Account Services Executive - Position Available!

by // 08 . 31 . 2010  1:47 PM

The Advent Advert

by Advent Creative // 07 . 31 . 2009  2:12 PM

We put together a new commercial to run in movie theaters, television, and online. We’re pretty proud of it. Check it out:

Four must-have formulas for evaluating your e-commerce website

by Marshall // 07 . 06 . 2009  11:47 AM

If you’re not measuring the effectiveness of your e-commerce website, then you will never be able to properly manage it. The first step is to get some form of analytics on your site that will give you a breakdown of your traffic. We suggest Google Analytics for two reasons: one, it does everything you need it to do, and two, it’s absolutely free. If you don’t have it, you can get it here.

Once you’re tracking your website’s numbers, you may still need to do some metrics on your own to get a good idea of how it’s performing. The following are four basic metrics that are extremely helpful for e-commerce:

1. Conversion Rate

A “conversion” is when somebody visits your site and then does something that you want. That could be making a purchase, giving contact information, leaving a comment, or asking for more information.

You can identify goal pages in Google Analytics to easily track your total conversions. For instance, a goal could be the “thank you” page that comes up after someone makes an order.

Now you need to divide your total conversions by the number of people who visit your site. There are several ways to look at your total traffic. Pageviews is normally going to be your highest number and least accurate since one person will often view several different pages in one visit. The next number you can consult for total traffic is Visits, which describes how many people come to your site including those who make return visits. There is also Absolute Unique Visitors, which is exactly what it sounds like. With Absolute Unique Visitors, returning visitors are not counted again.

For conversion rate, I suggest using Visits. It’s a more conservative and accurate measure for this metric. Imagine somebody visits your site, makes a purchase, and then comes back later that day and does the same thing. You want to be able to account for that in your conversion rate. No matter which one you use, make sure to be consistent.

Here is the basic formula for conversion rate:

Conversion Rate = Total Conversions/Visits

Example:

Total Conversion = 50
Total Visits = 2,000
50/2,000 = 2.5%

2. Cost per Conversion

Just because you’re converting at a high percentage rate doesn’t necessarily mean you’re being successful. A more accurate judge of success is the Cost per Conversion. To get this, divide your monthly website expenses by your total conversions.

Cost per Conversion = Monthly Website Expenses/Total Conversions

Make sure to consider all the costs of your website. Here’s a break down of how this might look:

Web design and development: $10,000 spread over 5 years = $167 a month
Search Engine Optimization and online marketing: $1,000 a month
Blog writing: $250 a month
Pay-per-click advertising: $300 a month
Hosting, etc.: $100 a month

Total = $1,817 a month
Conversions a month = 50
Cost per conversion = ($1,817/50) = $36.34

If you make more than $36.34 on every conversion, then you’re moving in the right direction. If you don’t, then it’s time to change some things.

3. Average Profit per Conversion

Knowing your average profit (or loss) on a conversion can help you budget and plan for the future. It will also help you set online sales goals. Here’s the formula:

(Gross Revenue from Website – Total Costs)/Total Conversions = Average Profit per Conversion

Make sure to include all of your costs and not just your web costs. For instance, you will need to consider shipping, payroll and other general overhead. It may look something like this:

Gross Revenue From Website = $15,000 a month
Total Costs = $8,817 (includes $1,817 for monthly web costs)
Conversions = 50

($15,000 - $8,817)/50 = $123.66

4. Abandonment Rate

This metric describes how many people started to convert on your website, but then dropped out. A high abandonment rate might signal an inefficiency or a barrier in your check out or conversion process. Use this formula to calculate abandonment rate.

(Number of Visits to the Conversion Page – Number of Visits to the Goal Page)/Number of Visits to the Conversion Page

It might look like this:
Number of Visits to the Conversion Page = 30,000
Number of Visits to the Goal Page = 20,000
(30,000 – 20,000)/30,000 = 33% abandonment rate