Part 1: Sales
Do you understand the numbers that your web site generates? Do you know how many sales your site actually generates? Do you know how you can apply that knowledge to your business and cause it to grow?
I will answer all of the above, and also discuss how to use statistics to enhance your web business through the use of sales, traffic flow, uniques, hits, click-through rates, and many other important business factors. Part 1 focuses on sales and traffic, while part 2 is all about where your traffic is coming from (and how to get more of it!). Part 2 will be discussed in the next issue of our newsletter - so be sure to stay tuned!
Sales
The most obvious statistic for many businesses is sales.
Here are 2 of the most pertinent questions every business needs the answers to:
- How many sales do you make per day/month/year?
- How much profit do you make per sale?
Not hard figures to find, but how many sales actually came from your Internet business? Often it is easy to gather this figure simply by looking directly at either online sales, or by asking your customers ("How did you find us?"). But sometimes the Internet is just one part of a very complicated sales process. You may make all your sales in person, but how many of your clients go home and research your products/services using information found on your web site?
These are the questions you need to find answers to in order to estimate how many sales were completed due to your Internet presence but not necessarily completed online. If you make sales online, the answers are easy. If you sell real estate or other "in person" products or services, then you have to ask your customers individually. Either way, it will come down to a concrete number that can provide insight into how you can grow your business.
Profits
From the number of sales made per month, you can easily figure out your gross sales amount. Then you have to take your expenses per sale into account and figure out your profits. Only cost of sale expenses should be deducted and NOT one-time expenses such as overhead. On the Internet, this would normally be the cost per click of pay-per-click campaigns (such as Google AdWords or Yahoo Marketing Solutions), or the CPM (cost per thousand) for banner ads, and of course, your direct costs for the item or service being sold. Once you have these figures in hand, you can then calculate your profit per sale.
Traffic
So now that we know how many sales we make per month, and how much profit we're actually making off of those sales, let us take a look at how many potential customers walk through our virtual store. There are many different statistics for web site traffic: page views, hits, daily uniques, monthly uniques, etc… Which one should you be using? From my own experience, I recommend using daily uniques.
Daily uniques measures how many unique visitors come to your site in a single day. By that we mean that no single user is counted twice in the same day even if they visit the store several times within a twenty-four hour period. Thus, if someone comes to your site four times on Monday, and six times on Tuesday, he/she would only count as two daily uniques.
Page Views measures how many times your page is viewed (usually including reloads). Page views are also counted for each page. Thus, if someone comes to your site four times on Monday and views eight pages each time, and six times on Tuesday (viewing two pages each time), you would measure (4 x 8) + (6 x 2), or 44 page views.
These statistics are usually available through your server's statistics program. Alternatively, you could also use one of a myriad of other statistics programs available on the Internet. For most of our clients we set up www.hitbox.com on their sites. With our daily uniques per month figure in-hand, we suddenly have some very powerful numbers to work with.
Conversions
Conversion is the measure of how many people who visited your site were subsequently converted into clients of some sort. Measuring how many uniques turn into buying customers is one method of conversion, but you could also measure how many visitors your site gets vs. how many visitors sign up to your newsletter, or how many of them go to a specific page, or how many send you an email, etc… These are all measures of conversions, and simply use the ratio of sales (or sign ups, emails, etc…) to visitors (or uniques).
Let us assume our site has the following statistics:
- Sales: 100/month
- Gross: $250/sale
- Average Profit: $150/sale
- Daily uniques: 12 000/month
In the above example, we have 100 sales per month, and 12000 daily uniques per month, thus our conversion ratio is 1:120 or 0.83%. Not such a bad ratio, especially for items that cost $250 each. Most markets would want a ratio of 1% or 2%, but of course each industry is different.
Analysis
Using our imaginary numbers (profit of $150/sale, gross $250/sale) we can then figure out how healthy the online business really is. At 100 sales a month, we are grossing $25 000 per month, and profiting $15 000 per month. At this point in our analysis, we can now see that there are three ways in which to improve the site:
- Increase profit margin
- Increase conversions
- Increase traffic
1. Increasing profit margins involves lowering costs or raising prices, both of which fall out of the context of this article.
2. Increasing conversions involves optimizing the usability of your web site; usability is a quality attribute that assesses how easy user interfaces are to use. For more information on usability and how it can help your Internet business, go to Useit.com.
3. Increasing traffic involves improving your link network, your PPC campaign, or your search engine optimization. We will look at the latter in detail in Part Two of this article (exclusively available by signing up to our FREE Monthly Newsletter at RedCarpetWeb.com). Part Two will also discuss referrers, search engine keyphrases, search engine positions, and how to use these statistics to increase your sales. Don't miss out! Sign up for the Newsletter today and learn how you can make the most of all your web statistics and improve your Internet business.
Do you know how to use referrers to increase your traffic? How to increase your conversions? This article is the second in our series on learning how to analyse and understand your web site's statistics. The goal of this series is to help you increase your site's revenue.
Part 2: Referrers
A referrer is a website that directly sends you traffic. The bulk of your traffic is referred by search engines, but other sites send you traffic as well. These referring sites will help you increase your position in search engines because by linking to you, they are essentially "voting" for your site. The search engines take these "votes", and count them towards how popular your site is. The more popular the site, the higher the site will rank on a search. Of course it is not that simple; content actually plays a more important role, but everything should be taken into consideration when fighting for your hard-earned placement within the search engines.
Referring domains
So to get back to our main point: How can you use referring sites to help you make more money? Simple. By looking at your statistics, and finding out who is linking to you, you can see trends or patterns and capitalize on your site's strengths. For example, if you sell real estate, who is linking to you? Local businesses? Government sites? Other real estate sites? Is it only sites you have swapped links with or are there a pleasant amount of unexpected sites linking to you as well?
If you do not have many sites linking to you, than maybe you should consider posting more useful information on your site. Try to make your site useful for anyone who wants to know about your industry (not just potential customers) by writing new informational pages. This will do two things:
- Your potential customers can find out about your industry without leaving your site, thus increasing your site's professionalism and usefulness.
- Other sites in your industry will start seeing your site as a useful resource to link to. You will become a leader in sharing information about the industry online.
This can only lead to more links, more traffic, and ultimately more people talking about your site.
Exchanging links is a good idea too, but it should only be done if the site is appropriate to link to. Do not link to sites that are unprofessional, or sites that are just a gathering of links (link farms); it will make your site lose its authority.
Finally, there are directories. Directories like www.dmoz.org will link to you if you have good useful content on your site. Even if people do not actually search for your site on those directories the links from them tend to propagate your site throughout the web. Take your time and read the directory's instructions carefully before submitting. If you submit to them haphazardly, they will simply ignore you.
Search Engine Referrers
Looking at your site's statistics, you can find out which search engines are sending you the most traffic. Usually the search engines that show up in statistics are Google, Yahoo, MSN, and Ask Jeeves. Find out with search engine sends you the most traffic, then take a look at what keyphrases the surfers are using to find you. These keyphrases will tell you what your clients are looking for. For example, here at Red Carpet Web Promotion, we get a lot of searches for carpets. Obviously we do not want or need this traffic, but due to our name it cannot be avoided. For us, it is important to keep track of this "carpet" traffic because it skews our numbers. If traffic doubles one month, is that because our position for "carpets" went up, or is it because our position for "web promotion" went up? It is important for us to figure this out, because if our position for "web promotion" went up but we did not get more sales, than we would need to update our web site to convert these potential clients into paying customers.
By verifying the keyphrases that people are finding you with, you will better understand why people are coming to your site. If you are a plumber and most people find you with the keyphrase "sump pumps", you'd do best to make sure your site, or the section of your site they are arriving at, offers them sump pumps! Likewise, if they are coming from a site that is referring you as a great deep well repair man, than make sure that that section of your site promotes your deep well repairing skills.
Conclusion
Look at your stats regularly, see where your traffic is coming from, and make sure your site caters to these people. If they are coming looking for sump pumps and you do not sell sump pumps, either start selling them, or sell something of value to these people. If you do offer the product that these people are looking for, but they are not buying, than figure out why. Is it your price? Is the shopping cart too complicated? Do people not see the "Buy a Sump Pump Here" link? Figure it out and fix it fast, because the Internet is so fickle that your "sump pump" traffic might be gone next week, and you would have missed out on the easy jackpot.
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