Use these charts to model deal growth in 2012

Attachments

Deal revenue growth spreadsheet to model revenues against email growth for one year. Thanks to Chris MacDonald, for updating this document.

Here's a simple excel chart for deal performance, measured in deals/email, revenues/email and new opt-ins/email

Projecting deal revenue made simpler: Use attached spreadsheets as a starting point.

To project revenues for daily deals for the next year, start by creating key metrics (this assumes a working daily deals program).

Three metrics allow companies to compare deals apples-to-apples: Deals per email, revenues per email and new opt-ins per email.

Every company launching in the daily deal space has a different starting point - number of emails in particular and promotional capabilities as well. Metrics also allow you to know if the deal, itself, did well "by the numbers"  and to compare performance of deals between markets. 

Attached is a simple spread sheet to use, and a projection sheet. The rest of this report will discuss how to use these reports. 

Here is how to calculate the basic three deal metrics: 

1. Deals/email name
Number of deals sold divided by emails on the opt-in list= Deals per email name.

Example: 450 deals were sold from an email list of 20,000.
450/20,000=.02 deals @ email

Even though deals come in from other sources, the 80% that come from email is fairly universal, and takes into account viral marketing that resulted form the email.

2. Deal revenue/email name
Deal revenue net to the media partner divided by emails on the opt-in list=$per email name.

Example: Taking the above deal, which generated $5 net to the media company, (and the same ammount to the partnering merchant), per deal. That means the deal generated $5 x 450= $2250 to the media partner. Or $2250/20,000 email names=.11 cents per name.

3. New opt-ins per email name
This can be as important as both of the above, since it builds the franchise.

The calculation is similar, # of opt-ins divided by number of emails on the orginal opt-in list.

The excel spread sheet is attached below. Keep in mind that to create working metrics, you only need a small sample, not the whole year. However, it's useful to track this data daily - or add the rev/email and deals/email calculation to your existing deal-tracking reports.

Once you understand these key metrics, projecting deal revenues for the next twelve months is fairly simple.

Creating the promotional plan

The real work is creating the promotional strategy to build email opt-ins. A variety of elements are feeding email opt-ins, so have a plan for each, including:

*Inhouse advertising (standard banner on all web pages, Facebook, Twitter, etc.)

*Contests throughout the year

*Sweepstakes and giveaways

*Remarketing promotions ($20 in deal bucks to anyone who hasn't bought yet)

*General list mailings (how often and when you will mail a deal to the whole list)

*Pay-Per-Click (Google Adwords, Facebook or other direct marketing)

*Charitable tie-ins (donate revenue from a deal to a favorite charity who helps you promote)

Plug these numbers in to the Deal Projection Spread Sheet attached to calculate the Deal Growth for 2012. Since you know the revenue per email name, each additional email calculates added revenue for that month. Note: These spreadsheet are based on opt-ins, not the general list. Mailings of an offer to the general list is counted as an additional promotion, and therefore is on the promotional schedule. 

Questions? Send an email to alisacromer@gmail.com

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