Profitability for businesses that choose to conduct business online depends on several important factors -- some of which play a more pivotal role than others. In my opinion, one of the many factors considered a heavyweight in the profitability equation, web site traffic, is highly overrated. Let''s look at three of the most heavily trafficked sites in July 2000 (the last month for which data are available), according to MediaMetrix: Amazon #11, iWon.com #25, Napster #47. These three have received more than enough press for having business models of, how shall we say this, questionable sustainability. Traffic Does Not Equal Success
Do these high traffic ratings indicate that any of these sites is a success? Despite the presence of 5.4 million unique visitors at Napster''s site (www.napster.com), for example, they still don''t have a business model. Visitors come. Visitors go. No one spends any money. Napster doesn''t make any money (even though their legal bills are probably larger than the GNP of many small nations).
But is Napster so unique in the visitor-to-revenue ratio? While I don''t have a source to give you, I''ve heard that 90% of Web site visitors leave the site within 3 clicks of the home page. A stunning 60+% leave a Web site after seeing only the home page (whether that number includes people who click away from annoying, time-wasting, uninformative Flash home pages isn''t clear). Do these numbers make shopping cart abandonment rates (see The Truth Behind Shopping Cart Abandonment Rates) look modest?
Traffic Is a Bad Measurement of Anything
Even if only 25% of shopping carts are abandoned - and frankly, this is a statistic you should be able to get from your own database for your own store - the real issues are: Who is coming to your site, who should be coming to your site, and how do you get and keep customers? I have been grappling with the idea that merchants have been shooting at the wrong target when they aim for more traffic - whether via search engines, banner ads, sweepstakes, or promotions - without regard to the kind of traffic they''re generating.
While reading Peter Small''s new book The Entrepreneurial Web, I came across his argument that it''s actually a bad thing to get the wrong people to come to your site! Small''s views are notoriously unconventional, which I like. I believe that when everyone''s saying the same thing, only one person is thinking. Since Small stands alone so often, it''s clear he''s thinking.
Bad Traffic Leads to Bad Results
The problem with having the wrong people coming to your site is that you can get confused as to who your real audience is and change your business to please them. What makes them wrong? Perhaps they''re not really in the market for what you''re selling. Perhaps they''re not in the market for your profitable products. If you''re selling some things at a loss in hopes of cross-selling the profitable products, and the shoppers are bottom-feeders who buy only at the lowest price, then you might find you never cross-sell anything.
You need to figure out who the right customers are for your site, and figure out how to get them to your site. How do you figure out who the right customers are? How do you get them to your site? We''ll discuss them in upcoming columns, with the help of some savvy marketing execs. In the meantime, don''t focus on your traffic stats too much. Unless you''re in the affiliate business, traffic does not equal profitability.
Alexis D. Gutzman is an E-commerce Technology Author and Consultant and author of The HTML 4 Bible, FrontPage 2000 Answers!, and ColdFusion 4 for Dummies. Her newest book, The E-commerce Arsenal: 12 Technologies You Need to Prevail in the Digital Arena will be out in October. She can be reached at agutzman@internet.com
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