We have been selling our software this way for a long time. Before we introduced these two pricing levels, we were selling our software for $29.95. Adding the more expensive Pro edition for $49.95 was a good way to increase the price without dropping the old price. After the change, about 80% of our customers started opting for the Pro edition, causing a nice jump in profits.

The presence of two editions also gives our visitors a choice. Price conscious customers can opt for the cheaper Standard edition. Buyers just looking for the best, regardless of price, can choose the Pro edition. The availability of choices helps to increase conversion rates.

As you can see in the image above, we have done something similar with our range of barcode scanners, a cheap CueCat for $19.95 as an entry level scanner, a deluxe laser scanner for $139.95, and a mid-level option for $79.95.

But offering multiple editions also has one drawback: it adds complexity.

Complexity

If you offer multiple editions of your software, at different prices, you will have to as clear as possible about the differences between them. Our solution for this is to include the little blue question mark thingies everywhere we mention the two editions. Clicking it pops up this feature comparsion chart:

But still, a large percentage of the support questions we get is about standard and pro editions. People still ask about the differences between them. And about how to upgrade from Standard to Pro. Or why feature X has suddenly disappeared after unlocking the trial edition (the trial edition has all Pro features, so unlocking to the Standard edition disables some features). Also, we get people complaining about feature X being a Pro feature, while they think “this is something every user needs” (yes, we also get this for advanced stuff like “Export to XML”).

Having two software editions also adds complexity to your shop page, especially if you offer multiple products. The page has to show list both editions, with their prices and again some way to find out more about the difference between them. The buyer must be able to to add either the Standard or the Pro edition to the cart, and preferably the shop page should allow switching between the two. In the Collectorz.com shop, it looks like this:

So I began wondering: is the availability of the two editions still increasing my profits? Or is the extra complexity hurting my conversion rates? Well… if you have been reading my posts for a while, you can probably guess what’s next…

The test

Here’s the A/B split test I have been running for the past 14 days:

• Version A: As described above, the product pages and shop offering two editions, Standard and Pro.
• Version B: Product page and shop listing just the $49.95 edition, just called “Movie Collector”, without the Pro postfix.

In the B version, the Buy-box on the product pages looked like this:

And the shop page could be reduced to:

Simpler, but less choice and looking more expensive.

The results

Well, let’s start with the good news:
In the B group the average purchase value was 31% higher.
But the number of sales (= conversion rate) dropped by 25%, causing an overall 2% drop in profits.
The conversion to trial sign-ups also dropped, by about 3%.

Interestingly, during the first few days of the test, the results looked promising. The B edition immediately showed the increase in purchase value, but the number of sales was higher too. The A version proved better in the end, but took more time to pick up steam.

What’s happening here? Well, I can’t be sure, but it looks like the more price-conscious customers are also taking more time to decide on their purchase, e.g. by seriously evaluating the trial edition. The kind of user who had no problem with the $50 price tag apparently also had no problem buying without trying. Hey, why not add a 2nd $50 program and the deluxe scanner too

Anyway, it seems like we shouldn’t get rid of the Standard edition (yet). The 2% decrease in profits is small, but a 25% drop in new customers being added to “the pool” is unacceptable and could cause a large drop in profits in the long run (less cross-sells, less up-sells, less upgrades, etc…).

But wouldn’t it be great to increase the average purchase value by 31%, without the drop in conversion rate? Back to the drawing board…

This is my new Aston Martin V12 Vantage, in Fire Red.

I first saw it 3 months ago, in the showroom of the local Aston Martin dealer. And I immediately fell in love. I had been considering a V12 Vantage for a long time (actually, since I purchased my V8 Vantage), but this one, in this color… oh my god…

I managed to resist buying it for quite a while, but last week I gave in. It’s just too beautiful and too brutal. So now it’s mine

Some specs:

• 6.0-litre V12 engine
• 510 bhp
• 570 Nm of torque
• Top speed 190 mph (305 km/h)
• 0-62 mph (0-100 km/h): 4.2 seconds

And a couple more pics:

These pics were taken during a test drive, so it’s still on dealer plates. I will be able to pick it up in about two weeks, when Syts and I return from our trip to Dallas.
I have already reserved a parking spot, next to his little brother.

We are already working on iPad editions. The iPad development costs are relatively low because of our in-house experience with Apple iOS programming and because we can share a lot of code with the iPhone editions. Moreover, I strongly believe that the iPad is going to be an important software platform. Especially for our type of software and our target audience.

But what about Android, Blackberry and Windows Mobile? Are these platforms popular enough to justify the development of dedicated mobile apps? What is the popularity of these devices compared to iPhone and iPod touch? More importantly: how popular are these devices amongst Collectorz.com customers?

Well, let’s just ask them with a simple survey.

The Survey

This is the survey I sent out last week, to all Collectorz.com customers, using SurveyMonkey. To get as many responses as possible, I kept it simple. Just two multiple choice questions:

• What kind of mobile device(s) do you own? (multiple answers possible)
  • iPhone
  • iPod touch
  • iPad
  • Android based phone
  • Blackberry
  • Windows Mobile based phone
  • Nokia smartphone
  • Palm Pre
  • Other
  • I don’t own any smartphone or similar device
• How many apps have you purchased for the device(s) you selected above?
  • None
  • 1-5
  • 5-10
  • 10-15
  • 15-20
  • More than 20

The Results

After five days this survey had 12 thousand responses. More than enough to make the results statistically valid, so let’s look at the numbers:

What kind of mobile device(s) do you own?

First, the results of question one. Please note that users could select multiple options, so that’s why the numbers don’t add up to 100%.

Clearly, the Apple devices are very popular in our market. Using a SurveyMonkey filter I found that 45% of Collectorz.com customers owns an iPhone, iPod touch *or* iPad. 2.5% of my audience responded that they own an iPhone, an iPod touch *and* an iPad.
Which means that with some smart code sharing between iPhone and iPad apps, we can reach almost half of our customers with a mobile app.

Which is 3 times as many as can be reached with an Android or BlackBerry app. I know, both are built in Java, but I doubt that we can share much code between them.

Personally, I was surprised to see how popular Windows Mobile still is. However, its’ popularity seems to be on the decline. Nokia, Palm Pre? Too small to bother.

(Please note that this survey was sent to existing Collectorz.com customers only. If we have been attracting extra customers *because* of the iPhone apps, then the results may be slightly skewed in favor of the Apple platforms. However, this effect should be minimal.)

How many apps have you purchased?

I added this question to find out whether the owners of the different devices are actually buying apps for it. I mean, a particular phone may be very popular but if nobody is buying apps for it… then you have to wonder whether developing apps for that platform will be very effective.

These are the results, for the four popular mobile phone types:

The above charts confirm my suspicion that Blackberry and Windows Mobile users are less of an app-buying crowd. The numbers for Android are quite low too, but this is probably because the platform is relatively young.

Now what?

I was happy to see that our current focus on the Apple devices was justified by the survey results. All the more reason to get our iPad apps out as soon as possible and to keep improving and updating our iPhone apps.
I was a bit disappointed by the percentage of Collectorz.com customers owning Android and Blackberry devices, especially compared to the Apple audience. But we will stick to our plans to create Android and Blackberry apps. The market seems big enough to earn back the development costs. So we just hired a new Java programmer and he has already started on the Android apps

Apps for Windows Mobile, Nokia or other phones? Don’t think so…

Interesting results, so I tried some experiments with the color of my own sign up buttons.

On the Collectorz.com website the main call-to-action buttons (Try and Buy) are a dark shade of blue (what we call “collectorz blue”). This results in a nice and quiet look. But if I can get more sign ups by introducing a noisy Sign Up button, I won’t complain.

The Red Button

I tried a red one first. It sure stands out
The results after about 400 sign ups:
The conversion rate dropped by 9%.
Not quite what I had expected. Maybe red is too much of a danger color? Are people scared to click a big red button? Or maybe it’s too red and will a softer shade of red do better?

The Green Button

Next attempt: a green sign up button. IMO it looks a bit nicer than the red one. But that’s not what counts, is it? Will it get more people to sign up for the trial? Ehm… no…
The results (400 sign ups counted):
13% less sign ups.
That’s even worse than the red one.

Back to Blue it is

Well, that didn’t work. So for now I am back to the blue buttons. I still think that making the free trial option stand out more is a good idea. But apparently not like this.
Maybe I should have tried Dan McGrady’s 3rd tip first: “Change the button text from “Signup for Free” to “Get Started Now”. Dan says:

“Get Started Now” is an easier sounding commitment than signing up. Signing up also has connotations with paying.

Make sense, so that’s what I am testing at the moment.

I have a favor to ask – the last batch of scanners that was sent to us came on a double stacked pallet. Our receiving dock isn’t able to accept these, so they asked that the next shipment we get if it could only be single stacked pallets.

Single stacked? Double stacked?
I don’t even know what that means

The joys of selling hardware, I guess. Sometimes, I long back to the days when we were just selling software, “shipped” by email.

Mexico? We hardly ever sell to Mexico.

A quick peek at the Ecommerce tab confirmed that: In the same period only 0.37% of my sales came from Mexico. This wouldn’t be much of a problem if all that traffic was organic and thus free. But what if I am paying for those visitors with Adwords?

Sadly, information like that is not readily available from your Adwords interface. You will have to run a Geographic Performance report to get to the data. And even then, it takes some work to turn the data into actionable information.

But, it’s definitely worth doing. For instance, I found that for the past five months, a considerable part of my Adwords spend had been going to Mexico and a couple of other countries (Greece, Spain) that were not resulting in enough sales.

So I highly recommend that you spend some time to analyze your own Geographics Performance report. To help you do it, I have created a step-by-step tutorial on creating and analyzing this important report type. Here we go…

Creating the report

Start with running the report and saving the report data:

• In your Adwords account, choose Reporting, then Reports from the drop-down menu.
• At the top, choose Create a New Report
• Under Report Type, choose Geographic Performance
• Under Settings,
  • Set Level of Detail to Account
  • The View (Unit of Time) setting is fixed to Daily. I would prefer to use the Summary option here, but it is not available for Geographic Reports. Oh well, we can do the aggregation ourselves with Excel or Calc…
  • Choose a Date Range that gives you sufficient data (I’d recommend to select a couple of months of data, maybe even more)

  

• Under Advanced Settings, click Add or Remove Columns, then check choose the following columns:
  • under Attributes: I’d recommend to select just Country/Territory, unless you’re doing local ads.
  • under Performance Statistics, choose Impressions, Clicks and Cost
  • under Conversion Columns, choose Conversions (1-per-click), or if you are tracking your sales and sign ups separately (like I do), then choose the Sales Conv and Sign-up Conv fields instead.

  

• Click “Create Report” at the bottom and wait for it to complete.
• Open the report, then at the top left choose Export Report and click “.csv (for Excel)

  

We now have the raw Geographic Performance data saved on our computer. Let’s open it in Excel or Calc to massage it into something useful.

• Now open the saved CSV file in either Excel or OpenOffice Calc. Note that Adwords report are called CSV (as in COMMA Separated Values), but are actually TAB separated. So make sure you choose Tab as the delimiter when importing.
• (At this point you may want to Save the report in your spreadsheet’s native format, .XSL for Excel or .ODS for Calc.)
• Delete the top 3 rows (REPORT, ACCOUNT and DATE RANGE) and the bottom row (Totals) from the sheet.
• I also like to:
  • Make the header row bold so that it stands out more
  • Rename some of the column headers to something shorter (e.g. Country, Sales, Sign Ups).

This should give you a sheet that looks like this:

Aggregating the data per country using a Pivot Table

As you can see, the Geographic Performance Report gives us performance data per country per day, not very useful. To get a useful summary per country, we need to aggregate the data by country using a Pivot Table (or as OpenOffice Calc calls it, the Data Pilot). Here’s how to do that:

• Select the entire sheet by hitting Ctrl-A (or Cmd-A for us Maccies).
• In Excel, choose Data / PivotTable Report. (or in Calc, use Data / DataPilot / Start).
  
  (the following steps may differ depending on your version of Excel or Calc, but the main thing to get right is the Layout)

• As the destination of the pivot table, choose New Sheet (in Calc, this is under More / Results to).
• For the Layout of the pivot table, drag the Country field to the Row box and drag the Impressions, Clicks, Costs and Conversions fields to the Data box.
• Make sure the Data box now says “Sum of …” for all fields. Double click each field to change it if necessary. (For some reason my Mac Excel defaults to “Count of …”.)
• Leave the Column box empty.

Like so:

After generating, this will result in the following pivot table:

• We selected multiple data fields and by default these appear vertically arranged. However, we want to be able to sort on each of these fields, so we prefer to have them as separate columns. To make that happen, just drag the header of the Data column one cell to the right and drop it on the cell that says Total (in Calc that cell is empty).

  

  And presto, we have an aggregated performance report by Country, with nice totals for Impressions, Clicks, Costs, Number of Sales (and in my case, Number of Sign Ups):

  

Analyzing the data

Now the fun begins. Let’s see where we are making money and, more importantly, where we are losing money.

• First sort the table on the Cost column. This may already provide some eye-openers. For instance, I saw Mexico appearing as the fourth country from the top.
• Now let’s create a column that is a rough estimate of our earnings in each country. Just call it Revenue or something like that. In the first data cell of that column, use a simple formula ito fill it with the Number of Sales times your average sales value (e.g. “=E5*60″). Copy that formula down the entire column (just click in the cell and drag its bottom right corner down).
• Create a 2nd new column called “Margin” and use another formula to fill it with the value of the Revenue column minus the Cost value (for me, that became “=G5-D5″). Again, copy it down for all cells in that column. This Margin column is essential, as it shows us whether we are making money or losing money. Hint: negative values are bad
• To make the negative values stand out more, I use Conditional Formatting (Formats menu) to set the background of values < 0 to red.

The result:

Now take a close look at the countries with a red Margin box, especially the ones near the top and the ones where you are loosing a lot of money. Try sorting on this new Margin column to quickly find the biggest money wasters.

How to use this information?

As promised in the introduction, I have shown you how to turn the raw geographic data into actionable information. But what action should you take?
Should you modify your Campaign settings to remove the “bad” countries and stop advertising there? Or should you try to improve your sales process for those countries? In other words, to fix your negative margins, do you fix the Cost side or the Revenue side?

The easy way out is to remove the countries from your Campaign Settings. But before you do, try to think of the reasons you are not selling well in these countries? For example, if sales in Germany are below par, this could be because you are not offering specific local payment methods that are popular in Germany. Or maybe you need to consider translating your product and/or creating a localized “punkt de” website.

Modifying your Campaign Settings

If you do decide to stop advertising in the “red” countries, either permanently or temporarily (while you optimize your sales process), here’s how to modify your Adwords settings. In Adwords, Location settings are at the Campaign level, so you will have to modify these settings separately for each campaign in your account. But don’t worry, there’s a trick in Adwords Editor that lets you copy country settings between campaigns.

For the first campaign I like to modify the Location settings in the online Adwords interface (the bundles and the map make it a bit easier to find the countries):

• Go to the Campaigns tab in your Adwords account.
• Click the first campaign in the navigation bar on the left.
• On the right, go to the Settings tab.
• Under Locations, click the Edit link.

  

• This will open the “Select a Location” pop-up.

  

• Modify the list of locations here, removing your bad countries. Make sure to verify the list of remaining one under “Selected locations”.
• Click Save.

That’s one down. Now if you want to use the same Location settings for other campaigns, I recommend to use Adwords Editor because it lets you copy/paste the settings from one campaign to another:

• Start Adwords Editor and Get Recent Changes.
• On the right, go to the Campaigns tab.
• Select the campaign for which you already modified your Location settings in the online interface.
• Right click that campaign and from the context-menu, select Copy Campaign Targeting.

  

• Select a campaign that you wish to copy the Location settings to.
• At the bottom, to the right of Location Targeting, choose Paste.

  

• Do the same for the other campaigns that need the same targeting. No need to Copy Campaign Targeting again, just hit the Paste link for all of them.

A word of warning though: it may make sense to have different Location settings per campaign. Considering the targeting of your campaigns and products and decide which countries you want to advertise to in each one. If necessary, re-run the above steps to generate a campaign specific Geographic Performance report.

Your results?

Here’s what happened to my Adwords account after I performed the above steps:
Costs dropped, conversion rates increased…

How did it work out for you? Did you discover locations where you were losing money? What happened to your daily costs after modifying your Location Settings?
I would love to hear about your results, just post below.

But after looking at the Conference Schedule, I changed my mind. This could be quite interesting after all.

And of course it’s always fun to meet our ISV friends in person again, drink some beers, play Rock Band, etc…

So Sytske has just registered us for the conference, booked our flight to Dallas and the stay at the Hyatt hotel. Plus we signed up as a Bronze level sponsor.

See you in Dallas!

Here’s some of the first effects I am seeing when using a microsite as the target URL and, more importantly, the Display URL of Google ads.

Book Database

Microsite: www.bookdatabase.com

Music Database

Microsite: www.musicdatabase.com

DVD Database

Microsite: www.dvd-database.com

Obviously, I still need to work on optimizing these pages for conversions.
But for now, I am quite happy with my improved CTRs.

CD delivery companies (we have worked with SwiftCD and CustomCD) are always pushing us to have “Delivery on CD” pre-checked. Understandably, because this is bound to sell more CDs and thus bring them more business. And automatically adding a $10 Priority Support subscription is sure to result in more subscriptions to that service.

Sounds good, doesn’t it? Making more money on each sale, who can say no to that?

Unless…
… the sudden addition of extra costs is putting people off. Some customers may even feel cheated. Sure, one can easily (?) remove the extras from the cart, but that’s all extra steps in your checkout procedure. Overall, making people opt-out on your up-sells may cost you sales.

Of course, it’s all about the bottom line: Will the extra profits per sale compensate for the lost sales?
Now we can all have long discussions about what will happen. And I could easily write several articles about the expected effects.

As always, there’s only one way to find out for sure: An A/B split test.

The test: Cart A vs Cart B

The test is pretty simple. The big blue buy buttons on my product pages (see below), either take the customer to cart Version A or cart Version B.

Version A is the opt-in version. The initial cart only contains the software the user select, then he can optionally add extras like the Delivery on CD and Priority Support.

Version B is the opt-out version. The cart automatically contains both extras, but these can be easily removed using the little red “X” buttons.

The results

After one week of testing and 232 sales counted, these are the results:

• Sign Ups: -2.4%
• Sales: -17.8%
• Average First Purchase: +5.6%
• Total Profits: -12.8%

As you can see, it confirms the expectations: the Average First Purchase went up and Sales decreased. But the extra money made per sale is not nearly enough to compensate for the loss in sales quantity.

What does this mean?

So does this mean we should not automatically add or pre-check extras like CD-Delivery and Support subscriptions?
Well, not like I did it in the above test. But I have not given up yet. Here’s a couple of ideas I would like to test later:

• Test with just the CD or just Support auto-checked. Maybe one of them is causing the lost sales. Looking at last week’s sales I am seeing a lot of CD Delivery sales, but very little Priority Support subscriptions. So most people are removing the support option. Is there hope for a design that has just the CD Delivery auto-added to the cart?
• Make it even easier to opt-out, e.g. by making the “remove from cart” buttons clearer and bigger.
• Offer both options as pre-checked check boxes right in the big Buy box on the product page, so that users can uncheck them even before clicking my big blue buy button.
• Offer a “Premium Pack” option on the product home page, that has both extras included in a bundle, with a separate Buy button and the total price of $69.95 listed right there. We have used a similar solution before for a barcode scanner bundle and that was working well.

And here’s my updated Twitter background: