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.

Profit per New Customer

It's common for folks to measure cost per new customer. Total Marketing Cost = $10,000. Total New Customers = 130. Cost per New C...