Testing everything you do with your online business – and tracking the results – is the only way to keep on top of what you’re doing right and what you need to improve.

Let’s say you want to make some changes to the layout of your website. Obviously, you don’t want to make changes just for the heck of it. Any changes you make should be for one main purpose: to do a better job of converting visitors into customers.

But if you don’t test the new version vs. the old version, how will you know if the changes you make actually do improve the site’s performance? And if you don’t track the results of your testing, how will you know exactly which changes had the greatest effect?

Simply put, if you don’t test and track every single change you make to your site… every promotion you run… and every traffic-generation strategy you try… you’re going to be shooting in the dark every time. And there’s absolutely no way of knowing what you’re going to hit.

So here’s my list of the top five things you absolutely must know about testing to keep your online business on target.

1. Test only one thing at a time.

The most important thing to remember is this: Keep it simple. Test one thing at a time. It’s the only way you’ll know exactly which change is causing which effect.

Let’s say you want to increase the number of opt-ins from your site. There are lots of things you could test to make this happen. You could try putting your opt-in form in a different location. You could change the wording of your opt-in offer. You could try offering a free gift instead of just a free newsletter.

But if you made all these changes at once and your opt-in numbers began to skyrocket, how would you know which change was responsible? Besides, one of those changes could actually be having a negative impact – and you’d never even realize it!

2. Calculate the important numbers.

You need to know two main numbers to keep on top of your website’s performance: the number of visitors you get and the number of sales you make in any given period. That way, you can figure out exactly how many visitors you need to attract to your site in order to make a sale.

Here’s how you do it:

Let’s say you get 300 visitors to your site in one day and you make 12 sales. Simply divide the number of visitors by the number of sales: 300/12 = 25. So, for every 25 visitors you got that day, you made one sale. (Expressed as a percentage, this means your conversion rate was 4 percent, as 1/25 = 0.04.)

If that conversion rate remains steady, you can expect to make one sale for every 25 visitors. If you get 100 visitors, you’ll make four sales. If you get 1,000 visitors, you should make 40 sales.

It’s a simple conversion that tells you exactly how well your website is doing its job.

If that conversion rate drops, it could mean there’s a problem with your website – and you should do a thorough examination right away. On the other hand, if it spikes, you should try to figure out why more visitors are suddenly buying your products – so you can repeat this success.

3. Track the most important things first.

Focus on tracking your money makers first, as they’ll have the greatest impact on your business.

If your site sells more than one product, you should be tracking the conversion rate for each product separately. Maybe your site is doing a great job of selling one product but a lousy job of selling another. This is something you need to know, so you can figure out what’s going right in the first case and what’s going wrong in the second.

4. Think in terms of ratios as opposed to absolutes.

Think in terms of percentages, not whole numbers. Instead of thinking, “Hey, I made 25 sales last week!” – think, “Hey, I made 25 sales per 1,000 visitors last week!”

Knowing you made 25 sales last week doesn’t tell you anything by itself. If you know you made 25 sales per 1,000 visitors, however, you know your conversion rate is 2.5 percent. In other words, you know that 2.5 percent of all your visitors last week bought something from you. If it was a normal week, then, going forward, you can expect that 2.5 percent of all your customers will probably buy something.

This kind of information is essential if you want to forecast how much revenue you’re going to make in any given time period. It also gives you a baseline number that you can refer back to when testing different elements of your website.

For example: Imagine that you changed the headline of your sales page yesterday morning – and you ended up making 25 sales, just like you did the day before. Does that mean the change to your headline had no effect on your sales numbers?

Not necessarily.

Maybe you only got 100 visitors to your site yesterday, instead of 1,000. That means your conversion rate yesterday was actually 25 percent – which is HUGE! That means one in every four people took action on your site. Wow! That must have been some headline you wrote.

Of course, you should find out why you only got 100 visitors to your site yesterday. Once you bring that number back up to 1,000, then, if your conversion rate stays the same, you’ll be making 250 sales a day!

5. Track your conversions by source.

It’s not enough to know what your conversion rate is. You’ve got to know where your best-converting visitors are coming from.

For example, are your most qualified visitors coming from pay-per-click ads you’re running through Yahoo Search Marketing? Are they coming from your organic listing on Google? Or maybe from your affiliate network?

Knowing this helps you understand where your most lucrative stream of traffic is coming from – so you can focus your efforts there and work on growing those high-converting traffic numbers even bigger.

[Ed. Note: If you’re looking for freedom and income, you can’t do much better than starting your own business. Internet marketing expert Derek Gehl has helped thousands of people grow online businesses that generate $100,000 a year – and often much more! Learn how you can start a “hands-free” Internet business right here.

You CAN start an Internet business – or accomplish any goal you set for yourself. And with expert advice and goal-setting strategies, achieving your dreams can take as little as 15 minutes a day.]