Website Conversion Rate Assumptions
Q: My product is sold online and is highly dependent on website conversions. How does your website conversion rate tool work, and how can I use it to show my sales?
A: Much like our Sales Channels feature, the Website Conversion Rate feature breaks down your sales forecast so that you can model in detail where your sales come from. To accomplish this, there are only two inputs.
1. First, enter the number of website visitors you anticipate on a monthly basis throughout the course of your model.
2. Second, enter the conversion rate: the percent of website visitors who make a purchase on your site in a given month. This rate often increases over time as you build your brand and gain credibility in the marketplace.
Once you have entered these values, you can check to see that the resulting unit sales forecasts make sense.
Now, when you add an Offering, you will enter all assumptions inputs, including pricing, acquisition costs, offering costs, etc. When you get to the sales forecast methodology, you will select “Website Conversion Rates,” which will then automatically bring in your Website Conversion unit sales from your earlier inputs above.
Then you can see the results on all reports. We are highlighting here just two:
a. Key Metrics: This report shows a host of key metrics for your plan, including your website conversion rates. Expand to the Monthly view and you (and your investors performing due diligence) can quickly see the ramp up of your "# of Website Visitors" and conversion rates. In the screenshot, the values show the yearly totals.
b. Sales Detail: This sales report starts out with the sales calculations, revenue, cost, and gross margin for each time period.