Basic Web Metrics
These basic web performance metrics make up the basic building blocks of understanding what users are doing on your website and can be combined to create more advanced metrics (see below).
A session is a period of user activity on a website. For example, a user may come to your site, browse some pages and then make a purchase. If they are inactive for 30 minutes, the session ends.
Note that a second session will be recorded if the user returns later that day.
This is the number of visitors with at least one session on your website within a given period. If a visitor returns twice in a day, they will be recorded as one user.
The number of pages visited on your site in each period.
Pages per Session
The average pages viewed during a session on your website, calculated as page views divided by sessions. More pages per session mean that users are more engaged and visiting more of your site.
Average Session Duration
The average duration of visitors’ sessions. Longer sessions indicate that are more engaged.
Bounce rate is the percentage of visits where users viewed only one page and left. A high bounce rate suggests that people leave your site because they are not finding what they are looking for. You can minimise bounce rates by ensuring that landing pages are relevant to the advertising campaigns.
Percentage of New Sessions
The percentage of new visitors to your website. A successful website will have a mix of new and returning visitors.
A conversion (a.k.a. Goal) is the completion of a user action on a website, e.g., making a purchase. The website owner defines conversion types that they wish to track.
Key Performance Indicators (KPIs)
Web analytic takes the speculation out of running a website. You can tell at once how much revenue a particular campaign, channel or promotion is generating. However, judging how well your website is performing and finding areas needing improvement requires identifying the metrics which affect your business’s performance. These are referred to as Key Performance Indicators (KPIs).
KPIs help inform website optimisation and the direction of your overall business strategy. If you are trying to decide which metrics are the most important to track for your business, here are three questions that should be asked:
- If this metric changed, what impact would it have on the company?
- Will improving this metric help us reach our strategic goals? What is it that your website is trying to achieve?
- Will improving this metric also improve other metrics? For example, improving the conversion rate will also improve the cost per conversion.
Some of the key metrics which you should consider for your business’s KPIs are listed below.
A conversion can take different forms, depending on the purpose of a website. On most retail websites, a conversion is usually a sale. However, on other sites, a conversion might be an interaction where a user leaves some information, for example, completing a registration form. Conversion rate is the number of conversions (i.e. visitors taking the action you wanted them to take) divided by the total number of visitors.
Conversion rate (%) = (completed conversions / number of visitors) x 100
A better conversion rate can have a dramatic effect on the profitability of your site. According to Wordstream, the average conversion rate is 2.35%, but some businesses achieve above 10%.
Average Order Value (AOV)
The Average Order Value measures how much your customers typically spend on a single order. Hopefully, when people visit your website, they buy more than one item or choose more expensive over cheaper items. The average order value measures the success of cross-selling tactics on the website.
Average order value = total order value/number of orders
Shopping Cart Abandonment
Shopping cart abandonment refers to users adding items to their shopping basket but leaving the site without paying for the goods. This is a widespread occurrence online, with some website reporting as much as 50% of shopping carts abandoned. Abandonment happens for a variety of reasons. Users may be bored with the number of screens in the shopping checkout or visit the checkout to find the shipping costs. Many of the reasons for checkout abandonment boil down to poor usability and navigation.
With abandonment rates so high, reducing the percentage of drop out can improve the return on investment from online advertising and increase sales without increasing spending.
Shopping cart abandonment (%) = (number of completed carts / carts loaded) x 100
Cost Per Acquisition
Cost per Acquisition is the amount you typically spend to bring in a new customer. The acquisition cost calculation determines the value of a given promotional effort over a given period. If £2500 spent on 250 new customers, then the Cost per Acquisition is £10.
Acquisition cost = acquisition or promotional cost/Number of new customers
The amount you are happy to spend on a new customer is decided by your Customer Lifetime Value calculation.
Customer Lifetime Value (CLV)
Customer Lifetime Value is the revenue a customer will generate for your business over the course of your relationship with them.
Customer Lifetime Value = Customer Value x Average Customer Lifespan
Where Customer Value = Average purchase value / average purchase frequency rate
Cost per Conversion
The Cost per Conversion can be used to compare the price of different types of advertising or promotion. The metric focuses on results and not simply costs. A campaign may have a high absolute cost but a low cost per conversion, making it a cost-effective campaign. Conversely, a second campaign may have a limited budget but a high cost per conversion, making it expensive.
Cost per conversion = Costs/number of sales
Return on Investment (ROI)
Return on investment is a metric used to measure an investment’s effectiveness, be it a new computer system or online marketing campaign. Return on investment is given as a percentage:
Return on investment (ROI) = (Return/investment) x 100
For example, an online seller of electronics creates a PPC campaign to sell iPads. Each sale of an iPad generates a profit of £50. The PPC campaign costs £2000 and makes 200 sales.
Return on investment = (100 x 200/2000) x 100 = 500%