Web Site Sales Metrics
Posted by Mary Gammel on June 4, 2009 under Web Analytics | 
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This e-tips articles provides some basic metrics that any web site owner can calculate to track website generated sales and website profitability.
What is a Website Sales Conversion Ratio?
The Web Site Sales Conversion Ratio (R) is used to determine on average how many web site visitors will buy your products and services.
To calculate the ratio, you need to know two pieces of information:
- Number of Unique Visitors (V) to your web site over a specified period of time (a month, a year, etc)
- Number of Sales (S) generated from the web site over the same period of time
The Ratio (R) is calculated by dividing the number of sales (S) by the number of unique visitors (V). Or:
- R = S / V
You should be able to get the number of unique visitors from your web site hit logs. Determining the number of sales should be easy if you have an e-commerce web site. Otherwise, you’ll have to track where your sales originate from using a different method.
Don’t be surprised if your ratio is low. In most cases, this ratio of sales to visitors is generally around 1% or similar to direct mail campaigns.
How is the Website Sales Conversion Ratio used?
You can use this ratio to determine how increasing the number of visitors affects profit generated from your web site. You can also work on improving your ratio by implementing strategies to turn more visitors into customers.
Calculating Website Profit Per Sale
To calculate web site profit per sale (PS), you need the following values over a specified time period (month, year, quarter):
- Net profit from all web site sales (N)
- Web site maintenance costs (W)
- Number of sales generated (S)
The web site profit per sale (PS) is calculated by subtracting the web site maintenance costs (W) from the net profit (N) and dividing the result by the number of sales (S).
- PS = (N – W) / S
Web site maintenance costs should include all hosting, content management, programming, and promotional costs related to your web site.
Calculating Website Profit Per Visitor
To calculate web site profit per visitor (PV), you need the following values over a specified time period (month, year, quarter):
- Net profit from all web site sales (N)
- Web site maintenance costs (W)
- Number of unique visitors to the web site (V)
The web site profit per visitor (PV) is calculated by subtracting the web site maintenance costs (W) from the net profit (N) and dividing the result by the number of visitors (V).
- PV = (N – W) / V
Profit per visitor is often used in determining how much to spend on pay-per-click advertising.
Website Sales Metrics Example
Now, let’s calculate the web site sales conversion ratio, profit per sale, and profit per visitor for the month of June given the following values:
- Unique Web Site Visitors (V) = 1000
- Number of sales generated through web site (S) = 20
- Net profit on web site sales (N) = $300
- Web site maintenance costs (W) = $100
The web site sales conversion ratio (R) is:
- R = S / V = 20 / 1000 = 0.02 or 2%
The web site profit per sale (PS) is:
- PS = (N – W) / S = ($300 – $100) / 20 = $10
The web site profit per visitor (PV) is:
- PV = (N – W) / V = ($300 – $100) / 1000 = $0.20
How do you use website metrics?
You can use the sales conversion ratio to play what-if scenarios to determine how your sales would increase if your number of visitors changed. That’s just one example.
How can Quality Web Site Testing help you get started with a website metrics program?
First, we’ll work with you to set up your web site metrics along with a spreadsheet for tracking them every month. Then we’ll help you get your web site ready for tracking using a tool like Google Analytics. Finally, we can help you reach your goals by evaluating your web site for search engine optimization and recommending changes to your site’s content and strategies.
Quick Tip:
Start a program at your office to keep track of your web site’s sales conversion ratio, profit per sale, and profit per visitor. By making this a habit you can see how changes to your web site’s content and strategies affect your profit.
Did you know?
You can substitute different values in the sales conversion ratio and profit calculations to measure things like members, downloads, new customers, etc. Simply substitute the value you want to track for the number of sales (S) and perform the calculations as described in this article.
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