Conversion ratios are not the only measure of success for your Referrer programs. Your RefID programs need to support what you are spending on them so your product margin on the sales generated must be more than you are spending on the links. A very expensive RefID link with a great conversion ratio might still have a negative returnI. To get truly accurate results you can download order details and analyze your margin by looking at the margin on each product sold however that sort of analysis is beyond the scope of CommerceCM. For a rough analysis, most merchants are aware of their average product markup and can do some quick calculations.
Let us take a look at the data we have from our sample RefID.
Total product sales in Canadian dollars were $84. We will assume that shipping and tax are neutral. With a 40% margin after transaction fees, the merchant has $33.60 C profit on the two orders. Analyzing the US sales, (not shown here), shows total product sales of $639.60 US which gives us a profit of $255.84 US.
The RefID is for an Overture term which we pay for in US dollars. We need to convert the Canadian profit to US, for total profit of $284.30 US.
Our cost from Overture for the month is $0.27 per click. Since there were 274 clicks, we paid $73.98US to get those 20 sales. Since the profit is substantially higher than the cost, then we know that we can continue to support this expenditure.
As you get more familiar with your margins, average online sales and average profit, you will be able to tell at a glance which RefID programs are most effective for you.