Is your website successful? To answer that question you need to two things - conversions and analytics.

What are website conversions? For e-commerce sites the most common answer is that a conversion is a sale. Something was purchased and you received payment. For non-store websites a conversion is most commonly an inquiry, an email or phone call generated from your website. Other examples of conversions are referenced (affiliate) sales, information downloads, and social networking. There are no doubt many others, but hopefully you get the idea. So I've got a conversion, now what?

Most businesses are able to assign some value to each conversion. Sales are easy. The value is the amount of the sale - sometimes. Sometimes it is the estimated lifetime value of a customer in cases where customer retention and recurring sales have proven value. Affiliate sales are basically very similar. Inquiry emails, phone calls, downloads and social networking links are frequently more difficult to value. But, determining their value is critical if you need to know the value of your website. But, why do you need to know the value of your website?

A good business person invests in growing their business. And any significant investment is measured by the return the investment generates. It makes good sense to spend $1 to make $10. It makes no sense to spend $1 for no return. So this brings us to the most important things you need to know about your website. What is the value of each conversion? And, how many conversions are you receiving compared to the traffic your site receives?

To answer the value of a conversion question you have to know the definition of your conversion and you have to know the actual or potential revenue that conversion event represents. This sounds simple. And, yet many companies settle for only an approximation of the conversion value. This might be because the conversion event is not the actual revenue generating end result (e.g. a request for a quote). You might know how many quotes you get, but you don't know how many quotes have actually closed as sales. So you make your best guess.

To answer the how much traffic and how many conversions most people turn to some form of analytics (with Google Analytics being one of the most visible instances). Analytics is combination of data manipulation and reporting. The various analytics programs and services gather raw traffic attribute information and present structured reports based on built-in or devised analytical reporting.

Is all this necessary? If you are in business it is. Knowing the value of each conversion and the number of conversions over time you can now calculate the 'return' from your website. Now compare this 'return' with the money you spent creating your site and the money you spend maintaining your site. The result is your return on investment. But the real benefit is that going forward you will know how much money you can afford to invest in improving your traffic and conversions. That is what you really want to know.