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.

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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.