Frequently Asked Questions

One of the more commonly referenced website analytics terms is "bounce rate." What is bounce rate? What does it mean? Is it an important metric to monitor? Let's start with defining what a bounce is. A bounce occurs when someone visits your website, views a single page, and leaves. In this scenario a website tracking tool like Google Analytics, would report one bounce or a 100 percent bounce rate (depending on which type of report you run/view).

Web marketing people love to create new terms for things you thought you already understood! In the world of Internet marketing, the word "conversion" represents any action on your website that is more valuable than someone that visits your site and leaves without doing anything. What constitutes a conversion depends entirely on the industry and on the individual company. For most companies, it's a web form submission (aka. a lead). Other terms that are interchangeable with "conversion" include: goal, upper funnel action, lower funnel action, lead, action, and event (I'm sure there are dozens of others, but you get the point).

Website conversion rate is a critically important metric used to measure and improve website performance. It is typically calculated by dividing the number of defined conversions by the number of visits to your website (expressed as a percentage). In some industries, and depending on what you're actually trying to measure/improve, it might be calculated using a segment of visits (vs. all visits). For example, a local plumber serving Colorado might have a 4% conversion rate when using all visits, but a 14% conversion rate when visits are segmented to only calculate the number using visits in Colorado--after all, can the local plumber really expect a visitor from China to convert? Not likely.

ROAS stands for return on ad spend. To calculate ROAS, you take the revenue generated from the advertising campaign and divide it by the cost of the advertising campaign. If you pend $10,000 on an ad and it generates $100,000 in business, your ROAS would be $10. ROAS can be a useful metric when you want to compare the performance of two different advertising channels.

ROI stands for return on investment. If you Google "marketing ROI," you'll get a million different defintions. Which you use depends on your needs and business situation. The most simplistic version is to take the gross profit generated from a particular marketing investment, subtract the cost of the marketing campaign from it and divide this number by the cost of the marketing. ROI is typically expressed as a percentage, so multiple your answer by 100.

Depending on your industry, there are a number of ways to calculate Customer Lifetime Value (CLV). If you sell a monthly service, you could take your (average revenue per monthly per customer) X (gross margin) X (the average number of months a client stays with you). If you run a home service business (HVAC, plumbing, etc.), you might take your (average revenue per job) X (gross margin) and also take into account the number of times a customer uses you over a period of, say, 10 years and how likely they are to refer you to other people.