Sadly, many business owners don’t maintain and monitor performance indicators. As true as this is for offline businesses, it’s even more so the case for online businesses.

Tom Peters said “You can only improve what you measure”. If you’re operating blind and not measuring the performance of your website, there is no way you can improve its performance.

Only by understanding the metrics can you develop strategies to improve them. Many website owners focus on some metrics, but usually to the exclusion of others. For instance, they may implement some strategies to improve traffic to their site, but they don’t improve the QUALITY of traffic; their sales process; offer; or copy writing; so their sales remain low.

In general, the most important statistics are called “conversion rates”. These are ways of measuring how successfully you are achieving the goals of your site, such as converting curious browsers into buyers or converting first-time buyers into repeat customers.

You’ll likely have several conversion rates to focus on as you guide your customers through your sales process, but here are some key formulas (in this article we’ll look at some basic metrics of your business. In the next edition, we’ll discuss some more advanced metrics):

1. How many visitors are you converting into customers?

Your Visitor-to-Customer Conversion Rate is one of the easiest stats to gather, but also one of the most powerful. It’s a quick indication of how effectively you’re convincing visitors to buy from you.

# of sales/ # of visitors x 100 = Visitor-to-Customer Conversion Rate

So if you get 10,000 visitors a month and 472 of them become customers, then your conversion rate is 4.7%.

472/ 10,000 x 100 = 4.7%

2. How many visitors are signing up for your newsletter?

Known as the Visitor-to-Subscriber Conversion Rate, this metric tells you how attractive your call to action offer is. Keep an eye on this figure as you test different positions and copy for calls to action.

# of subscribers/ # of visitors x 100 = Visitor-to-Subscriber Conversion Rate

If you get 10,000 new visitors to your site in a week and 2,730 of them subscribe to your free newsletter, then your conversion rate is 27%.

2,730/ 10,000 x 100 = 27%

3. How many of your newsletter subscribers are becoming customers?

Your Subscriber-to-Customer Conversion Rate is a good test of how effective a sales tool your newsletter is. This is especially important if your main product is a paid newsletter.

# of customers/ # of subscribers  x 100 = Subscriber-to-Customer Conversion Rate

If 120 of your 2,730 subscribers end up buying something from you, then your subscriber-to-customer conversion Rate is 4.4%.

120/ 2,730 x 100 = 4.4%

4. How much revenue are you making from each visitor?

Very simply, this Revenue per Visitor stat shows how much you’re earning from your average visitor. This is particularly valuable since this number helps determine how much you can spend to acquire a new visitor while still earning a profit.

Sales/ # of visitors = Revenue per Visitor

If you sold $6,000 worth of inventory this month and had 39,000 visitors to your site, you would know your revenue per visitor is about $0.15.

$6,000/ 39,000 = $0.15

5. How many people are clicking where you want them to click?

Your Click-through Rate shows the percentage of people who “click through” from your sales letter to your order form (or any other link you want to measure).

clicks on link x/ # of visitors to page with link x 100 = Click-through Rate

For example, if you get 10,000 visitors to your sales letter, and 650 click on the link to your order form, then your sales letter has a click-through rate of 6.5%.

650/ 10,000   x 100 = 6.5%

Quick Tip: Unless you have a custom-built system, you won’t be able to view all of your stats in one place, so you should set up a spreadsheet in Microsoft Excel, where you can plug key sales numbers and stats into one “dashboard” to track all of your key metrics over time.

Once you figure out all of the formulas, you can just type in your new details each week to track your progress. In the next post we will look at more advanced metrics.