The only way to keep track of what you're doing right with your online business is to test everything you do and track the results. Let's say you want to make changes to your website's layout. Obviously, you don't want to make changes just for the sake of change. Any alterations should be made to help convert visitors into customers.
But if you don't test the new version vs. the old version, how will you know if the changes actually improve your website's performance? And if you don't track the results, how will you know which changes had the greatest effect?
Here's a list of the top five things you should know about testing and tracking to keep your business on target.
1. Only test one thing at a time.
When it comes to testing, the most important thing to remember is keep it simple. Make sure you only test one thing at a time. It's the only way you'll know exactly which change is causing which effect.
Say you want to increase the number of opt-ins on your site. There are a number of things you could do to achieve this. You could try putting your opt-in form in a different location on your site. You could change the wording of your opt-in offer. You could even change the offer itself. For example, you could try offering a gift with the subscription instead of a free newsletter.
But if you made all these changes at once and your opt-in numbers began to skyrocket, how would you know which change was responsible?
2. Keep two numbers in mind.
To stay on top of your website's performance, you need to know two main numbers: the number of visitors you get and the number of sales you make in any given period. This allows you to figure out exactly how many visitors you need to attract to your site to make a sale.
Let's say you had 300 visitors to your site in one day and made 12 sales. Divide the number of visitors by the number of sales, which gives you 25. For every 25 visitors you had that day, you made one sale. Expressed as a percentage, this means your conversion rate was 4 percent. If that conversion rate remains steady, you can expect to make one sale for every 25 visitors.
It's a simple conversion, but it's something everyone should know. It tells you exactly how well your website is doing its job.
If that conversion rate drops, it could mean there's a problem with your website--and you should conduct a thorough examination of it right away. On the other hand, if it spikes, you should try to figure out why more visitors are suddenly buying your products so you can repeat this success.
3. Test the most important things first.
If your site sells more than one product, you should be tracking the conversion rate for each product separately. Maybe your site is doing a great job of selling one product, but a lousy job of selling another. This is something you need to know, so you can figure out what's going right in the first case and what's going wrong in the second.
But don't start off trying to track 30 things at once. Focus on your lead money-makers first.
4. Think in terms of ratios, not absolutes.
By that, I mean think in terms of percentages, not whole numbers. Instead of thinking, "I made 25 sales last week," think, "I made 25 sales per 1,000 visitors last week." Knowing you made 25 sales is nice, but it doesn't tell you anything by itself.
If you know you made 25 sales per 1,000 visitors, however, you know your conversion rate is 2.5 percent. If it was a normal week, going forward you can expect that 2.5 percent of all your customers will probably buy something.
This kind of knowledge is essential if you want to forecast how much revenue you're going to make in any given time period. It also gives you a baseline number you can refer to when testing different elements of your website.
Imagine, for instance, you changed the headline of your sales page this morning and made 25 sales, just like you did yesterday. Does that mean the change to your headline had no effect on your sales numbers? Not necessarily.
Maybe you only had 100 visitors to your site today, instead of 1,000. That means your conversion rate today is actually 25 percent, which is huge. (However, you should find out why you only attracted 100 visitors to your site.)
5. Track your conversions by source.
It's not enough to know what your conversion rate is; you also need to know where your best-converting visitors are coming from. For example, are they coming from pay-per-click ads you're running through Yahoo Search Marketing? Or are they coming from your organic listing on Google--or your affiliate network?
This information will help you understand where your most lucrative stream of traffic is coming from, so you can focus your efforts there and work on growing those high-converting traffic numbers.
Finally, I want to point out that you shouldn't worry about what the precise definition of a "unique visitor" actually is. (Different software tracking packages track unique visitors a bit differently.) Whether your software tracks the same way as someone else's doesn't really matter. But what does matter is whether you count the same numbers in the same way every day. As long as your definition remains consistent from one day to the next, your numbers will always give you meaningful results.
Derek Gehl is the CEO of the Internet Marketing Center, an internet marketing firm that has helped thousands of people learn to start and run their own online businesses.IMC hosts a new Search Marketing Lab Forum, where members have their strategy questions answered by search marketing specialists.