exam 4

task complete rate =

% of customers who felt they completed their objective/task on your site

macroconversions

realization of major objectives (the primary purpose of the business)

microconversions

realization of minor objectives (objectives that may contribute to major objective down the line or are subsidiary objectives on their own)

recency =

# of days between visits (lower is better)

visits to purchase =

# of visits from date of first visit to date of conversion

loyalty =

# of visits per time period (higher is better)

conversion rate (%) =

# visits (visitors) where goal is achieved / # of visits (visitors)

average order value (AOV) calculation

-Average Order Value (AOV) = total sales / number of orders you get -Average amount customers are spending when they buy something from your site -Sometimes we do not know how many orders we have -BUT we have # of visitors and conversion rate -Conversion rate convert to decimal...? -50k visitors, 1% conversion = 500 orders -AOV = total orders $ / (# of visitors x conversion rate)

gross margin per visitor (GM/V) calculation

-GM/V = conversion rate % x average order value ($) x gross margin on sales (%) -GM/V = gross margin / # of visitors = (revenue - cost of sales) / # of visitors -CM/V = conversion rate x average order of value x gross margin of sale -Marketing = Conversion Rate

gross margin of sales (GMoS) calculation

-Gross Margin on Sales (%) = (gross revenue - cost of sales) / gross revenue -Sales = (total) revenue coming in -Cost of sales = how much you have in the product -Gross margin (or gross profit) = difference between the two ^ -***Net margin = take out ALL of the costs of the business, not just the cost of product -ROI (return of investment) = how much you're making (%) of sales

choosing KPIs

-No one size fits all solution -Each business needs to distinguish KPIs for themselves -There are "no perfect KPIs" -KPIs are tools! -No long term commitment -If it doesn't work for your objective, modify it and if it still doesn't work, get rid of it! •Choosing KPIs varies by the size of the business

1. An e-commerce site had $4.5 million in revenue during a quarter in which they had a macroconversion rate of 4.2% and total visitors of 1.5 million. Calculate the AOV

1. AOV = revenue / # of orders; # of orders = # of visitors x conversion rate AOV = revenue / (# of visitors x conversion rate) = $4.5 million / (1.5 million x 0.042) = $71.43

2. For a website with revenue of $6.2 million and cost of sales of $5.4 million, calculate the gross margin on sales

2. GMoS = (Revenue - Cost of sales) / Revenue = (6.2 million - 5.4 million ) / 6.2 million = 0.8 / 6.2 = 0.129, remember to convert to %, so 12.9%

3. If the same website had 13.5 million visitors during that time period, calculate the GM/V. (referring to #2)

3. GM/V = gross margin / # of visitors, Gross margin = Revenue - Cost of sales GM/V = (6.2 million - 5.4 million) / 13.5 million = 0.8 / 13.5 = $0.06 (GM/V is a dollar amount, no conversion)

4. For the same website, what is the average revenue per visitor. (referring to #2 & #3)

4. Average revenue per visitor = revenue / # of visitors = 6.2 / 13.5 = $0.46 (dollar amount)

5. For a B2B site, with a revenue of $12.5 million, GMoS of 15% and total visitors of 2 million, calculate the GM/V

5. GM/V = gross margin / # of visitors GMoS = gross margin / revenue, so gross margin = revenue x GMoS. GM/V = (revenue x GMoS) / # of visitors = (12.5 million x 0.15) / 2 million = $0.94 Note: GMoS is given in %, convert to decimal before calculation

6. A website had 6 visitors with these sequences of page views. What is page value for page 2? Viewer 1 = page 1 > page 7 > page 1 > page 5 > page 3 > $14 Viewer 2 = page 2 > page 3 > page 5 > page 4 > $10 Viewer 3 = page 1 > page 4 > page 1 > page 7 > page 3 > page 2 > $14 Viewer 4 = page 6 > page 7 > page 1 > page 6 > exit Viewer 5 = page 3 > page 2 > page 1 > page 2 > page 3 > $5 Viewer 6 = page 1 > page 2 > page 1 > exit

6. For page 2, visits involving views of page 2 are the following - Viewer 2 = page 2 > page 3 > page 5 > page 4 > $10 - Viewer 3 = page 1 > page 4 > page 1 > page 7 > page 3 > page 2 > $14 - Viewer 5 = page 3 > page 2 > page 1 > page 2 > page 3 > $5 - Viewer 6 = page 1 > page 2 > page 1 > exit Total sale = $10 +$14 + $5 = $29 (visit 6 had no sale) Unique page views = 4 (viewer 5 saw page 2 twice, but it still counts as only one UPV) Page value = Total sale with at least one page view/#of unique pageviews = $29 / 4 = $7.25

GM/V =

= gross margin / # of visitors = gross margin / N = (Revenue * GMoS) / N = (#of orders * AOV * GMoS) / N = (N * Conversion rate * AOV * GMoS) / N = Conversion rate * AOV * GMoS

QUIZ- The ecommerce website shoe-fly.com sells high performance athletic shoes. It had total revenue of $27,000, a conversion rate of 3% and 200,000 visitors in February, 2022. Calculate the AOV.

AOV = revenue / # of orders = revenue / (CR x # of visitors) = $27,000 / (0.03 x 200,000) = $27,000 / 6,000 = $450

LAB - Last week, there were 1000 unique visitors to PC4You. Among the visitors, 15 submitted the form, and 3 placed the order at last. 2. The prices for the 3 computers sold were $2,300, $2,500 and $3,600, respectively. What is the average order value? (Define conversion as the placement of order)

AOV($) = Total Order Value / Conversions(orders/transactions) AOV($) = ($2,300 + $2,500 + $3,600)/3 => $8,400/3 = $2,800

LAB - In order to know why so few of the visitors submitted the form, Jason launched an online survey. The result indicated that it was because many people thought the technical terms used in the form were too hard to understand. Therefore, PC4You created a simplified version of the form. In the week after this change, the (macro) conversion rate increased to 3%, and 1200 people visited PC4You's website that week. The total sales were $90,000. 5. Based on the information above, calculate the average order value for this time period.

AOV($) = Total Order Value / Conversions(orders/transactions) Conversions (#) = Conversion rate * total # of visitors Conversions (#) = 3%*1200 visitors => 0.03*1200 = 36 AOV($) = $90,000 / 36 = $2,500

LAB - Last week, there were 1000 unique visitors to PC4You. Among the visitors, 15 submitted the form, and 3 placed the order at last. 1. Based on the information above, calculate the micro-conversation rate and macro-conversion rate.

Conversion rate = Conversions (#) / total # of visitors => Conversions (#) = Conversion rate * total # of visitors Micro-conversion rate (MCR) = (15/1000)*100 = 0.015 = 1.5% Macro-conversion rate (MACR) = (3/1000)*100 = 0.003 = 0.3%

QUIZ- If the GMoS is 4% on total revenue of $150,000, calculate the cost of goods sold (in dollars).

GMoS = gross margin / revenue = (revenue - cost) / revenue. So 0.04 = (150,000 - cost) / 150,000 re-arranging, 0.04 x 150,000 =150,000 - cost or $6,000 = $150,000 - cost or cost = $150,000 - $6,000 = $144,000

QUIZ- Online pet supplies store petpanda.com had a GMoS of 5% on a conversion rate of 2% and an AOV of $12. Calculate the GM/V

GM/V = GMoS x CR x AOV = 0.05 x 0.02 x $12 = $0.012, or 1.2 cents

QUIZ- Online concert ticket reseller site big-bandz.com had a GM/V of $0.30 with a conversion rate of 2% and a GMoS of 10%. Calculate the AOV.

GM/V = GMoS x CR x AOV, so $0.30 = 0.1 x 0.02 x AOV Dividing both sides by 0.1 x 0.02, we get AOV = 0.3 / (0.1 x 0.02) = $150

LAB - In order to know why so few of the visitors submitted the form, Jason launched an online survey. The result indicated that it was because many people thought the technical terms used in the form were too hard to understand. Therefore, PC4You created a simplified version of the form. In the week after this change, the (macro) conversion rate increased to 3%, and 1200 people visited PC4You's website that week. The total sales were $90,000. 6. Suppose the cost of sales was $66,000, calculate the gross margin per visitor.

GM/V($) = Gross margin/# of visitors = (Revenue - Cost of Sales) /# of visitors GM/V ($) = ($90,000 - $66,000)/1200 = $24,000/1200 = $20

LAB - In order to know why so few of the visitors submitted the form, Jason launched an online survey. The result indicated that it was because many people thought the technical terms used in the form were too hard to understand. Therefore, PC4You created a simplified version of the form. In the week after this change, the (macro) conversion rate increased to 3%, and 1200 people visited PC4You's website that week. The total sales were $90,000. 7. The simplified version of the form brought in many new customers, but many of them were not tech-savvy users and only needed low-end computers. Thus, PC4You decided to increase the profit by cost management. In the week after the cost cutting, 1500 people visited the website, and PC4You sold 40 computers for $90,000 with the total cost of sales being $55,000. Based on this information, what is the gross margin per visitor during this time period

GM/V($) = Gross margin/# of visitors = (Revenue - Cost of Sales) /# of visitors GM/V ($) = ($90,000-$55,000)/1500 = $35,000/1500 = $23.33 (approximately $23)

LAB - Last week, there were 1000 unique visitors to PC4You. Among the visitors, 15 submitted the form, and 3 placed the order at last. 3. The total cost of sales for the 3 computers was $5500. Calculate the gross margin on sales (GMoS).

GMoS = (Revenue - Cost of sales) *100 / Revenue GMoS = ($8400-$5500)/$8400*100 => ($2900/$8400)*100 => 0.345*100 = 34.5%

difference between entry page & landing page

INTENTION! •Landing page = intended landing page when designing a website (where you're intended to enter the site) •Entry page = where the visitor actually enters the site

QUIZ- If a website earns an ROI of 8%, calculate the GMoS

ROI = (R-C)/C = 0.08 so R - C = 0.08 C or R = 0.08 C + C = 1.08C Now we can substitute this expression for R in the GMoS calculation. GMoS = (R - C) / R = (1.08C - C) / 1.08 C = 0.08 C / 1.08 C -- the C cancels out GMoS = 0.08 / 1.08 = 0.074, or 7.4%

AOV =

Revenue / # of conversions

LAB - After graduation from Penn State, Jason and his friends opened their own online computer store, PC4You. Different from other stores, PC4You allows the customer to customize all parts of the computer. Customers will first submit a form online to specify their requirements for the computers (CPU, GPU, RAM, etc.). Based on the requirements, PC4You will give the customer a quote. Customers can then choose whether they will place the order or not. 1. In the above example, what is the macro-conversion? And what can be a micro-conversion?

The macro-conversion is the sales of the ecommerce site because it is an online computer store. The micro-conversion is the customer submitting the online form with specific requirements for a computer.

page value =

Total sale with at least one pageview ($) / # of unique pageviews

conversion terms

conversion conversion rate

days to purchase =

days from date of first visit to date of conversion

visit characterization terms

entry page landing page exit page referrer page referrer session referrer click-through click-through rate

visitor characterization terms

new visitor return visitor repeat visitor visits per visitor recency frequency

GMoS =

o Revenue - cost of sales = gross margin o GMOS = gross margin / Revenue = (Revenue - Cost of sales) / Revenue

building block terms

page page view visits (sessions) unique visitors event

engagement terms

page exit ratio single page visits (bounce) bounce rate page views per visit

average revenue per visitor =

revenue / # of visitors

visits (sessions)

type: count calc: A visit is an interaction, by an individual, with a web site consisting of one or more requests for a page. If an individual has not taken another action (typically additional page views) on the site within a specified time period, the visit will terminate by timing out.

return visitor

type: count calc: The number of Unique Visitors with activity consisting of a Visit to a site during a reporting period and where the Unique Visitor also Visited the site prior to the reporting period.

repeat visitor

type: count calc: The number of Unique Visitors with activity consisting of two or more Visits to a site during a reporting period.

new visitor

type: count calc: The number of Unique Visitors with activity including a first-ever Visit to a site during a reporting period. *Note that "first-ever" is with respect to when data began being properly collected on your site by your current tool.

unique visitors

type: count calc: The number of inferred individual people (filtered for spiders and robots), within a designated reporting timeframe, with activity consisting of one or more visits to a site. Each individual is counted only once in the unique visitor measure for the reporting period.

frequency

type: count calc: The number of times an action was performed by a unique visitor over a period of time.

recency

type: count calc: Time since a unique visitor performed a specific action of interest to the analyst.

single page visits (bounces)

type: count calc: a visit that consists of ONE page view

click-through

type: count calc: number of times a link was clicked by a visitor

page view

type: count calc: the number of times a page was viewed

hit

type: count calculation: A request received by the server. (NOT a page view or site visit).

impressions

type: count calculation: Number of times a piece of content was delivered to a user's browser.

landing page

type: dimension calc: A page view intended to identify the beginning of the user experience resulting from a defined marketing effort.

page referrer

type: dimension calc: Page referrer describes the source of traffic to a page.

referrer

type: dimension calc: Referrer is a generic term that describes the source of traffic to a page or visit.

session referrer

type: dimension calc: The first page referrer in a visit.

exit page

type: dimension calc: The last page on a site accessed during a visit, signifying the end of a visit/session.

entry page

type: dimension calc: the first page of a visit

page

type: dimension calculation: An analyst definable unit of content.

conversion

type: dimension or count calc: The number of times a desired outcome was accomplished.

event

type: dimension/count calc: Any logged or recorded action that has a specific date and time assigned to it by either the browser or server

page exit ratio

type: ratio calc: Number of exits from a page divided by total number of page views of that page.

click through rate

type: ratio calc: The number of click-throughs for a specific link divided by the number of times that link was viewed.

page views per visit

type: ratio calc: The number of page views in a reporting period divided by number of visits in the same reporting period.

visits per visitor

type: ratio calc: The number of visits in a reporting period divided by the number of unique visitors for the same reporting period.

conversion rate

type: ratio calc: The ratio of conversions over a relevant denominator.

bounce rate

type: ratio calc: single page visits divided by entry pages

conversions cont. again

· Conversion rate = number of conversions/total # of visitors · number of conversions = conversion rate * total number of visitors o Conversion rate, macroconversion rate, and microconversion rate are all percentages. Multiply by 100 to convert decimal to percentage or divide by 100 to convert percentage to decimal.

Q4. Calculate the page value for page 4. •Visitor 1: Page 1 à Page 3 à Page 1 à Page 5 = $10 •Visitor 2: Page 1 à Page 3 à Page 4 à Page 3 à Page 1 = $5 •Visitor 3: Page 1 à Page 4 à Page 1 à Page 5 = $5 •Visitor 4: Page 2 = $20 •Visitor 5: Page 4 à Page 5 = $20

•5 + 5 + 20= $30 •Unique = 3 •$30/3 = $10 is the page value for page 4

analysis and reporting (3 levels)

•Aggregate — Representative of the entire site. •Segmented — A subset of the site traffic for a defined period of time, filtered in some way to gain greater analytical insight: e.g., by campaign (e-mail, banner, PPC, affiliate), by visitor type (new vs. returning, repeat buyers, high value), by referrer. •Individual — Activity of a single Web visitor for a defined period of time.

choosing the right KPIs

•All businesses need to have Acquisition, Behavior and Outcome KPIs •Acquisition - how visitors come to your website, e.g., referral traffic •Behavior - what happens after visitors land on your website, e.g., pages viewed per visit •Outcome segments explain the impact visitors had on your website, e.g., conversion rate •Need at least one KPI in each of these categories (max is 2) •Not more than 3 or 4 KPIs critically important metrics that we are tracking constantly

page value calculation

•Average page value for site = total order value $ / sum of unique page views for each page Steps: 1 Find the number of unique page views (Of the page you're trying to measure) 2. Example is looking at page 1 (3 people visited page 1) -IF THEY DID NOT MAKE A PURCHASE, YOU DO NOT COUNT THEM 3. Unique page view = count only a visit to a page ONCE -Like visitor 1 is only counted ONCE even though they visited page 1 twice

choosing a KPI for a LARGE business

•BIGGEST constraint for large business - preserving and increasing market share, crossmarketing (multiple outcomes) •Acquisition KPI - percent new visits •Behavioral KPI - events per visit •Outcome KPI - % assisted conversions (other channels besides the final step that help the visitors convert) -Goal is to keep your dominance! Stay on top! -Want to see what are the new visitors to show expansion of audience -No longer worried about how many people are coming, but wanna see the new percentage use & increase in market outreach -Every touch point becomes an assisted conversion

choosing KPIs for a MEDIUM business

•BIGGEST constraint for medium business - improving targeting and gaining loyalty and engagement •More precise targeting increases costs, but medium businesses can afford it more than small businesses •Acquisition KPI - clickthrough rate (through wiser choice of promotion channels and better messaging) •Behavioral KPI - page depth (number of pages browsed, shows loyalty) •Outcome KPI - per visit goal value, microconversion rate (shows engagement) -Not a small business, so your concern is keeping your customers -Page depth = number of pages browsed because it shows loyalty of customers and audience

choosing KPIs for a SMALL business

•BIGGEST constraint for small business - managing costs •Acquisition KPI - cost per acquisition •Behavioral KPI - bounce rate and cart abandonment rate •Outcome KPI - macroconversion rate -Managing costs is biggest concern -Want to keep costs low -Small business wants to keep your eye on the bottom line (macroconversion)

analysis and reporting

•Basic measures •Visit count: page view, visit, unique visitor •Visit duration: time on page, time on site •Bounce rate and exit rate •More advanced analysis and reporting •Trend, distribution, user activity/behavior, engagement, clickstream, interest/attention, conversion and performance •Count: able to get a single number •Ratio: a derived (divided) measurement •Segment the measurement by the dimension (category)

behavior - on site (KPIs)

•Bounced visitors •Watched a video •Repeat visitors •Returned more than X times ("effective frequency") •Used site search •Abandoned carts •Viewed a minimum number of pages •What do the users do once they are on site

what are KPIs?

•Businesses need to go beyond clickstream data to address "outcomes" that are meaningful for their business objectives •Key Performance Indicators •"financial and non-financial metrics used to help an organization define and measure progress towards organizational goals" •To note: •1) KPIs are metrics •2) that help define and measure progress •3) towards organizational goals •KPIs measure how you are doing against your objectives

conversions cont.

•Conversion = any action that the user performs that you are interested in •Any activity that is of interest to you that you are tracking •On an ecommerce site a sale = conversion (but not the only conversion) •Short-sighted if you do this •So many different activities that are performed that also bring value •Macro= primary purpose that you set up the website •Micro= SHOWS INTEREST

conversions

•Conversion: the point at which a visitor performs a desired action •Macroconversions - realization of major objectives (the primary purpose of the business) •Microconversions - realization of minor objectives (objectives that may contribute to major objective down the line or are subsidiary objectives on their own) •Have KPIs that address macro- and micro objectives

outcomes (KPIs)

•Converters (conversions) •Non-converters •Fill out form •Sign up/receive e-newsletter or other alerts •Buy more/less than specific amount •Specific purchase •Multiple/repeat converters

qualities of KPIs

•Great KPIs must be un-complex •The purpose and root of the KPI should be obvious •If a KPI changes, the reason for the change should be easily diagnosed •All members of an organization should be able to understand the organizational KPIs •Great KPIs should be relevant •KPIs are specific and unique to each organization •KPIs are measures against the goals of each particular organization •Great KPIs should be timely •You need to be able to understand KPIs quickly •If a KPI shows that action is needed, you need be able to take action quickly •KPIs should be instantly useful •Should not take 10-15 minutes to explain •Should lead to immediate action

Q2. A company has $100,000 in gross revenue and cost of sales for that revenue is $50,000. What is the Gross Margin on Sales?

•Gross Revenue = 100000 •Cost of sales = 50000 Gross margin on sales (%) = (gross revenue - cost of sales) / gross revenue •GMoS = (100k-50k)/100k=50k/100k=0.5x100=50%

clickstream data

•HTTP requests headers (small text files that you send once you know the content address of the server); Every webpage is actually a file on a server •Application-level data; Programming environment that are used to set up interactive website, Collect browsing behaviors as well •Network level data •On a content server, they're collecting your data & sending it to 3rd parties •External data: Off-site data, Marketing information, Surveys, Competitive Intelligence

KPIs

•Metrics •Special category of metrics •Need to know the unit •Tracking them immensely •Need to track these super well •Define & measure progress •Compare the KPIs to the objectives to see how you're doing •Set up goals

qualities of KPIs cont.

•Not complicated at all! Simple! •They should be relevant & related to the goal •If they aren't, it's wasteful and misdirected •Timely •Constantly tracked & measured •Used to make changes to business model •Instantly useful

KPIs cont.

•Objectives - based on the mission and vision of an individual or business •"to be the most successful e-commerce company" •Strategies - an action plan to achieve objectives • "a plan to attract users" •Goals - actionable, specific performance intentions, an expected outcome to achieve •"increase user base" •KPIs - metrics to measure performance against goals •"subscriptions per month" •Target - a number you seek to achieve •"2,000 subscriptions a month"

acquisition (KPIs)

•Search engines •Organic v. paid (AdWords / PPC campaigns) •Site referrals •Which other partner or affiliate or non-affiliate sources are sending the most traffic? •Campaigns •Email •Social media •Online display •Offline activity •Other off-line media •Referral sources •Where the users come from

Q3. if GMoS is 5%, calculate ROI.

•Steps... 1. GMoS = GM/Rev > 5% = (Rev-Cost)/Rev •Cost in terms of Revenue = R-C = 0.05R > R-0.05R=C = 0.95R = C 2. ROI = GM / C = (R-C)/C = (R-0.05R)/0.95R = 0.05/0.95 = 0.053X100 = 5.3%

Q5. if ROI = 2%, calculate GMoS.

•Steps: 1. ROI = 2% = R-C/C = 0.02 x C (both sides) = R-C = 0.02C = R = 0.02C +C = R = 1.02C 2. GMoS = 1.02C - C / 1.02C = 0.02C /1.02C = 0.0196X100 = 1.96% •GMoS = 1.96%

Q1. A site has total orders (for day, month, etc.) worth $50,000. During this time period the site had 100,000 visitors and 10% conversion rate. What is the average order value?

•Total orders = $50000 •Visitors = 100,000 •Conversion Rate = 10% Average order value = total orders ($) /[# of visitors x conversions rate] •AOV = $50,000 / (100,000x10%) = $50000/10000=$5