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?

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


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




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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?

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




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

What do you think of this?

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.

What's in a goal?

I get asked fairly frequently what are examples of goals. If you don't use them properly, how do you know when your website is successful?  Goals are a way of linking what your site does with what your organisation needs to do. So you can make sure you are using your time wisely.

Here's a list of goals (targets) in no particular order:

My recommendations ... are you ...

Selling on-line? Set up Revenue (E-commerce).

Getting customer details? Set up URL (Leads) goals.

Building interest? Set up 'Time on site'.

Something else? Ask me!

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How to set up a goal? 

Log in to your analytics software, visit 'Admin', and then add a Goal.

Set it up like this: