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ROI and Conversion Calculations for Jewelers

ROI and Conversion Calculations for Jewelers 6033-daily-golden-nugget-649This is the second part of a Nugget explaining how you can take tracking results from Google analytics and calculate more than just the return on investment for your retail jewelry store.
(Part one here)

Let me do a quick rundown of all the example numbers from yesterday...

The following visitor referrals have come to our website over the last 30 days
Visits from Facebook: 15
Visits from Google+: 4
Visits from Pinterest: 2
Visits from Twitter: 1

I estimated it would take 10 hours per month at a payroll cost of $260 to manage a Facebook in such a way that it would bring 15 website visitors to you. You might have 3000 Fans on Facebook with a Facebook measured Reach of 1500, but notoriously, Fans do not jump from Facebook to a website without a compelling reason.

Let's make up some more numbers for our calculations...

I have to assume that all in-store salespeople are asking all the customers for their lead source. This is a must-do for these calculations.

Number of in-store customers who came in because of a Facebook Post: 3
Sales included:
$150 Caerleon birthstone jewelry
$149 Sterling Silver and diamond sideways cross
$295 Gold and diamond stud earrings

Number of in-store customers who came in because of your website, but clicked to the site from Facebook: 2
Sales Included:
$299 birthstone earrings
$250 Lorenzo pendant

I randomly chose these items for the calculations. Figuring out the Goldilocks Effect of Social Posting of Product & Prices is a totally different method of training your website, but that's another story for another day.

Our totals:
5 Facebook in-store buyers
$1143 in total sales from Facebook as a lead source

A simple calculation of the Return on Facebook Investment would be:
FB.ROI = (Sales from Facebook - Cost to Manage Facebook)/Cost to Manage Facebook
FB.ROI = (1143 - 260)/260 = 3.39

If you have all the figured you can easily compare that to the ROI of your other marketing methods. But I want to take this further, because after all, there are much more interesting and meaningful numbers to measure on the internet.

We can calculate the value of every Facebook Fan according to these numbers. We can calculate the Value of our Fans in general, and the value of our fans that came to the store.

We could calculate the value of your total number of Fans that Like your page, but the number of people you Reach is probably a more accurate assessment of Fan Value.

Fan Value = Sales from Facebook/Reached People
Fan Value = $1143/1500 = $0.76

So you could say that for every person you Reach on an average month, you are making 76 cents.

Using this number you should also be able to calculate your point of Diminishing Returns for Facebook marketing costs.

Now let's look at the value of a website visitor how originated on Facebook. My sample numbers show 15 website referrals from Facebook, and thankfully we were able to accurately track that 2 customers then came into our store for a revenue of $299 + $250 = $549

Now take a look at this:
Website Visitor Value = Sales from Website Visitors / Website Visitor Count for Lead Source
Website Visitor Value = $549 / 15
Website Visitor Value = $36.60

Compare $0.76 to $36.60

Okay, so I'm just playing with numbers here because I don't have access to real jewelry sales. But this example should be enough to convince you that you seriously need to track this yourself. After 30 days you might find these numbers to be closer together, or even further apart. Whatever they are, you need to focus your online marketing more toward larger Facebook engagements, or focus on bring people from Facebook to your website.

The last calculation I want to share with you today is a Conversion Ratio. Normally you would measure your conversion rates with e-commerce sales compared to the number of visitors you have on the website. Instead, I'd like you to consider this In-store Visitor Ratio...

In-store Visitor Ratio = (Num Sales from FB Leads / FB Reach ) X 100
In-store Visitor Ratio = ( 5 / 1500 ) X 100
In-store Visitor Ratio from FB Reach= 0.33%

Just like I did above, here's the same calculation if you only consider the statistics from your website:
In-store Visitor Ratio = (Num Sales from FB Leads / FB Website Visitors ) X 100
In-store Visitor Ratio = ( 5 / 15 ) X 100
In-store Visitor Ratio from website= 33.3%

What I've shown here today are extremely granular numbers and analysis. My goal was to illustrate that your website and your social network activity isn't just an amorphous task with invisible results. There is real money to be made if you correctly train your staff, track you activity, and measure your results.

AT: 01/17/2013 06:12:14 PM   LINK TO THIS GOLD NUGGET
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