Do you know the answers to these 2 simple questions?  The answers could be the path to doubling your profits.

If I were to ask you two basic questions about your website I would wager, that like most web proprietors, you couldn’t answer them off the top of your head.  Here are the questions:

1. What is your conversion rate?
2. What is the amount of your average sale?

Most people don’t know or pay attention to their web analytics.  This is because they either don’t understand the importance of analyzing their metrics or they don’t know how to use the data they have.  Why should you care about a bunch of stats anyway?  Isn’t it just enough to know how many people visit your website?  If you send enough traffic to your site won’t those visitors magically turn into buyers?  What if I were to tell you that paying attention to your web stats was the beginning of the path to doubling your profits and it wouldn’t cost you a dime to do it.  Would it be worth your time to learn about analytics and to start paying attention to them?

My guess is you answered “yes”.  But you are now probably asking yourself “how”.  First of all, if you aren’t currently using a web analytics program you should get one right away.  Google Analytics (www.google.com/analytics) is a free web analytics program that is easy to implement and easy to use.  There are other analytics programs you can use, but this is the best free solution available.

Secondly, you need to develop a baseline.  By baseline I mean you need to know what your current stats are.  This will give you something to measure and improve against in the future.  You can start by developing some Key Performance Indicators or KPI’s.  Here some examples of KPI’s to measure:

• Unique Visitors
• Conversion Rate (typically this is calculated by dividing the number of sales by the number of unique visitors)
• Average Sale

You should check your stats everyday and monitor the performance of your all your marketing campaigns.  You should also drill down into the data.  Analyze how well each campaign converts.  For example, if you are using Google Adwords, analyze which of your keyword ads is performing the best, etc.

Now you are probably saying, “well now I know what my stats are, but how does that help me double my profits?”  Here’s just a small example, let’s say you change the offer or headline on your homepage or landing page.  Now that you know what your conversion rate and average sale is, you can test to see if a different offer or headline will improve your conversion rate and/or average sale.  Here’s an example of a typical scenario in an e-commerce website:

Let’s say site XYZ gets 100,000 visitors, has an average sale of $75 and has a conversion rate of less than 1%.  What would happen if the conversion rate were to double?

Wow, with no additional marketing spend or traffic, $56,250 was added to the bottom line! Paying attention to your web stats and using them to improve your site can make a significant difference.

Do the calculations for your website and see what would happen to your profits if you were to double the conversion rate.

There are many other ways your web statistics can help you improve your bottom line.  Look for my future blog posts, where I’ll go over these issues.

If you currently use Google Analytics or another web analytics program, you may be overwhelmed by the amount of different website data available for you to analyze.  If you are looking at too much data on a regular basis, it may cause what is called paralysis by analysis.  Looking at and attempting to analyze too many stats may overwhelm you and keep you from taking any action.  Don’t get lost in the data.  Don’t worry about all the stats that you may not even understand or what they are for.

Instead, look at the important stats that show you how your site is performing at-a-glance. You can do this by creating Key Performance Indicators, also known as KPI’s, for your website.  To go along with your KPI’s, you should establish a baseline and goals to measure future performance against.  A baseline is where you now.  For example, if your existing Conversion Rate is 4%, that’s your baseline.  If want increase your Conversion rate to 8% by a specific date, that’s your goal.

Let’s take a look at a few examples and what I recommend for KPI’s.

Recommend KPI’s for an e-Commerce Site

• Unique Visitors (Google Analytics calls them Absolute Unique Visitors)
• Bounce Rate
• Conversion Rate
• Number of Sales
• Average Sale Price
• Acquisition Cost

If you have a site where the main goal is to provide information, such as a blog, your KPI’s might look something like this:

• Unique Visitors
• Average Time on Site
• Pages per Visit
• Conversion Rate (If you have an opt-in email list or an option for people to subscribe to your blog)

You should look at these KPI’s on a daily basis as well as a monthly basis.  Depending on what type of site you have some the KPI’s may vary.

Google Analytics Tip:

You can add your KPI’s to the Google Analytics Dashboard. To do this, navigate to the item you want to use as KPI, then click on the “Add to Dashboard” button.

Google Analytics Add to Dashboard Button

For example, if you want to add Absolute Unique Visitors to the Dashboard:

1. Click on “Visitors” in the left navigation menu
2. Click on “Absolute Unique Visitors” in the main window
3. Click on the “Add to Dashboard” button on the top of the page

Resources:
Google Analytics Glossary – definitions of “Bounce Rate”, “Unique Visitor”, etc.
http://www.google.com/support/googleanalytics/bin/topic.py?topic=11285