Transaction Volume Drivers

A simple model this - but it has a lot of implications.

If you want to drive up the number of transactions on your web site, then how do you do it? What variables exist? In developing business cases for e-commerce site investment businesses often take some pretty wild, or "optimistic" guesses as to how much traffic they will get through. The question is, what variables can they effect to reach these levels.

Our model shows 4 main variables that impact the amount of transactions that a site will have:

• Customer Base - how many people do you already have as customers, how many are prospects, how can you market and sell to them to increase the number of customers you have? Can you grow inorganically, eg by take-over?
• Internet Penetration - No matter how many customers you have, if they haven't got web access they won't visit your web site. For most companies changing this variable is a bit beyond their control, but they should keep an eye on Internet penetration statistics, patricularly for broadband, the amount of people actually buying things over the web, and regional and demographic variations. If we see useful data in this area we usually post it to our blog.
• Site Usage - So you've got customers, and they've got Internet access, but are they using yor site? We've got a whole other model for this bit but the key factors are around awareness - do they know its their, usability - is it easy to use, and saliency - does it do what they want. There are of course other competitor sites, and aggregation sites, to contend with.
• Services per User - Once you get people using your site, a great way to up the activity levels is to offer them more services. If I'm just buying one product from you I'm unlikely to use your site often. But if there is a whole range of things that you can do for me I'm more likely to revisit and re-transact on the site.

So the bottom line is that transaction volume on a site is typically driven by the following equation:

Transaction Volume = internet penetration x customer base x site usage x services per user [ x competitive poistion? ]