Five Metrics Essential to Keep Your Website Profitable

How do you know if your website is worth what you’re investing in it? How do you know if a promotional campaign will pay for itself? There are five calculations you can make to have these numbers at your fingertips.

The following list shows you what they are, where to find the data for them, how to calculate them, and how to use them once you have them.

Visitor Conversion Ratio
What it is
The percentage of visitors to your site who complete whatever action you want them to take (for example, buy your product, sign up for your newsletter).

What data you need
• Number of Sales (from your shopping cart or account records)
• Number of Visitors (from your Web referrer logs)

How to calculate
Number of sales ÷ Number of visitors X 100 = Visitor Conversion Ratio

How to use your Visitor Conversion Ratio
Most sites convert at a rate of below 1%, but sites that are well optimized for conversion can enjoy conversion rates of 10% or more. Track you conversion rate as you make changes to your site and work keep increasing it.

Cost/Visitor (CPV) Ratio
What it is
How much it costs you to obtain a visitor. Include all costs of running your website.

What data you need
• Web Marketing Costs (from your accounting information)
• Number of Visitors (from your Web referrer logs)

How to calculate
Web Marketing Costs ÷ Number of Visitors = Cost/Visitor

How to use your Cost/Visitor Ratio
Get an accurate picture of how much it actually costs to bring each visitor to your site. Then work to bring your Cost/Visitor down by cutting expenses that are not successful in producing sales.

Revenue/Visitor Ratio
What it is
Revenue/Visitor is the flip side of Cost/Visitor. It gives you a picture of what each visitor to your site is worth to you.

What you need
• Sales Revenue (from your accounting information about sales that are related to your website)
• Number of Visitors (from your Web referrer log)

How to calculate
Sales revenue ÷ Number of visitors = Revenue/Visitor

How to use your Revenue/Visitor Ratio
Compare your Cost/Visitor to your Revenue/Visitor to determine if you're spending too much for your visitors. If you have a healthy gap between the two, you can afford to be more aggressive in obtaining visitors. If they’re close, work on raising your Visitor Conversion Rate to make better use of the traffic coming into your site, and work to lower your Cost/Visitor by eliminating spending that is not leading to sales.

Cost/Customer (CPC) Ratio
What it is
How much it costs you to obtain each paying customer. Include all costs of running your website.

What data you need
• Web Marketing Costs (from your accounting records)
• Number of Customers (from your shopping cart or your accounting records)

How to calculate
Web Marketing Costs ÷ Number of Customers = Cost/Customer

How to use your Cost/Customer Ratio
Use it to get an accurate picture of how much it actually costs to bring each paying customer to your site. Work to bring your Cost/Customer down by cutting expenses that are not successful in producing sales.

Revenue/Customer Ratio
What it is
Revenue/Customer is the flip side of Cost/Customer. It gives you a picture of what each paying customer on your site is worth to you.

Where to find it
• Web Sales Revenue (from your accounting records)
• Number of Customers (from your shopping cart or your accounting records)

How to calculate
Web Sales Revenue ÷ Number of Customers = Revenue/Customer

How to use your Revenue/Customer Ratio
Compare your Cost/Customer to your Revenue/Customer to determine if you're spending too much for your paying customers. If you have a gap between them, you can afford to be more aggressive in obtaining visitors. If they’re close, work on raising your Visitor Conversion Rate to make better use of the traffic coming into your site, and work on lowering your Cost/Visitor by eliminating spending that is not leading to sales.

Ecommerce Facts
A list of online marketing statistics includes eye-opening facts about the growth of the mobile Web, as well as consumers’ growing reliance on the Web to research purchases. (www.virtualmarketingblog.com/index.php/20080224/7-statistics-relevant-to-internet-marketing/)

As consumer spending tightens, consumers are turning to the Internet increasingly because of the ability it gives to quickly compare prices and get the best deals. (www.emarketer.com/Article.aspx?id=1006285&src=article_head_sitesearch)

Although often ignored by marketers, a new survey showed that consumers who are 62 and over are far more active online than previously thought – and show no less willingness to buy online than younger, more “tech-savvy” Internet users. (www.clickz.com/showPage.html?page=3629395)