March 09, 2009

Conversion Rate Fail

At Nordstrom, we had the "3-2-1 Rule" for our 1,000,000+ multichannel customers.
  • Three Monthly Website Visits.
  • Two Monthly Store Visits.
  • One Monthly Purchase, 85% of the time in a store, 15% of the time online.
Using any web analytics package, we calculate an online conversion rate of 5%:
  • Online Conversion Rate = (15% of one monthly order happening online) / (3 visits) = 5%.
  • True Monthly Customer Conversion Rate Across Channels = 100%.
When I talk about non-linear direct marketing issues, I'm talking about issues like this one. This customer jumped in and out of our brand every six days. We needed a new set of metrics to understand the behavior of this customer, a set of metrics that measured success, not failure.

Always keep the mind open to the possibility that we're not actually measuring reality with the tools we've been given.