Daily Archives: July 3, 2013

What is your average visitor value?

I thought it was worth spending some time on the differences in e-commerce of measuring success related to conversion.

Many investors focus purely on visits and conversion especially around e-commerce. They say conversion rate is fantastic, all we need to do is grow visits. Easy eh?

In the food industry there seems to be quite an elastic demand curve relating to order value and LTV. The higher the price you are asking the lower the conversion rate.

So I wonder if there is a better way to calculate the effectiveness of visitor conversion.

In this worked example (which google analytics reports), you can see the revenue per visitor to your website.

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Business 1 has the same number of visitors as business 2, but the second business has 5 times the average order value even though conversion rates are broadly the same.

Business 3 has a lower conversion rate but the AOV is much higher – you need less customers and therefore arguably it is an easier business to scale. In subscription businesses, like Diet Chef it is more complex as the average order value is the total value of the plan the customer signs up to, not just the first week or month of this.

So when analysing the business, don’t just take conversion rate and visitors as the metrics, look at the value of your average visitor to your website and do everything you can to improve this metric.

Is the CEO also the “Chief Product Officer”

Mark Pincus has just stepped down from the CEO position of Zynga.com partly because of investor pressure and also to give him the time to focus on the product.

There is a lot of differing opinions of what a CEO should do. In larger more established companies with large workforces it can be to define the strategy and manage the team to execute that strategy. In public companies it used to be the Chairman that managed investors – but the transparency that is now required in public companies means the CEO is usually pulled in front of investors and analysts to explain the companies strategy and progress.

This can make it hard when you transition from a private to a public company as Mark has recently done. Additional pressure to perform and support a valuation means increased scrutiny for the CEO on performance and change.

By letting the founder CEO focus on the product, and bring in a new hire to manage investors and long term strategy (including employee moral at Zynga) this gives the company a chance to remove the microscope on performance. Giving the company the time to execute and fix the fundamental shifts that the gaming industry is seeing (Facebook platform to Mobile).

Mark is very well qualified to focus on product, and I am sure we will see a renaissance from Zynga following some pretty poor filler acquisitions in the past.

So ask yourself, are you a people manager or a product manager – you can really only be one. If product is your passion then make sure you give this enough time and don’t let your flair for this be diminished by focusing on too many other things.

Not the “Scottish play” the “Scottish debate”

It is less than a year until the referendum in Scotland about independence and it is beginning to hit the agenda of both personal and business communities.

I am reserving my position until the debate has actually happened rather than using purely views based on my “heart”.

It is a major subject though – both for the Scottish business community but also for how we are perceived in our connected partner in the rest of the UK.

I am writing this while on board a flight to London Heathrow, where I typically spend one to two days every few weeks. The majority of our suppliers are in the rest of the UK and although I love living in Edinburgh (having lived in Palo Alto, Nethybridge and Ellesmere port – glamour eh!). As a family we specifically decided to move back from the highlands of Scotland due to educational and quality of life issues (I spent a vast amount of time in London or Edinburgh and the north of Scotland is quite a commute!).

I was born in Edinburgh and I am very proud of my roots. There are huge advantages in standing out from the crowd worldwide because we are from Scotland. Whether that was in the city where a number of fund managers were also Scottish or in Palo Alto where being from Scotland was unusual and had very fond memories of golf, whisky and stunning history.

The world is mega connected now, we trade with Europe and the rest of the UK electronically. We have the advantage in e-commerce of being a net exporter of goods, but logically we are not ideally located for some of these activities. I don’t believe Amazon would have located logically in Scotland without the intervention of state funding.

So I am looking forward to the debate, and unlike the acting community I think talking about it is the best thing to do – let the debate commence!