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Home > Conversion Explained |  Print Version |
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"Before EVERYTHING else, you
gotta do some math!" |
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"Success online... making money
comes with math homework." |
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The most important online statistics you should know are your own website "conversion rates." Conversion rates are simply ways to measure how successfully you're achieving the goals of your site, which can include:
- converting visitors into buyers
- turning first-time buyers into repeat customers
- visitors who sign up for your mailing list
- changing subscribers into customers
- more donations for your non-profit
A few fairly simple calculations can tell you how much you can afford to spend to acquire new customers, or help you determine the return on investment (ROI) for all of your advertising and promotional efforts.
You could be missing huge opportunities to make more money if you're not measuring the numbers that matter most to your Internet business.
The good news is...
One of the greatest things about doing business online is that you can track and measure the results of everything you do on your website... headlines, sales copy, content, colors, very literally everything.
It's also easy to track your results online... but there's a lot of conflicting and confusing information out there about website statistics. You should print this slightly long web page for a reference on how to keep your finger on the pulse of your web business.
It starts here
Every time a visitor views one of your web pages and the files associated with it (graphics, banners, buttons), those details are recorded in a file called a "server log."
Your web hosting company should provide access to a web-based analyzer so you can review your "website stats."
Here's just some of what your stats can tell you:
- which search engine is bringing the most visitors
- what keywords visitors are using to find your site
- which ads and promotions bring you the most traffic
- how long visitors stay on your site
- which pages your visitors are most interested in
- where visitors land on your site and where they exit.
Before you get too excited about all this great information the truth is, those numbers are meaningless by themselves. Lots of sites get plenty of traffic... but they aren't getting many sales!
For the data to help you achieve your Internet business goals you must combine your site stats with your existing info on sales and subscribers.
Calculating conversion rates
You should probably focus on several key conversion rates as your visitors pass through the sales cycle. But please remember, you don't have to be selling anything for cash gain for your conversion rates to be important.
Conversion rates also apply to guiding your website visitors to take the "desired action" that you wish them to take... sign up for your newsletter, download an application, make a donation, and more.
Here are some key formulas:
- How many visitors convert into customers?
"Visitor-to-Customer" conversion is one of the easiest stats to gather, and one of the most powerful. It's a quick indicator of how effectively you're convincing visitors to buy from you.
# of Sales ÷ by # of Visitors x 100 =
Visitor-to-Customer Conversion Rate.
So if your site gets 1,100 visitors a month and 83 become customers, your visitor-to-customer conversion rate is 7.55%
83 ÷ 1,100 x 100 = 7.55%
- How many visitors sign up for your mailing list?
Your "Visitor-to-Subscriber" conversion rate tells you how attractive your subscription offer is. This is something to keep an eye on as you try out different positions and offers.
# of Subscribers ÷ by # of Visitors x 100 = Visitor-to-Subscriber Conversion Rate.
If you get 5,000 visitors per month and 368 of them become subscribers, then your site's visitor-to-subscriber conversion rate is 7.36%
368 ÷ 5,000 x 100 = 7.36%
- How much money do you make from each visitor?
"Revenue-per-Visitor" tells you how much you're earning from your average visitor. This is very valuable to know, as this number helps to determine how much you can spend to acquire new visitors while still earning a profit.
Total Sales ÷ by # of Visitors =
Revenue per Visitor
If you sold $11,000 worth of goods this month, and had 18,000 visitors to your site, you would know your revenue-per-visitor is about $0.61.
$11,000 ÷ 18,000 = 61 cents
- How many visitors click where you want them to click?
Your "Click-through-Rate (CTR)" shows the percentage of visitors who "click-through" from your sales letter to your order page (or any other link you want to measure).
Clicks on link "A" ÷ by # of Visitors going to page with Link "A" x 100 =
Click-through Rate.
Your site gets 22,000 visitors to your sales letter, and 1,780 click on the link to your order page, which means your sales letter has a click-through rate of 8.09%.
1,780 ÷ 22,000 x 100 = 8.09%
Those are some of the basic vital statistics, also known as "metrics", that you should be measuring.
I know, I know—all this math kind of takes some of the fun out of it—but think of the fun you'll have with the extra money you can earn through measuring and testing the different elements on your website.
Advanced stats
You can take it up to the next level by using these advanced measurements, which can give you even more insight and ideas on how to make more money from your web business:
- How are customers moving through your site?
For any site with more than two pages here is a crucial but typically ignored set of metrics, your "clickstream."
Knowing your home page "bounce rate", how many visitors to your home page leave (bounce) without going deeper into the site, can have a tremendous impact on how much money you make.
If 66% of your visitors don't click on a single link on your main entry page, you need to find out why... fast... as you're wasting valuable traffic.
- How much does it cost to attract new visitors?
Your Cost-per-Visitor (CPV) stat will tell you how much it costs, on average, to get a visitor to your site.
If you're using paid advertising, pay-per-click search, banners, or e-zine ads, this can be an extremely useful number.
Just compare your cost-per-visitor to your revenue-per-visitor, and you'll know whether or not your advertising is profitable, and also which ads are most profitable.
- How much do you pay to gain each new customer?
Your site's Cost-per-Customer (CPC) is an important measure to track. This number will help you make sure you aren't paying more to attract each customer than you make in profit from each sale.
Helpful tip
You won't be able to view all of your stats in one place unless you have a custom-built tracking system.
I recommend you set up a spreadsheet in MS Excel. You can then plug your site's key stats and sales numbers into a master stats document—and track all of your key metrics over time.
Once you've figured out the specific formulas your site needs, you can simply type in your new details each week and track your site's progress.
MORE MONEY by testing
Those are the basics on conversion rates. Not exactly big fun, but a necessary part of making money online.
Hopefully you now understand how important it is to track and measure your website's conversion rates and how conversion relates to...
Testing! Sometimes changing just a single thing on one web page can double, triple, or even quadruple your site's sales.
But you won't know what that one thing is... unless you calculate your site's conversion rates.
Discover how to write great copy.
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