Software Marketing Metrics

Monday, January 29, 2007

In software marketing, it is important to change one thing at a time and measure the results. Continual iterative improvement is the best way to achieve long term, measurable, results. So what are conversion ratios? Conversion ratios are simply tools to measure how effectively your product is being sold. They can often be easily computed directly from your web logs.

The Overall Conversion Ratio, the Download Conversion Ratio, and the Trial Conversion Ratio are particularly useful, and easy to calculate, for those selling software on the internet.

Overall Conversion Ratio (OCR)

The overall conversion ratio (OCR), Purchases/Total Visits, is the easiest ratio to calculate, but it is generally hard to make much use of since the visit count typically includes a lot of noise from search engine spiders and other non-prospective-customer activity.

Download Conversion Ratio (DLCR)

The download conversion ratio (DLCR). Total Downloads/Total Visits. Assuming you are in the business of offering a try-before-you-buy product to prospective customers, it is fair to say that a unique visitor who downloads a copy of the trial software is a prospective customer. This ratio is more useful than the OCR as there is typically less noise from automated spiders.

Trial Conversion Ratio (TCR)

The trial conversion ratio (TCR), Purchases/Total Downloads, is a great measure for how well a product sells itself to prospective customers. A low TCR indicates that there may be critical problems in the program that need to be addressed:

• It does not install properly or is otherwise dead-on-arrival.
• It crashes or behaves incorrectly.
• It has been cracked.
• It is falsely identified as malware by one or more anti-virus or anti-spyware programs.
• It is low quality work for which the prospective customer just does not want to open his wallet.

Looking for More?

If you want to have more fun with ratios, you can check out my 2006 SIC paper on Business Intelligence for the Micro-ISV.

If you want to get really serious about business intelligence, read the Business Intelligence Roadmap by Larissa T. Moss and Shaku Atre, and Data Mining: Practical Machine Learning Tools and Techniques by Ian H. Witten and Eibe Frank. These sources will help you get started building a deeper understanding of the business intelligence process and data mining.

Labels: Business Development, Marketing