4 ms·

I don't know if you have stats or if you're just making numbers up, but in all seriousness if you have the conversion rates for some popular sites I'd love to s

I don't know if you have stats or if you're just making numbers up, but in all seriousness if you have the conversion rates for some popular sites I'd love to see them. Just for curiosity's sake.

jacquesm 16y ago
I do but I can't give you the exact figures, that's not my decision to make. The big problem is probably defining what people call 'conversion rate', typically that's 'virgin traffic' divided by actual sales. The problem with that particular definition is to track accurately how many people have never seen your site before. For a site that is growing steadily the number of 'new' visitors that will eventually convert over the life cycle of their account is a number that always relates all of todays 'new' traffic to the total sales of today, but the sales of today were not typically caused just by people that visited today for the first time. So accurately tracking conversion rate is not as simple as it may seem at first glance. Also, and this is a completely different issue, conversion rate is not the most important figure at all, and I find the thread we're discussing this in amusing because even though the first poster in the thread accurately identifies recurring billing as an excellent revenue driver it completely misses out on the life-cycle aspect of an account, and typically accounts do not last forever. Industry standard is 3 months, so if your subscription site has a 1% conversion of free traffic to paying members then you will still only make 3 times your monthly charge on them. To do better than that you'd have to work really hard on tweaking that 3 month figure, retention is almost as important (if not more important) as initial sign-ups. That's where the real money is.
- melvinram 16y ago
  Agreed. Retention is key to any subscription based business.
- JeffL 16y ago
  Really interesting for me to read this analysis. For my online game, conversion of people who visit the landing page is about 0.5%, but once they're paying, churn is in the 3%-5% range per month, which is around 25 months retention on average. So for me, it seems that the real money is in trying to get the conversion rate up and I'm mostly ignoring the retention, because it seems like I'd have to do a lot of work to move the retention rate. I guess people looking for sex are quicker to pull out their wallet but also quicker to be satisfied.
  - jacquesm 16y ago
    You've got a goldmine there! With a retention like that you could drop your conversion rate even further (so market more aggressively) and still come out on top. Don't bother optimizing the conversion, the retention or any simple formula but instead focus on optimizing the one number that matters: net profits.
    - JeffL 16y ago
      If I have a goldmine, it's been eluding me. I'm not that great at marketing and seem to be able to only get so many people in with adwords. People pay $10/mo, so a new user is worth something like $200 and I'm currently bringing them in via adwords at about $50 each, but that's the average and if I up my bids, the cost to bring in more will be about $80 each, which seems high considering how long it will take to make the money back. I only get about $3k spend/mo with adwords at the current bids. Edit: Costs are already so low that the only way to increase net profits would be to increase revenue per user, perhaps with added micropayments, but it seems to me that with so few paying users <1200, I should be trying to get a larger user base and then later increase revenue per user?
      - jacquesm 16y ago
        A couple of ideas: - increase your price (see: http://news.ycombinator.com/item?id=1639712 http://news.ycombinator.com/item?id=1639712). - consider partnering with sites that you select to send you traffic and give them a kickback of for instance $20 / signup.
      - il 16y ago
        If you have a proven conversion funnel and high retention, you should be able to absolutely blow this thing up via Facebook Ads. AdWords is hardly the ideal channel to drive significant game traffic(unless you're awesome at Content Network). Or set up an affiliate program paying about $1 per free signup.
        JeffL 16y ago

I don't know if you have stats or if you're just making numbers up, but in all seriousness if you have the conversion rates for some popular sites I'd love to see them. Just for curiosity's sake.

jacquesm 16y ago

I do but I can't give you the exact figures, that's not my decision to make. The big problem is probably defining what people call 'conversion rate', typically that's 'virgin traffic' divided by actual sales. The problem with that particular definition is to track accurately how many people have never seen your site before. For a site that is growing steadily the number of 'new' visitors that will eventually convert over the life cycle of their account is a number that always relates all of todays 'new' traffic to the total sales of today, but the sales of today were not typically caused just by people that visited today for the first time. So accurately tracking conversion rate is not as simple as it may seem at first glance. Also, and this is a completely different issue, conversion rate is not the most important figure at all, and I find the thread we're discussing this in amusing because even though the first poster in the thread accurately identifies recurring billing as an excellent revenue driver it completely misses out on the life-cycle aspect of an account, and typically accounts do not last forever. Industry standard is 3 months, so if your subscription site has a 1% conversion of free traffic to paying members then you will still only make 3 times your monthly charge on them. To do better than that you'd have to work really hard on tweaking that 3 month figure, retention is almost as important (if not more important) as initial sign-ups. That's where the real money is.

melvinram 16y ago
Agreed. Retention is key to any subscription based business.
JeffL 16y ago
Really interesting for me to read this analysis. For my online game, conversion of people who visit the landing page is about 0.5%, but once they're paying, churn is in the 3%-5% range per month, which is around 25 months retention on average. So for me, it seems that the real money is in trying to get the conversion rate up and I'm mostly ignoring the retention, because it seems like I'd have to do a lot of work to move the retention rate. I guess people looking for sex are quicker to pull out their wallet but also quicker to be satisfied.
- jacquesm 16y ago
  You've got a goldmine there! With a retention like that you could drop your conversion rate even further (so market more aggressively) and still come out on top. Don't bother optimizing the conversion, the retention or any simple formula but instead focus on optimizing the one number that matters: net profits.
  - JeffL 16y ago
    If I have a goldmine, it's been eluding me. I'm not that great at marketing and seem to be able to only get so many people in with adwords. People pay $10/mo, so a new user is worth something like $200 and I'm currently bringing them in via adwords at about $50 each, but that's the average and if I up my bids, the cost to bring in more will be about $80 each, which seems high considering how long it will take to make the money back. I only get about $3k spend/mo with adwords at the current bids. Edit: Costs are already so low that the only way to increase net profits would be to increase revenue per user, perhaps with added micropayments, but it seems to me that with so few paying users <1200, I should be trying to get a larger user base and then later increase revenue per user?
    - jacquesm 16y ago
      A couple of ideas: - increase your price (see: http://news.ycombinator.com/item?id=1639712 http://news.ycombinator.com/item?id=1639712). - consider partnering with sites that you select to send you traffic and give them a kickback of for instance $20 / signup.
    - il 16y ago
      If you have a proven conversion funnel and high retention, you should be able to absolutely blow this thing up via Facebook Ads. AdWords is hardly the ideal channel to drive significant game traffic(unless you're awesome at Content Network). Or set up an affiliate program paying about $1 per free signup.
      - JeffL 16y ago