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:
- What is your conversion rate?
- 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?
| Site XYZ | Baseline | Increase | |
| Conversion Rate | 0.75% | 1.50% | |
| Sales | 750 | 1,500 | |
| Revenue | $56,250 | $112,500 | |
| $56,250 | $ Increase |
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.
{ 3 comments… read them below or add one }
Nice article, thanks.
I would also add a 3rd – What is your bounce rate?
I would add a fourth- how can I hire this guy?
Help please take a look!