Now that I have some historical data on my plugin business I have been going back and looking at the trends. I have a spreadsheet I created the first month after I launched to record sales. When I first started I was so green that’s the only thing I recorded. I had no idea my traffic much less my conversion rate. Now I know that conversion rate is one of the most important key performance indicators (KPI) when you sell your WordPress theme or plugin. Let me tell you why.
How Is Your Conversion Rate Calculated
Conversion rate measures the number of people who come to your site vs the number of people who purchase your product.
Number of Sales / Number of Visitors x 100 = Conversion Rate
This number is important because you can use it to measure and calculate lots of different interesting things. For example: As you make changes to your website you can use this number to see if those changes improved or hurt your sales. Hopefully you are A/B testing these changes but that’s for a different blog post. You can use it to tell whether that blog post or email blast had any effect on your sales.
I See The Future and It’s Bright
You can also predict the future with it 🙂 So say you have a product that sales for $50 and you currently make $1000 per month in sales with 1000 visitors per month. You current conversion rate would be 20(number of sales) / 1000(visitors) = (0.02 * 100) 2%
So just work the formula backwards to figure our how much more traffic you need to generate or how much more you need to convert your current traffic. So if I want to make $10,000 per month you would need to generate 200 sales at the current conversion rate and to get those 200 sales you need 10000 visitors.
200/10000 = 2%
But just what if you could optimize your site and increase your conversion rate to 4% then you’d only need 5000 visitors.
200/5000 = 4%
So as you can see conversion rate should be a key factor in your decision-making process. It’s a great indicator as to how your product is doing.
I started tracking my conversion rate about 4 months after I launched my WordPress plugin for coming soon pages and I was converting around 3% of my traffic. I’ve manage to increase that number by 1.25% over that last year and a half by A/B testing my site and making other optimizations.
I use the Unique Visitors metric in Google Analytics to calculate my conversion rate because this try to measure people. You can also setup Google e-commerce Tracking and it will do it for you. Plus you get lots of other juicy metrics in relation to your e-commerce in all you other reports.
If your site has more than just your product like a blog then you need to account for those times when a post becomes popular or some other artificial spike in traffic. I ran a MightDeals campaign once it drove lots of people to my site but they were going back to MightDeals to purchase. You can use Google Analytics to segment out that traffic and find your true visitors that you’ve acquired through your marketing. Segmenting is another post as well but I recommend this course if you use Google Analytics and run a business. Understanding the numbers should be key factor for your decision-making and running your business.
The course is called Google Analytics Academy and it was one of my goals to take it this year. It was definitely worth my time.
What are some other key performance indicators you use?