What is...

Revenue per visitor (RPV)

Revenue per visitor (RPV) is a business metric used for measuring the total amount of money generated by a visitor to your website. This metric is becoming increasingly important for eCommerce websites because it paints a more complete picture of the value that each individual visitor of your website brings to your business.

It has been created out of the need to fill the gaps left by the Conversion Rate metric, which is very useful if your focus is on customer acquisition, but less revealing when it comes to other areas of your business. The idea is simple: not all customers are created equal. The same goes for businesses. So industry benchmarks can be deceiving, especially if you use the wrong ones.

Let’s suppose you’re in the fashion retail business. You are selling rather expensive clothes, such as designer suits, while one of your main competitors sells relatively cheaper items, such as T-shirts and jeans from less expensive brands. Your conversion rate is 5%, while your competitor seems to do better, with a CR of 15%. And let’s assume that the industry benchmark is somewhere around 10% (we know it’s a pretty high value but we’re doing this for the sake of comprehension). According to this benchmark and looking over your shoulder at your competitor’s CVR, you can quickly lose hope. 

Enter: Revenue Per Converter (RPV)!

The great difference here is that the average price of the items you’re selling is $1000: this is how much your designer suits cost. Meanwhile, the average price of your competitor’s products is $25 (the price of a pair of jeans or a T-shirt). This is how much each converter spends on the two websites. By combining the CR with the RPV, you can make sense of these values in a way that is more relevant to your specific situation. And then, if you do the maths, the figures look something like this:

rpv revenue per visitor example

Suddenly, that 5% conversion rate doesn’t look that bad anymore, right?

How to calculate RPV

The RPV is calculated by dividing the revenue generated by your website during a specific time period, by the number of visitors during the same time period. So if you had revenue of $1,000 in August, and 20 unique visitors, the revenue per visitor would be $1,000/20 = $50. The RPV formula is, therefore:

RPV = Total Revenue / Total Unique Visitors

This metric is used for evaluating the value of each additional visitor that lands on your website. It can also be calculated by multiplying the conversion rate (CR) and average order value (AOV):

RVP = CR * AOV

Why is RPV important?

The Revenue Per Visitor metric only takes into account unique visitors, while CR doesn’t always do so: some CR formulas rely on the total number of sessions or leads. Taken separately, CR and AOV can be deceiving, leading to erroneous results that aren’t as conclusive as we may think. But taken together, they tell you exactly how much revenue each individual visitor is driving. 

The best thing about this metric is that it takes into account the dual dimension of increasing revenue. Once you attract visitors to your website, you can boost your return either by converting more users into paying customers (through Conversion Rate Optimization) or by stimulating greater customer-spend for each conversion (thus increasing the Average Order Value).

These are two separate strategies finally joined together into a measurement that fills the gaps, showing you exactly where your website or eCommerce store loses money. Looking at the formula, we understand that a drop in RPV can be explained either by an increase in visitors without any buying intent (which essentially means a drop in conversion rate) or by a shift in consumers’ behavior: they start buying less high-value goods and more low-value items (which translates in a drop in the Average Order Value).

This brings us to the last point of our discussion: how to increase RPV.

How to improve Revenue Per Visitor

We’ve already established the reasons behind the drop in RPV. The strategies meant to increase RPV can then be declined in 2 separate (yet by no means mutually exclusive) directions:

  • Strategies to improve CR
  • Strategies to improve AOV

Some common strategies used to improve conversion rates (picked form the Conversion Rate Optimization arsenal) are:

Make it easy for prospects to buy from you.

The customer experience should be seamless, there shouldn’t be any significant distractions from the buying process or unnecessary steps to complete before placing an order. Remove nonessential fields from your forms to make sure that users actually complete the order. And, most importantly, make the initial step really easy: research shows that there’s a psychological principle that makes us want to complete the processes we started, with or without further gratification. So you can convert more people by the simple action of simplifying the whole process and asking for an e-mail address to start off instead of requesting numerous details.

Create trust and offer social proof.

People buy from companies they trust. Moreover, people tend to trust their peers throughout the buying process. From word-of-mouth to testimonials, every bit of additional information counts when making a decision online. In fact, studies show that 92% of customers read online reviews before buying, and 70% of them trust reviews and recommendations from strangers. Long story short: if you don’t have a testimonial section on your website, make sure you add one. As for trust, there are several ways to build it: offer a money-back guarantee, make a list of influential partners or customers that have trusted you along the way and feature it prominently on your website, make any kind of information about your business and the process of returns and refunds easily available to customers, and be transparent.

Strengthen your copy and CTAs through A/B testing

See what works best among your customer base. Try out different text and headline lengths, different tones, and different perspectives and stick to the ones that bear better results, as indicated by your A/B tests.

Use scarcity marketing techniques

People are more likely to take the decisive step if they know the offer is limited. According to Sumo, scarce items feel exclusive, appear more valuable, and make people feel more powerful- managing to get a hold of one of them means you have access to something other people want but can’t have. Add countdowns to let prospects know how much time is left before the offer expires. Consider placing low-stock notices next to the products in your inventory, so that people know when there are only a few left- this might help them decide quicker. Another common tactic is to show how many people are currently checking out the product/service: if the offer is of interest, prospects will rush to get things done in due time, so that other people won’t snatch the opportunity from them.

Reduce cart abandonment 

There are lots of people who visit your website, add various items to their carts, then never proceed with the checkout. One common reason behind this is the price shock, which is partly due to the shipping costs that only appear at the end of the checkout process. The solution: make sure that your shipping costs are transparent and easily noticeable throughout the buying process, or try to reduce them as much as possible, depending on the value of the order. 

Cart abandonment e-mails, personal outreach, and guest checkout options are other effective ways to reduce cart abandonment. And don’t forget about remarketing: not all cart abandonment issues can be prevented or resolved but you can win back these prospects through remarketing. Create custom audiences for your social media ads targeting users that have visited your website but failed to place an order or showing them the exact products they viewed at a time when they would be more inclined to come back and buy them.

As for the ways to increase revenue through AOV improvements, here are some typically used techniques:

Upselling

This means suggesting upgrades or add-ons to the original purchase. This means, for example, adding antivirus software to the PC/laptop people are planning on buying for only $50 more or suggesting the version with more storage room for the phone they are interested in. The trick is to make the alternative appear more cost-effective than the original choice.

Cross-selling & recommendations

This is what made Amazon the giant it is today: the power of good recommendations and cross-selling. This means looking at what people are interested in buying and making relevant suggestions related to that specific item. For example, in fashion retail, it may mean suggesting a pair of boots that go well with that pair of jeans the user plans on adding to their cart. For electronics, it may be useful to suggest phone cases or similar accessories for a specific model of mobile phone. Even books can come with recommendations: similar titles, colorful bookmarks, journals or notebooks, personalized pens and reading accessories, and whatnot.

Product discounts and bundle deals

You can offer a $5 discount for orders that exceed $30, for example. Or you can go for a “buy 3, get one for free” kind of deal. You can even offer small surprise gifts after a certain price threshold to incentivize visitors to spend that specific amount on your products.

Reward or loyalty programs

Every dollar users spend turns into points that they can further use to get discounts or special deals on products of their choice. For many customers, this is a strong enough argument for buying more. Besides increasing the Average Order Value, these programs will also keep customers on coming, depending on how attractive your loyalty program is. However you choose to design it, make sure you keep it relevant to your customer base and to your client avatar and don’t hesitate to be creative: people love a good experience as much as they love a good bargain.

Offer a free shipping threshold

According to Oberlo, it’s the easiest way to increase the AOV. What’s best is that you can choose the order value that best suits your business goals. As a rule, it has been observed that a 30% increase to your Average Order Value works best as a shipping threshold. So if the average order value on your website is $100, $130 would be the new value that qualifies for free shipping. 

Final words

Revenue Per Visitor (RPV) is one of the most important eCommerce metrics and one of the most revealing. By combining the Conversion Rate and the Average Order Value, you get a more complete picture of what happens on your website, with no blind spots. If your website is losing money, it’s easier to see where this happens if you rely on this metric. 

RPV is also more relevant for eCommerce sites than simply measuring the conversion rates because, as we’ve shown at the beginning of the article, not all businesses and products are created equal. Relying on CR industry benchmarks can be misleading- this is why you’d benefit from using RPV instead.

Finally, there are numerous methods to increase your Revenue Per Visitor and we’ve reviewed the most commonly used ones in the last section of our article. We’ve broken them in two: techniques for improving your Conversion Rate and tactics for increasing the Average Order Value. Keep in mind that not some of them may apply to your business model, while others might not interest you: pick your battles and your best optimization initiative. You should analyze the performance on your website, see where you’re losing money, and focus on those specific areas for improvement, while also adapting these strategies to your niche and your audience/customer base. 

Explore other terms

Go to letter:  ABCDEFGHIJLMNOP RSTUVW or view all terms.

Here are some other terms you might want to check out:

Shopping Basket