For most digital commerce websites, there are three significant key performance indicators: Conversion Rate (CR), Average Order Value (AOV) and Revenue Per Visitor (RPV).
The CR is derived by taking the number of transactions (i.e. orders in the e-commerce world) divided by the number of unique visitors or sometimes sessions. AOV is measured by taking the revenue divided by the number of conversions/transactions.
RPV takes the revenue divided by the number of visitors. RPV is a special KPI that takes the CR and the AOV and gives us the value of the two into a single metric.
However, in some cases it is best to know how the performance of a given element is by other metrics not really supported by most analytical or testing platforms. If you wanted to know how many people clicked on a promo banner, you would use that as the goal to get your metric.
This only reveals the overall number of unique clicks, though. In the case of the promo banner, wouldn’t it also be interesting to know of the customers that clicked on the banner actually checked out?
THE NEXT STEP
This requires a correlation of two independent conversion goals: clicking on the banner and the standard conversion of an e-commerce transaction. This correlation is a new KPI.
This is the Engagement Conversion Rate (ECR). This KPI takes the number of people who interacted with a specific element (Engagements) of a website and divides it by the number of transactions (Conversions). The result gives us the conversion rate of those customers who interacted with the banner.
So why would we need to know this? Well to put it simply: if you found out that customers who clicked on a promo banner ‘A’ converted at a rate of 11% and customers who clicked on promo banner ‘B’ converted at a rate of 4% then it is safe to assume that promo banner ‘A’ is better for the overall conversion rate. Granted this is a very loose interpretation for expediency.
Now that we have a cross-correlated conversion rate it might be in our best interest to find out if there is any money to be made with this data. Let’s introduce the KPI: Revenue Per Engagement (RPE).
Much like its cousin, RPV, RPE tells us the revenue earned by the interactive site element. Here we take the revenue of customers that interacted with the element and divide it by the number of customers who interacted with it. Remember, not all engagements lead to an overall site conversion and revenue. With this, we may learn that promo banner ‘A’ is earning the site $11.58 per engagement whereas the RPE of promo banner ‘B’ is $15.97.
Further, we can now see that promo banner ‘A’ converts at a better rate (11%) but promo banner ‘B’ earns the site more money per engagement. This may be due to various factors, such as banner ‘A’ may offer a better discount which would elevate the ECR or banner “B” requires more items in your cart in order for it to ‘work’ which would elevate the RPE.
Another KPI that lends some better understanding for the actual interactive value an element has is the Visitors Per Engagement (VPE). This KPI takes the number of visitors and divides it by the number of engagements, which gives us a value or score for the interactive element.
We can then see how many visitors it takes before a customer interacts with the element. In this case, the lower the index, the better the interaction level is. For example: promo banner ‘A’ has a VPE score of 20.03 whereas promo banner ‘B’ has a VPE score of 12.98. This tells us that it takes far fewer visitors to interact with promo banner ‘B’ than it does promo banner ‘A’.
HOW CAN WE CAN HELP YOU
Here at HiConversion, we offer truly unique innovative solutions in the world of optimization and analytics.
Our adaptive customer experience optimization (CXO) allows you to detect customer preferences on your website and create a personalized optimal experience – in real time.
To truly understand your digital customers and gain extraordinary insights from our expansive suite of analytics and optimization, visit us here.