4 sales in a thousand visits - should Dave be worried?

Dave needs 10 sales out of every 1,000 visitors to be profitable. He runs a test and gets 12 sales. How can he be 95% sure that this isn't just good luck, and that the site will continue to be profitable?

---


Profitable conversion rate = 10 / 1000
Profitable conversion rate = 1%


Visit this calculator: http://vassarstats.net/prop1.html




---
Using the laws of Expected Value, we would expect:

Number of expected sales = Visit x Per-Unique-User-Conversion-Rate

We know the visits. Dave's profitable conversion rate is 1%.



Number of sales to be profitable  = 1,000 x 1%
Number of  sales to be profitable  = 10


Now this could be good, or it could be bad. Dave gets 4 sales for 1,000 visitors, should he be worried about this profit?

.
.
.
.
.
.
.


No. Dave is cool - 4 could still be profitable. 




---


How to work this out for your numbers? Visit this calculator: http://vassarstats.net/prop1.html

What do you think of this?

(Not set) - data missing - why?

You're seeing (Not set) in your Google Analytics. This is a really boring problem to have.

Here's a short list of possible reasons.

The fixable (like having your dog neutered)?

• AdWords and Google Analytics not linked at all
• AdWords and Google Analytics linked incorrectly, or costs not applied.
• Data not sent by clicks (auto-tagging not on in AdWords).

The unfixable (aka Ben Affleck's movie career):

• Data not in that report (e.g. keywords for display network, or dynamic ads).
• Data blocked by browser behaviour (e.g. SSL not sending referers).

If you are truly concerned, and you can't fix yourself, and you can call the A-team. Murdoch has a massive tool for the job, I hear.

Failing that your Google Account Manager, or friendly Google Analytics professional. Ask nicely.

What the frell is CLV !?!?

If you don't know what a customer is worth, you're inefficient. You should be thinking like this:









Average Order Profit
         x
Number of orders per year
         x
Average customer length (years)

         =

Customer Lifetime Value (CLV)


CLVs are important if you are selling anything.

...
CLV is not (here) a reference to how fast CDs work.