Web Statistics for the Dense (Part 1: Sales)

Do you understand the numbers that your web site generates? You know how many sales your site actually generates? You know how you can apply that knowledge to your business and make it grow?

I will answer all of the above, and also discuss how to use statistics to improve your business through the use of web sales, traffic flow, unique hits, click-through rates, and many other important business factors. Part 1 focuses on sales and traffic, while Part 2 is where all the traffic is coming (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 evident for many businesses is sales. Here are two 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 the sale?

No figures are difficult to find, but how many sales actually came from your Internet business? It is often easier to pick up this figure simply by looking at both the sales directly online, or asking customers ("How did you find us?"). But sometimes the Internet is only a part of a very complicated process for sale. You can do all your sales in person, but how many of your clients go home and research your products / services that use information found on your website?

These are questions you need to find answers to in order to estimate how many sales were completed because of your presence on the Internet, 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 should ask your customers individually. Anyway, coming up with a concrete number that can provide insight into how you can grow your business.

Profits

From the number of sales per month, you can easily see the amount of gross sales. Then you have to take your expenses per sale into account and figure out your profits. Only the cost of selling expenses must 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 (cost per thousand) CPM for banner ads, and, of course, the direct costs of 'item or service sold. Once you have this data in hand, you can then calculate your profit per sale.

Traffic

So now that we know how many sales per month, we're actually doing and how much profit out of these sales, we look at how many potential customers walk through our virtual store. There are many different statistics for web site traffic: page views, hits, uniques daily uniques, monthly, etc. .. What should you use? From my experience, I recommend using only daily.

Daily unique measures how many unique visitors come to your site in one day. By this we mean that no single user is counted twice in one day, even if visiting the shop several times within a period of 24 hours. So, if someone comes to your site four times on Monday, and six times on Tuesday, he / she would only count as two daily unique.

Page Views measures how many times your page is viewed (usually including reloads). Page views are counted for each page. So, if someone comes to your site four times on Monday and views eight pages each time, and six times on Tuesday (viewing two pages at a time), you should measure the page (4 x 8) + (6 x 2) , or 44 points of view.

These statistics are usually available through the program of server statistics. Alternatively, you could also use one of a myriad of other statistics programs available on the Internet. For most of our customers we have established http://www.hitbox.com on their sites. With our unique daily to-month figure in hand, we suddenly have some very powerful numbers to work with.

Conversions

The conversion is a measure of how many people visited the site were subsequently converted into clients of some kind. Measures how many uniques turn into buying customers is a method of conversion, but you can also measure the number of visitors your site gets vs. how many visitors subscribe to your newsletter, or how many of them go to a specific page, or how to send an email, etc. .. These are all measures of conversions, and simply use the ratio of sales (or sign up, e-mail, etc. ..) to visitors (or unique).

Suppose that our site has the following statistics:

- Sales: 100 per month

- Gross: $ 250/sale

- Average Profit: $ 150/sale

- Daily Visits: 12 000/month

In the previous example, we have 100 sales per month and 12000 daily uniques per month, so our conversion ratio is 1:120 or 0.83%. Not such a bad ratio, especially for items that cost $ 250 each. The most markets would take 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 $) you can then figure out how healthy the business is actually online. At 100 sales a month, we're cashing in $ 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 to improve the site:

- Increase the profit margin

- Increase conversions

- Increase traffic

1. Increasing profit margins involves the reduction of costs or price increases, both fall outside the context of this article.

2. Increasing conversions involves optimizing the usability of your website, usability is a quality attribute that assesses the user interfaces are easy to use. For more information on usability and how it can help your Internet business, go to http://www.useit.com.

3. The increased traffic is to improve the network link, your PPC campaign, or your search engine optimization. We will consider the second in detail in Part II of this article (available only by registering for our free monthly newsletter to http://www.RedCarpetWeb.com). The second part will also discuss referrers, key phrases search engine, the positions of search engines, and how to use these statistics to increase sales. Do not miss out! Subscribe to the newsletter today and learn how you can make the most of all your web statistics and improve your Internet business .......