Revenue Per Visitor: The #1 Metric to Grow Your eCommerce Revenue
There are literally hundreds of marketing metrics to choose from, and almost all of them measure something of value.
The main metric that will help you achieve revenue growth to your eCommerce website is Revenue Per Visitor (RPV).
- Site metrics interact with each other
- Customer interaction can be either positive or negative
- Revenue Per Visitor is a composite index influenced by Conversion Rate and Average Order Value
Revenue Per Visitor (RPV) Background
Increasingly, CEOs and CFOs do not pay attention to about 99% of marketing metrics. They are focusing more on the areas of primary concern such as: revenue, margin, profit, cash flow, ROI, shareholder value – in other words, your company’s ability to generate more profit and faster growth than your competitors.
Revenue per visitor (RPV) is one of the key financial performance metrics of your eCommerce site, and one of the primary objectives in any revenue performance optimization strategy. This composite metric combines Conversion Rate and Average Order Value into an actionable data point. It measures the money a website makes every time a customer enters your eCommerce store.
eCommerce professionals often think that Conversion Rate or Average Order Value are the best metrics to use for revenue generation. Unfortunately, RPV is poorly understood and rarely used as a metric. You may be surprised that using RPV can help increase revenue significantly on your eCommerce site!
Conversion Rate (CR)
If your goal is to generate more revenue on your eCommerce site it is very logical to think that increasing number of conversions (i.e. visitors who buy products on your site) will result in revenue growth.
In eCommerce marketing, the global Conversion Rate is the proportion of unique visitors that converted (i.e. made a purchase on the site). Micro conversions are defined as proportions of unique visitors that performed a desirable action on the eCommerce site. For example, a micro conversion can be a proportion of unique visitors that selected any product on the site. They did not make a purchase yet, but by selecting a product they moved one step further in the site’s sales funnel. Mathematically speaking, the Conversion Rate (CR) can be expressed as:
Similar to an increase in conversion rate, there are no guarantees that a lift in AOV will translate into a proportional increase in revenue:
This approach may stimulate sale of higher priced items, but the number of people who will make a purchase might go down, resulting in a decrease of your overall sales.
Revenue per Visitor (RPV)
Revenue Per Visitor is a composite metric that combines Conversion Rate and Average Order Value into a single number.
Revenue Per Visitor (RPV) is a metric representing the value of revenue per visitor within a period of time. It is calculated by dividing Revenue by Number of Visitors in a specific Period of Time, as follows: