,
then your conversion rate is 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 Conversion Rate |
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%.
3.
How many of your newsletter subscribers are becoming customers?
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 Conversion Rate |
If 120 of
your 2,730 subscribers end up buying something from you, then
your subscriber-to-customer conversion Rate is 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 about
$0.15.
5.
How many people are clicking where you want them to click?
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%.
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'll
need to find out why, or you're 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.
Quick
Tip: Unless you have a custom-built system, you won't
be able to view all of your stats in one place, so 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 progress.
Tools to Analyze Your Site Traffic
There
are a few basic tools to help automate how you measure your
site’s performance:
1.
Software Solutions:
Obtaining
your server logs is a good first step in getting hold of some
of the key information you need to measure your success. Some
web hosts already have log analysis software, which makes
things really easy. They will import your server logs into
their database, and automatically turn all of the numbers
into easy-to-read reports, graphs, and charts.
If your
web host doesn't offer this service, you need to ask them
for your server logs, which you can download via FTP. In many
cases, what you are going to get is raw log data -- piles
of numbers and symbols that are almost impossible to interpret!
But there are dozens of log analyzing programs out there that
will make sense of this information.
Here are
a few of the programs that I'm familiar with. Many are either
free or have free versions. This isn't an exhaustive list,
so you may also want to do some research of your own to match
your site's unique needs.
2.
ASP Solutions:
While
server logs are rich with information, they have their limits.
They can tell you how many visitors you get in a day, for
instance, but not how many are coming to your site for the
very first time. That's where ASP (application solution provider)
tracking solutions are great.
Using
an ASP to measure your stats usually involves pasting a nugget
of HTML code (usually with some JavaScript and an image) onto
each of your pages. When a visitor comes to your site for
the first time, they may be assigned a "cookie," which is
a small text file that records their visit.
The ASP
then tracks visitors through your site and provides a web
site where you can check your results. (Note: If you
use an ASP solution, check to see if they use cookies to track
visitors, since it may mean altering your privacy policy.)
Here are
a few ASPs that offer tracking services. ASPs generally charge
based on the number of page views. Some offer free versions,
but require you to display a banner or small button on each
page, something you should obviously try to avoid if you can.
3.
Other Tools:
If you
are using software like AssocTRAC to track your affiliate sales, then you may also use it
to track the metrics behind banner ads, text links, buttons,
or any type of advertising you pay for, including PPC campaigns
down to individual keywords.
This can
be a powerful way to track such vital metrics as Sales
per Visitor and your conversion rates on paid advertising
much more accurately than otherwise possible. You'll be able
to track these statistics for each link into your site by
assigning each a distinct tracking number.
Final Thoughts
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
right away.
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!
