Article at a glance:

E-performance: The path to rational exuberance

In the months leading up to and following the dot-com collapse, Internet companies were suffering from a kind of fatal attraction: the more visitors their sites drew, the more money they lost. Ironically enough, by the time investors finally ran out of patience with the dot-coms, the era of business-to-consumer profitability was just beginning to dawn. McKinsey's study of visits to hundreds of World Wide Web sites by 650 million consumers indicates why—successful sites are focusing on the only measure that really matters: lifetime customer value. The best-performing sites attained a customer conversion rate of 12 percent and a repeat-purchase rate of 60 percent—far better than their less successful brethren.

The take-away

To do well on-line, companies must provide targeted products or services and convert one-time visitors into paying customers by forging the appropriate partnerships, keeping the purchase process simple, and providing real-time support. In a world where disappointed visitors never return, operational execution is paramount.