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Measuring Performance, Creating 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. So, let's play!

Pencils and paper at the ready, dudes and dudettes. Time to see how well your site is actually doing. These simple exercises 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.

Customer Conversion Ratio

Customer Conversion Ratio (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 buy something. I've talked before about this important indicator of your success (see article), so I won't go into more detail this time, except to say for most websites by far, the CCR is way too low. Shop.org reports the average order conversion rate for its members is 1.8 percent. That means less than 2 people out of every 100 who visit a site actually buy anything! Want a point of comparison? Bricks-and-mortar operations have an average CCR of about 48 percent. That’s 27 times higher! So if you wondered if there was room for improvement, now you know, and isn’t that great news?

If you could increase your CCR from 2 percent to just 4 percent, you will have doubled your sales and done it without having spent one extra penny on marketing. Obviously, then, increases in the CCR translate not just into significant increases in your sales but in your profits, too.

It's simple to calculate your CCR. Divide your number of orders per month by the number of unique visitors (unique “hits”) to your website. Multiply this number by 100. The result is the percentage of your visitors who actually buy. And even if the number is way higher than 2 percent, you can still improve it, and by a lot. Have I ever lied to you? <grin>

Site Penetration Ratio

Site Penetration Ratio (SPR) is a quick way to determine how successful your home page is in drawing customers further into your sales process. It often comes as a surprise to many e-tailers that most of their visitors never get past the home page. You spend all those marketing bucks driving traffic to your site and the traffic does an about-face on arrival. In fact, most of that traffic leaves before your home page is even done downloading.

To calculate your SPR, you divide the number of unique visitors who click to any interior page by the total number of unique visitors that “hit” your home page. Multiply this number by 100, and you've got a number that represents the percent of people who go at least one level deeper into your sales process. Subtract this number from 100 and you've got the percent of people who don't even make it past your home page.

The Fun Has Just Begun

These are just two of the ways you can get an accurate handle on what is really going on with your online business, as well as monitor its progress as you make improvements over time. The friendly folks at Future Now have put together a free suite of calculators assembled into an Excel™ spreadsheet that’s a breeze to use. In addition to CCR and SPR, the suite in its current version includes Customer Acquisition Cost, Customer Retention Rate, Cost Per Visitor, Average Order Size, Sales Per Visitor, Customer Acquisition Gap, Site Penetration Index, Average Visit Length, Clicks to Find, Clicks to Buy and Time to Buy. Wow! You can "download" them (the file is actually e-mailed to you) by going here: http://www.futurenowinc.com/digitalsalescalculators.htm.

So help yourself (in more ways than one). Okay? Class dismissed.

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Return to: GROK Dot Com 4/1/2001

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