Ecommerce metrics are critical to measuring the performance of your online store. Without them, it’s hard to know which initiatives and strategies are working and which are falling flat. There are many eCommerce metrics to choose from today, but we believe that one stands above them all — Revenue per Visitor (RPV).
WHAT IS RPV?
In a nutshell, RPV measures the revenue that your site generates per visitor. Simple, right? While many merchants continue to rely on conversion rate (CR) as their primary eCommerce site metric, revenue-focused eCommerce should focus on RPV as the most reliable yardstick for how well a site performs.
Why is RPV Important?
Like your other eCommerce metrics, RPV will help show you what’s working and what’s not working to generate sales on your website. Your RPV can also help you determine which new visitor acquisition efforts are working and how much you can afford to spend on those acquisition efforts.
RPV is a composite metric that combines conversion rate (CR) and average order value (AOV) into a single metric.
In essence, CR and AOV are best viewed as factors that contribute to the growth or decline of RPV. By looking at them as forces that interact, you can find combinations that may contribute to CR or AOV in different ways but ultimately create lift in revenue—which is what matters most. Sometimes these forces work together as you would expect, as they did with this merchant who experienced across-the-board positive results:
But sometimes they don’t. Here are some limitations of judging results by CR or AOV alone.
Limitations of Conversion Rate (CR)
The purpose of CR is to measure how many visitors ultimately make a purchase from your site. This measurement tracks all purchases equally, regardless of purchase price — which is a major limitation of this eCommerce metric when used alone.
By weighting all purchases equally, CR falsely attributes the same conversion value to every customer (e.g. a $2 purchase is considered the same as a $500 purchase) leading to incomplete sales data on a customer’s actual spend. Even if your CR goes up, a sudden uptick in small orders could still spell lost revenue for your site. In fact, those small orders can actually be incredibly costly if you factor in any costs that you incur through low-threshold free shipping promos or premium packaging.
Here are the results of one merchant who lost money despite a healthy lift in CR:
Limitations of Average Order Value (AOV)
AOV addresses some of the limitations inherent in CR by measuring the average value of each purchase made on your site.
However, AOV does not look at how many purchases were made, so it doesn’t give you a full picture of how your revenue grows (or shrinks). Even if you see a drop in AOV, it might not spell doom for your bottom line.
This merchant still saw a lift in RPV despite lackluster AOV:
Put simply, CR and AOV don’t tell the whole story. That’s where RPV comes in.
HOW TO CALCULATE RPV
To calculate RPV, simply divide the total revenue earned during a determined time period by the number of visitors during the same period.
Let’s say, for example, you earned $20,000 during the month of April and had 4,000 visits during the same month. Your RPV for April would be $5 (or $20,000/4,000).
“The Mobile Optimization Initiative has given us a focused understanding of Mobile Optimization and Conversion, allowing us to share information with our developers, our UI/UX designers to create an overall better product for our customers. We have benefitted from developing insights on mobile optimization and shared it to our customers with impactful results.”
– Ali Ahmed, CEO, Imagination Media