The only metric that matters in business is dollars in the bank. Everything else is secondary. How often do we check this figure to gauge how well we are doing? We use it to tell us how successful, proud or unhappy we should be with ourselves.
What are some of these secondary metrics?
Click Through Rate
CTR = Number of clicks a link or ad receives / Number of views
CR = Total Visitors / Total Conversions
Usually used in conjunction with a specific segment of traffic such as PPC or email marketing.
VV = Total Visitors / Total Income
You’ll see a lot more metrics reported and discussed but these are the most powerful to get a basic understanding of initially. Get an overview of the forest before you start picking out individual trees.
Visitor value encompasses every other metric in such a way so that you could successfully manage a site based on this figure alone. Do something good brings more traffic and sales. As long as your VV is increasing you can be confident that your increased traffic is bringing in buyers too. With more traffic and a falling VV, you are probably bringing in the wrong kind of traffic.
On the other hand if your traffic is falling but your VV is rising, whatever you are doing is bringing in more buyers and less lookers. Keep it up.
Visitor value doesn’t give us much granularity especially if you are testing multiple aspects of the same site. There is no accurate way to tell which specific change is responsible for the increased VV.
True ecommerce is a game of inches; 1% here, .75% there all add up month over month. Sure in the beginning starting a PPC campaign or re-marketing campaign might show a quick 5% gain, but those types of wins are few an far between.
Steady month over improvements of 1%-3% should be the goal of a successful online marketing campaign.
I’m going to say that again. Steady month over improvements of 1%-3% should be the goal of any successful online marketing campaign. With that as the game plan, it’s easy to be on the lookout for new product lines, partnerships and other ‘homerun’ wins for a larger payday. The steady month over improvements, pay the bills (and probably _your_ salary) while the homeruns help separate you from the pack. The store owner from his competitors and you from your peers in ecommerce marketing.
If you happen to be both, well then take some time (and profit) and enjoy yourself. You’ve earned it.
If you are the consultant, string enough homeruns together and you can price yourself to the next level.
The entire point is to become familiar with your site’s metrics. Start out with just Visitor Value. Figure it out every day. It takes less than five minutes to look up the two numbers and divide them out. Start a spreadsheet. Keep track by date. Even better… if you have Google Analytics installed on your site, VV is one of its included metrics. Create a custom report showing VV over the last few months.
Numbers for some people just don’t make sense. Some guys can list off every baseball stat of every player on their favorite teams. Are they math geniuses because of this recall? Probably not. More likely its the simple rote familiarity. Read sports news everyday, watch ESPN recap, watch a game or two a week, that’s a lot of idle brain cells being tasked. Something has to stick.
Try to do the same with your site’s metrics. Just look a them everyday until they start to make sense. Eventually you should begin to see the trends; from differences between weekends and weekdays to monthly cycles.
Once the fog of data that is your statistics starts to become more focused in to view, you should start to see connections between the metrics and be able to ascertain how they can affect each other. These common relationships should get you thinking:
High CTR but low CR?
Most likely you are experiencing a lot of traffic that doesn’t like what you have. To find out more specifics find out how long they are sticking around and if they are making it to your checkout funnel.
Low CTR but high CR?
This is a great problem to have almost! You may not be receiving enough traffic but the traffic you are receiving is laser targeted on your offer and converting at a high rate. If you can increase the volume of this traffic, do it. If not try to find similar niches that will convert at a high rate.
Low VV and high CTR?
You are generating a lot of traffic, but a low percentage of them are actually converting. Look for better traffic, which usually means higher converting keywords. Use analytics to try to weed out marketing channels that are not currently profitable.