We are writing today in regard to Target’s choice of metrics to measure the performance of their website, Target.com. Target.com uses new visitors and bounce rate to measure effectiveness. While we believe that these metrics are valuable for management, we suggest Target also adopt conversion rate as a primary metric when considering return on investment.
The percentage of new visitors is valuable in determining the success of Target’s online advertising and segmenting strategies in attracting new business; given Target.com’s large user base, a smaller percentage may be expected. Target.com’s current bounce rate is strong compared to the industry-average 40 percent bounce rate.
What we believe is most important in determining the value of Target.com, is conversion rate. This measures how many visitors actually make purchases on the website, which directly translates into website revenue. With the number of users Target has, even a fractional increase in conversion rate would translate to large amounts of additional income.
It also has a tremendous value in further improving the website. If Target can’t track something, they can’t effectively manage their content. The use of conversion rate as a primary performance metric helps make decisions about how to maximize user experience on the website. Conversion rate can impact profit and traffic drastically and is crucial to keep in mind when developing website design and content.