Imagine speeding down the highway and everyone in the car is trying to grab the steering wheel and yelling “Turn left!”, “Make a right!”, “Speed up!”, “Slow down!”. If you can imagine this scene you have probably been in an online development meeting recently.

Forget about which technology or functionality to use, one of the biggest challenges of running an online business right now is simply agreeing how to steer.

Someone recently gave me a copy of “Web Design For ROI” and I read it on a flight to San Diego. Despite its rather dry title, it is happily packed with pragmatic and insightful tips that had me nodding in agreement (and scribbling notes) all the way across the country.

If you’re in this business you have probably experienced marketing people, sales people, usability people, and analytics people all sitting around the conference table trying to prove that they alone have the one true and right critical success factor. So which one is the sole arbiter of truth? Here’s the path to wisdom: They all do and none of them do.

The truth is that running an online business requires a holistic triangulation of business metrics, site metrics, and user metrics and that no one of them exists in a vacuum. The business metrics are the same ones that the business uses to measure success at a high level such as those pulled from a sales system used by the whole company. The site metrics are from web site reporting tools such as Omniture or Google Analytics. The user metrics are derived from user feedback such as surveys, focus groups, and usability testing.

It is imperative to track different types of metrics from multiple sources if you are running an online business. Yes, imperative. You’ll need visibility into quantitative and qualitative results and this is a great way to enforce some checks and balances on the metrics that are tracked.

By using this dashboard approach you will have the ability to make informed, balanced decisions for your business that are rooted in fact.

Having trouble keeping it in the middle of the road? A good dashboard with these three metrics allow you to keep your eyes on the road and your hand upon the wheel.

Where should I spend my money; spend it on marketing or on making the store nicer?

Obviously we need both but historically companies have focused on buying more traffic, buying more traffic, buying more traffic. And while we need to drive traffic to the store. we also need to convert shoppers once they are in our store.  Lead generation, fundraising, recruiting, sales; all of these can be measured in terms of conversion.  So when we talk about conversion, that’s what we’re talking about.

The secret here is to look at Return On Investment (ROI) as a percentage because it shows us that simply buying more traffic is not always the wisest business decision (all this coming from an old advertising guy, no less).

Here’s why: Let’s say, for illustrative purposes, that our traffic generation programs yield an ROI of 100%. Every month we spend one dollar to make two dollars. We know what we can expect month-over month.
It looks like this:

Traffic

But let’s say we have a sales conversion rate of 2%, so for every 100 people who come to our site, 2 of them buy from us.

Now let’s suppose we improve something on our site, say, the checkout process and we increase our conversion rate from 2% to 2.3%.
It doesn’t seem like a very big lift, does it?

Here’s the big a-ha moment: the traffic percentage is for a single month. The conversion percentage is 2.3% of an ever-increasing, month-over-month number. Unlike traffic percentages, our conversion percentage increases:

Conversion

Buying traffic is a one-time cost with a one-time benefit. Increasing our conversion percentage is a one-time cost with an ongoing benefit that increases month over month. It is entirely possible to see a yearly ROI of over 1000% from conversion optimization and that is why we continually look for ways to improve the customer experience. It’s not just a buzzword, it’s good business and it can tell us where to put our money when budgets are tight.