Gus: It’s that time of year I love when I spend all this money online buying stuff;  shame I am not spending it on myself. You know I always end up buying presents for people that I really want for myself. Like last year, I got my sister a pair of wearable speakers. She wasn’t impressed, I could tell.

Vlad: Hmmm.. Unlike you I hate buying presents,  I never get it right, and I never get anything I want. I  really don’t see the point.

Gus: Well, you’re cheerful! Why don’t you see it as a competition,  to see if you how close you get to the perfect present. What about Ineke ? What would she like ? Has she dropped any hints?

Vlad: She has, but I just can’t find it online.

Gus: What does she want?

Vlad: It’s something like a Daniel Fusterbucket dress.

Gus: And you saying you can’t find it online?  Well, have you thought visiting an actual store?

Vlad: Ineke is adamant that you can buy it at Bijenkorf , and she loves the packaging and the whole shop, in fact. But whenever I go into the shop I can never find anything, and on their website it just says “No matches found”.

Gus: They must be annoying so many people with that “no matches found” message. You would think they would do something about that.

Vlad: Come to think of it, one of our clients, Hema, had the same problem. Before they invested in improving their search efficiency, they wanted to understand how much “failed searches” or those with ‘no matches found’ was costing them.

Gus: How do you calculate that?

Vlad: It’s straightforward.  Hema were initially quite sceptical, but in the end found the whole process of putting a value on a failed search very useful.

Gus: But how can a failed search have a positive value?

Vlad: That’s the thing, you can’t. Quite simply, a failed search is an example of a ‘negative goal’ – it’s something you don’t want to happen because each time it does, the business loses money.

Gus: Go on then,  show me how you put a value on a failed search.

Vlad: OK, let’s say Bijenkorf has 35,000 searches made on their website each month. 20% of these searches result in ‘no match found’ or are failed searches. We know from our analytics tool that the conversion rate for those with failed search is 0.5% and those with successful search, where a match is returned, the rate is 2%. Can you work out how much money they lose for each failed search?

Gus: Not without knowing their Average Order Value ?

Vlad: AOV is 125 euros.

Gus: OK ..if there were no failed searches we would have a revenue of 35,000 x 2% x 125, is 87, 500 euros. Right?

Vlad: Yep.

Gus: And the revenue from failed searches is 35,000 x 0.5% x 125, so that is 21,875.

OK, wait a minute. If I take 21, 875 away from 87,500 I am left with the extra revenue I would have got if all searches had been successful that month.

That’s 65,625 euros.

Then if I take 65,625 and divide it by the number of failed searches that month, 7,000 (or 20% of 35,000), I can see how much failed search loses them.

And the answer is 9.375 euros.

Vlad: That’s right, if these numbers were real, Bijenkorf would be losing over 9 euros for each failed search.

Gus: Wow, and that’s discounting the repeat orders they would be getting from visitors who had used search successfully and had gone on to buy.

Vlad: Good point.

Gus: But what could can you do to reduce failed searches?

Vlad: There are several things you could do. The first is to benchmark the % of searches that fail, and then to identify which search terms are causing no matches to be found. Whilst you are doing your analysis on these search terms, the least you can do is to show your bestsellers where no match is found. Here, have a look at this sketch to see what I mean.

Vlad's sketch

Once you know which search terms are causing the problems you need to update your CMS to capture misspellings and synonyms.

Gus: There might be items visitors who are searching for items that you don’t stock anyway. I suppose if the volume of searches is pretty high then you might consider stocking these on a trial basis.

Vlad: I hadn’t thought of that. Absolutely.

Secondly, you might think about using a dedicated search systems like SLI Systems, Nextopia or Celebros. They do clever matching on search terms in the background and then returning the most relevant matches based on previous visitor searches.

Gus: Interesting. But hold on, how do you capture the search terms that appear in failed searches. I don’t think Google Analytics does that.

Vlad: Not at the moment, but it wouldn’t surprise me if they introduced in their next release. Here’s a link to a blog post I found on the Analytics Talk that explains what you need to do get failed search terms into a GA report.

Gus: Perhaps we could approach Bijenkorf and see if we could help them with their searches.

Vlad: Good idea.  Let’s finish our Christmas shopping first.

____________________________________________________________________________________________

Related Posts

Setting website goals – part 1 (catalogue request)

Setting website goals – part 2 (email newsletter subscription)

Gus: Their results just get better and better. Open rates are up, clickthrough rates up and so is the number of orders generated from each email.

Vlad: They have spent a lot of effort on testing different subject lines, offers and creatives. It’s starting to really pay off for them.

Gus: And who suggested they do this?

Vlad: Alright, Gus.

Seriously, you have really helped these guys. Without your advice and also encouragement they would still be complaining about how they never seem to make any money from their emails.

Gus: Well, if you are giving each other pats on the back, you need one for increasing the numbers of emails that actually got delivered. The work you did on checking the emails wouldn’t be caught by spam filters and checking that their email server hadn’t been blacklisted with ISPs made a massive difference as well.

Vlad: I just assumed that they were doing this already. Just commonsense really.

Gus: What it means is that each email sent is now generating 15 cents instead of the 5 cents we started with.  Given that, I am surprised how relaxed Luca is  about recruiting new subscribers to their email newsletter.

Vlad: Each subscriber clearly has a value, and yet he;s  not very aggressive about adding new email addresses.

Gus: How could we demonstrate to him that he needs to get serious about recruiting more subscribers?

Vlad: I think the first thing we have to do is set up a goal on in Google Analytics, and start recording how many new subscribers they are converting. Next, we need to put a value on that goal.

Gus: Like the value we put on a catalogue request goal?

Vlad: Exactly. Let’s see if I give you the raw numbers you can work out how much each email subscriber is worth to them.

Gus: Hit me.

Vlad: OK. We know that they get 12,000 unique visitors per month, their average order value is 45 euros, the conversion rate is 3% for those who have subscribed to an email newsletter, and 2% for those who haven’t, and they pick up roughly 450 new subscribers per month.

Gus: So, the revenue they generate from their email subscribers is.. 12,000 times 3%, so that is 360 orders per month, multiply that by AOV of 45 euros you get .. 16,200 euros per month. Right so far?

Vlad: So far.

Gus: If we compare that with the revenue they get from  the non-subscribers, 12,000 times 2% multiplied by 45 equals.. 10,800 euros per month. So the extra revenue they get from email subscribers is 16,200 less 10,800 equals 5400 euros per month. So if I divide the extra revenue, the 5,400 euros, by the number of new subscribers each month .. I have forgotten how many email subscribers they get each month?

Vlad: 350

Gus: 5,400 divide by 350 is 15.42 euros.

Vlad: So each email subscriber generates an extra 15 euros per month, or 185 over the course of the year.

Gus: That really makes it very clear how much each subscriber is worth to the business. I think when we show this, Luca he’s going to have to get a lot more focussed about getting more names ontothe email database.

Vlad: We need to talk through all the different ways he can promote the email newsletter, as well as looking at how we can entice more people to sign up.

Gus: I think creatively there is a lot that they could do to make the call to action more compelling, also having the email signup box  at the bottom of the page is doing him no favours.

Perhaps I could get one of the designers I know to mock something up.

Vlad: Good idea. We could split test the new creative against the current one to ensure that this is the reason email signups are going upwards.

Gus: I’ll give the designer I know a call after lunch and brief her.

Vlad: Excellent.

____________________________________________________________________________________________

Related Posts

Setting website goals – part 1

Gus: I just don’t get it, all Johann talks about is his conversion rate. What is it this month? What was it last month? What are the underlying trends?

Vlad: It’s what drives his business. The higher the percentage of people that convert on his website, the richer he becomes.

Gus: I know that, Vlad,  but bear in mind he takes a good proportion of orders over the telephone and via the catalogue. Butt because he can easily measure the conversion rate this is what he focuses on.

I know there are other things his call centre could do to increase average order values – a few competitions, special offers, phoning up best customers.

Vlad: I think for Johann, he been surprised by the growth in online orders and he’s started to pay less attention to other aspects of his business. What he needs to do is look at some other goals that he wants his visitors to accomplish.

Gus: Like what?

Vlad: Well, given the business started as a catalogue business, he should be focus on the number of people who request a catalogue via the website.  Some people, given his target market, are never going to order online, but they may request a catalogue.

Gus: So, at least we can see how well the website is doing at generating a catalogue request, and which traffic sources are good or not so good for acheiving this goal. Ideally, we need that goal to have a value, so we can quantify these traffic sources and the keywords that generate catalogue requests. But is there a way of doing this ?

Vlad: I think even you could cope with the maths of this.

You take average order value, ideally of catalogue requesters, and then multiply it by the percentage of ‘catalogue requesters’ who convert into a customer.

Gus: My maths is getting better every day, I can now do long division!

OK, to prove my point, if Johann’s AOV is 90 euros and 10% of ‘catalogue requesters end up ordering, then the value of a catalogue request is 9 euros. Yes?

Vlad: I am indeed a great teacher. Yes, that’s it.

Gus: Good. Well tomorrow, I’ll set up a goal on his Google Analytics account and then get Johann to give me the AOV and response rate figures. It also means that he could set up a PPC campaign just targetting people who want to request a catalogue. This way he’ll have a target cost-per-request and good measurement on how well this campaign is performing.

Vlad: If we can get him to understand that there are other goals on the site for him to focus on then perhaps we can get him to see a bit beyond his damned conversion rate.

Gus: Agreed.

OK. Well I better get home. I need to change before going out with the girls.

Vlad: I like the sound of that. Do you want to come along?

Gus: Another time, Vlad. Another time. See you tomorrow.

Vlad: Yep, see you tomorrow.