Establishing Baseline Metrics

November 12, 2009 · by Rick Wilson

A few weeks back while working with a customer who had recently launched their new updated web store an interesting thing happened.

Based on the responses from people, the new site was a giant leap forward. It was much more accessible visually, it looked like they had really "made it".

There was only one huge problem, once the new site launched sales fell by almost 50%.

This site does tens of thousands of dollars in sales per week and every single day that sales were down 50% was like a house on fire, as you can imagine.

The site looks great, people claim to love it and sales are dismal, now what?

Well the first thing to do was figure out what was going wrong and thankfully one of the great things about doing business online is analytics. (As a side note, if you're not currently using an analytics program, stop reading this post and go setup Google Analytics for your store, without this data you are like a ship without a rudder as they say)

Even when you have analytics installed, usually it's a bit like trying to drink a sip of water from a fire-hose, it's hard to even know where to start.

It's vital to establish a baseline of your metrics, so you have something to compare against when you're trying to make improvements or diagnose a problem

Here's what I recommend looking at to get a consistent sense of what's going on:

1. What percentage of your customers are adding something to their shopping cart/basket? This is usually done by dividing the number of people who reached your basket page (assuming your cart takes them to the basket page when they click add) from the total number of visitors. Take that number and view it from the perspective of 1 in X people who come to my store add something to the cart. Obviously the lower you can make X the better.

2. What percentage of those who add something to their cart complete checkout? Divide the number of people who complete checkout, usually figured out by counting people who made it to the Invoice page in your shopping cart and dividing it by the number of people who made it to your Basket page. This is your "Cart Conversion Rate" and it can be anywhere from 10% up to 80% and it varies depending on your industry. Regardless of what it is you want to start measuring it and then trying to improve it.

3. What's your overall Site Conversion Rate? This is figured out by taking the total number of people who complete a sale and divide by your total number of visitors. It'll normally fall somewhere between 1/10th and 10%. Amazon tends to get about 10% so that's your long term goal, however 1 - 3% is much more normal and achievable.

4. What percentage of your customers complete each step of your checkout funnel? You simply divide each step by the one above it. This should help you quickly identify issues in your checkout process. Is your shipping not calculating properly and causing a huge percentage to bail? This is the most likely way to find out.

If you've setup your analytics properly you can go back and graph this by month over a long period of time. Looking at this over a year or longer provides some very interesting data.

If you don't make sure you're collecting all of this data properly today, then when the time comes to need it, you'll be out of luck and swinging blindly to try and fix your problems.

At the very least make sure you have a way to figure out these items:

1. Total Visitors
2. Number of people who add something to your cart
3. Number of people who actually purchase something

If you have those three numbers above and ensure you're collecting them consistently over time, then you'll have the baseline data necessary to both improve and troubleshoot your store.

Category: Navigating eBusiness | Tags: Marketing, Shopping Carts and Platforms, analytics, Analytics, Conversion