WEB STORE ECONOMICS.Although selling software online is often an economic black box, a few publishers now have enough Web store experience to measure return on investment and other key metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. . Some of the best numbers we've seen come from MathSoft, a developer of technical calculation software that has operated a direct-response Web store since July 1996. "When we launched the store, we'd already established good channels for our two or three major SKUs," says Chris Randles, MathSoft's vice president of sales and marketing. "But we also had some 85 add-on A purchase of additional goods before payment is made for goods already purchased. An add-on may be covered by a clause in an installment payment contract that allows the seller to hold a security interest in the earlier goods until full payment is made on the later goods. products that were extremely inefficiently in·ef·fi·cient adj. 1. Not efficient, as: a. Lacking the ability or skill to perform effectively; incompetent: an inefficient worker. b. distributed." Since add-ons dramatically enhance the value of MathSoft's core calculation engines in vertical markets, Randles points out, getting visibility and distribution for these titles was a high priority--even more important than the actual cash these titles might generate. Relying mostly on internally-developed tools, MathSoft put together a Web store that has gone through several overhauls. Currently, the store contributes "about 10%" of the company's $25 million in annual revenues, Randles says. That's a significant financial contribution, but some of the store's other statistics are even more revealing: * Conversion ratio: Randles has been tracking the ratio of online sales to the number of unique visitors A count of how many different people access a Web site. For example, if a user leaves and comes back to the site five times during the measurement period, that person is counted as one unique visitor, but would count as five "user sessions. to the MathSoft Web site, and he reports that his store consistently converts 15%-20% of its visitors into customers. In addition, the site produces "the most valuable sales leads A sales lead is the identity of a person or entity potentially interested in purchasing a product or service, and represents the first stage of a sales process. The lead may have a corporation or business associated with the person(s). we've been able to generate from any source," including advertising, public relations public relations, activities and policies used to create public interest in a person, idea, product, institution, or business establishment. By its nature, public relations is devoted to serving particular interests by presenting them to the public in the most , and trade shows. He's now looking for Looking for In the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with. ways to attract more traffic, particularly with free offers. "The more we give away, the more we sell." * Staffing: "We spent about six man-months to build the site, and we broke even in three months," Randles says. "We've had to add five hours of labor a week for site maintenance, but also we've probably eliminated the need for one sales person who would otherwise handle these transactions." * Transaction mix: MathSoft's Web store titles are priced between $69 and $300; Randles says most customers spend "between $100 and $200" on each visit. Since most titles are only available on disk, relatively few transactions involve electronic downloads. "But when people have a choice, about half still choose to order hard goods from us." * Profitability: In effect, says Randles, MathSoft has tried to create a "specialty store Noun 1. specialty store - a store that sells only one kind of merchandise shop, store - a mercantile establishment for the retail sale of goods or services; "he bought it at a shop on Cape Cod" " that will compete on breadth of product line, service, and "instant gratification GRATIFICATION. A reward given voluntarily for some service or benefit rendered, without being requested so to do, either expressly or by implication. " rather than price. Since few resellers carry MathSoft add-ons, he notes, "there's no need to discount our prices." In fact, says Randles, MathSoft's Web store margins are so good that he's likely to add more third-party add-ons to the product mix. Chris Randles, vice president of sales and marketing, MathSoft, 101 Main St., Cambridge, Mass. 02142; 617/577-1017. E-mail: crandles@mathsoft.com |
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