The first article of this series discussed page views per session as a kind of early warning system key performance indicator (KPI) for your website. The second discussed time on site as another warning flag. Both of these articles show specific measurements used to forecast site problems. There are lots of KPI's you can set up to warn you of impending doom or better show your successes but to go through each one would take me till the end of next year. So to wrap up this series, this article will discuss the general metrics you should be looking at as an 'e' business and more importantly why you should be looking at them.
'e' Business metrics
The term 'e' business was coined by Ogilvy and Mather for IBM in November of 1997 and has stuck around ever since. Great advertising, of course it came from e-commerce which was a general term, but I can still remember the IBM jingle and the ads showing IBM's vision of networked computing. There was nothing wrong with the IBM idea or their adverts. However, one problem with this 'e' part is that for some reason people decided that the Internet was not like other marketing mediums.
Everything became "e or i something", it became associated with the brave new world of fast moving VC led consortiums buying and selling companies based on their business plans and little else. No-one measured success by ordinary standards any more, you didn't need to pay rents, have credit history, loyal customers or reliable revenue, just a great idea and guts.
Great ideas aren't measurable and neither are guts!
We all know what happened next of course. The normally cautious VC's realized they had made some really stupid moves and pulled their money out before they went bankrupt. This starved the companies that they actually helped to mismanage and put a lot of otherwise talented individuals on the dole (sent them down the river, took away their jobs, you get the picture!).
So why did ordinarily savvy business men and women jump on this particular bandwagon? And why did IBM, Dell and other notable bricks and mortar businesses survive the dot bomb where so many failed?
Survival was down to 'e' business as usual
IBM, Dell and the likes simply developed their businesses by doing what they already knew worked and applied what new business intelligence they could glean from the Internet to help them with their existing strategies. In other words they used new information from web analytics in combination with real business metrics to develop online business plans. There wasn't anything particularly clever about it, it was common sense and all the metrics had one thing in common, they were controllable.
Web business metrics you can control
There are hundreds of reports you can get from web analytic systems and if you know what you're doing they can really help you. Things like bounce rates, entry and exit pages, scenario analysis, first time versus repeat buyers etc. are all extremely important to measure and build upon. They are individual KPI's I mentioned at the beginning of this article.
However the only metrics which you as an e-business can directly control are average sale price, profit margin, overhead, conversion rate and visitors. You probably won't see 2 or 3 of those 5 metrics reported in most web analytic systems, simply because it's not down to a web measurement system to tell you what your profit margin or overhead is, though most good ones can manage average sale price, conversion rate and visitors.
Why these 5 metrics?
Let's take a look at these 5 metrics and explain how you can affect them.
Average sale price ? You can directly alter your product prices to be higher or lower thus affecting the average sale price.
Profit margin ? You can reduce overheads or increase sales prices to improve profit margins. You can also reduce your margin if it's strategically a good idea to reduce sales prices and you have no other way to reduce price other than eat into your margin. The idea being that more of your visitors will buy due to a lower price meaning overall you have a higher net profit.
Overhead ? By reducing overheads you can improve profit margins, or affect the product sales price. One of our clients has sold a lot of one kind of product. Now he has a very low overhead for that product range meaning he can reduce the average sale price of the product while retaining the same profit margin. Because his overheads are low his prices are very competitive and he continues to do well with this product category.
Conversion rate ? Believe it or not it is possible to control your conversion rate! By measuring other KPI's mentioned using good web analytics tools you can see how people are behaving on your website. In a nutshell if you then fix the problems you will undoubtedly find, you improve the chances that people will buy your products. It's not really that simple but that's the way it generally starts.
Visitors ? The level of visitors you get is down to your marketing efforts whether that is paid or unpaid. You can engage in search optimization for critical keywords or PPC marketing to drive traffic for keywords you can't rank for organically. You can pay affiliates to send you traffic that buy your products. You can put out press releases. You can engage in banner advertising or behavioral marketing. Or you can do nothing and hope that your content alone provides enough traffic from websites that point to you. All of these methods affect the levels of traffic. The key is getting relevant traffic rather than traffic that isn't interested in your product range.
In Summary
I hope to have shown 2 uses of web analytics, using KPI's to serve as warnings when things are going wrong and using web analytics in conjunction with metrics to help you start thinking of your web commerce as a business. By using the warning flags as indicators of where things might go wrong you can identify problems and figure out whether your website is visitor centric enough. By exercising control over the five metrics discussed here you can improve your bottom line.
Author: Steve Jackson, Editor - Conversion Chronicles
Steve Jackson is CEO of Aboavista, editor of The Conversion Chronicles and a published writer. You can get a free copy of his e-book sent to you upon subscription to the Chronicles web site (http://www.conversionchronicles.com).
According to NOP World, 48% of all Internet users have... Read More
The chief criteria for judging an ecommerce shopping cart are... Read More
We all know that accepting credit cards is the key... Read More
If you learn how other people make money online, I... Read More
When most people think of a retirement gift, they think... Read More
What a loaded question! Let's narrow that down a bit... Read More
Publishing has always been a difficult business to promote successfully,... Read More
There are two major ways to accept credit cards on... Read More
Nothing has helped international brokerage business more than the internet:... Read More
Data from China Internet Network Information Center (CNNIC) shows that... Read More
Back in 1998 (through 2000 or so), I worked for... Read More
Surf to Google and perform a search on "Internet Merchant... Read More
My previous article I wrote called "One Point Two Billion"... Read More
What is a Stakeholder?Try "define: Stakeholder" in Google and you... Read More
With consumers purchasing billions of dollars of merchandise online each... Read More
Choosing a carefully pinpointed niche market should be one of... Read More
Last time, we started to take a look at the... Read More
Deciding when to get your own merchant account for internet... Read More
This article will explain in depth the steps needed to... Read More
Customers are tough cookies. They're extremely media aware and increasingly... Read More
The Lowdown on EcommerceEcommerce is truly the most confusing aspect... Read More
Online shopping can be a little frightening to people who... Read More
The development and expansion of the Internet has made business... Read More
I'm a plain man who uses plain thinking in devising... Read More
Online shopping is convenient, but many companies whose web sites... Read More
Did you know that one of the best ways to... Read More
Using the Internet to sell products and services to ever... Read More
In spite of the increasing attention on how the Internet... Read More
BENEFITS OF A DATABASEBy maintaining your list as a database,... Read More
Paypal is one of the wonders of the web. Never... Read More
The problem with most e-commerce marketing strategy today is that... Read More
E-commerce offers customers the chance to eliminate many stages in... Read More
A beginner's guide to setting up a successful online store... Read More
Many people online today still believe that buying tobacco products... Read More
The World As It Then WasThe dynamic economic growth of... Read More
If you have little or no capital but you want... Read More
Do you sell something online? Do you have a business... Read More
Yes, it's true, coupons are not just for newspapers anymore.... Read More
When it comes to e-commerce everything is a little bit... Read More
Anyone using a slow, or an awkward payment processor had... Read More
Ten great tips to turn online holiday shoppers into eager... Read More
How much holiday shopping did you do on-line this year?... Read More
As e-commerce develops ambiguities in the current tax code in... Read More
When most people think of a retirement gift, they think... Read More
If you are a small to medium size company and... Read More
I have written at length about the need to anticipate... Read More
What is a Stakeholder?Try "define: Stakeholder" in Google and you... Read More
With consumers purchasing billions of dollars of merchandise online each... Read More
Online shopping is convenient, but many companies whose web sites... Read More
The days of easy money are overIn these post-dot-com days... Read More
Recently I went looking for an online merchant account, with... Read More
A year ago, I had big plans to re-vamp my... Read More
Businesses, which are still sitting on sidelines and not doing... Read More
E-commerce offers customers the chance to eliminate many stages in... Read More
E-commerce offers customers the chance to eliminate many stages in... Read More
If you want to sell on the internet, your need... Read More
Just because you've built your e-commerce website doesn't mean the... Read More
Being able to accept credit cards and other online payments... Read More
Selecting the right emarketplaceAlthough, IT spending has been staying flat... Read More
Choosing an online shopping cart is a big decision. Unlike... Read More
My Business is Afraid of the InternetBill Gates, CEO of... Read More
What a loaded question! Let's narrow that down a bit... Read More
An internet business is by far the best way to... Read More
Business to business e-commerce is on the rise! Worldwide B2B... Read More
I recently published a short e-book called 'One Thing I... Read More
You want to succeed at eCommerce? Welcome to a very... Read More
E-commerce |