Adam Gartenberg's Blog

Business Analytics and Optimization, IBM and Social Marketing

The big law of small numbers


Just like spaceships powered by calculations on a waiter's bill pad, I'm always amazed at how a credit card bill seemingly filled with lots of $20 and $30 charges (and the requisite grocery bill) can add up to such a staggering high total after only a page and a half.    

Let's call this the big law of small numbers.

The bad news for your credit card balance is good news when it comes to marketing your business, though.

A couple months back, the Escape from Cubicle Nation blog covered the Marketing for Nice People program, which focuses on small, little tweaks that can greatly increase your business.  To riff on the example she pulled from their sales letter, picture the following scenario.

New business

Lets say you get 100 new visitors a week to your website/store.  Now let's up that by just 10% to 110 a week.

Conversion

Today you convert 10% of your visitors to paying customers.  Does upping that to 11% or 12% seem too hard to do?

Average transaction size

Let's say your average sale is $20.  Is there a little extra you can do to get that to just $23 instead?

The result

None of those numbers were particularly staggering, but by increasing your new visitors by 10%, your conversion rate by 2 percentage points, and your average deal size from $20 to $23 (15%), you just increased your weekly revenue from new customers from $200 to $300 - a 50% increase.  Factor what can happen when you improve your post-sale followup or increase your word-of-mouth marketing, and it's not hard to imagine doubling sales, as the program says they'll help you do.

Like I said - the big law of small numbers.