The Hidden Benefits Of Indirect Revenue

One Stop Shop

Revenue -- such music to an entrepreneur’s ears!

After all, it feels extremely great to know that implementing a strategy results in revenue to your company, right?

But did you know that revenue can be achieved directly and indirectly?

You ran an ad campaign and your target customers purchased from you so you got $13,000 in sales? That’s direct revenue.

You implemented an abandoned cart recovery campaign so you made an extra $5,000 in profit? That’s direct revenue. Direct revenue is the obvious result of your marketing strategies: an increase in profit.

Beyond direct revenue, though, there’s another magical realm where fairies, unicorns, Doctor Strange and indirect revenue exist.

And it’s good if you implement a marketing strategy that results in direct revenue. But isn’t it better if you can run a strategy that achieves both direct and indirect revenue at the same time because it’s optimized for both?

Your time, investment and efforts will be the same but you get to hit two birds with one stone. In this week’s podcast, I’m going to help you achieve exactly this.

In the spirit of having your cake and eating it, too, the inspiration to share the concept of indirect revenue came when I was doing a case study for one of Conversio’s customers, Pastreez, an online shop selling beautiful and yummy macarons (French cookies).

As a Conversio client, Pastreez’ lead magnet is simple and enticing enough: sign up at their website pop-up for free so you can receive 7 pieces of macarons for free. Once they’ve received the voucher for the free macarons, they’ll also be included in a nurturing email campaign to encourage sales over time.

In this scenario, the direct revenue is simple. For example, if you’ve sent 100 emails and made $500 from them, then $500 is the direct revenue.

Now, checking at the case study of Pastreez, I’ve noticed that the direct revenue seemed promising -- an additional $10,000 in direct revenue for them, spread over ~2500 email recipients in a 3-part email campaign is great, right?

But that wasn’t the end of it. There were also extra benefits in the name of indirect benefit that I’ve monitored:

1. Higher Average Order Value

Customers who went through this specific email campaign by Conversio had 23.57% higher Average Order Value (AOV) compared to customers who didn’t experience this campaign.

This is massively beneficial in terms of boosting Customer Lifetime Value and direct revenue. Just imagine: if your AOV is $300, and it’s increased by 23.57%, you get to have an additional $70 in sales -- for every customer!

2. Higher Repeat Purchase Rate

Another hidden benefit of indirect revenue is the increase of repeat purchase rate: customers who experienced this specific email campaign made 2.56% more purchases compared to the rest of the brand’s customers.

This is amazing news because a) it’s easier to sell to engaged customers who purchase repeatedly; and, b) repeat customers tend to spend 3%-15% more. So in a way, this indirect revenue affects your direct revenue, too.

3. Improved Cart Recovery Rate

Sure, 10.7% of customers who receive recovery emails return to make a purchase. But Pastreez’ number was off-the-charts: they had a 50% increase of the overall cart recovery rate!

This means that the overall email campaign was effective over the long run since it had a momentum going that encouraged the prospects to buy from them, even though it took two to three emails to make this happen.

Figuring out the hidden benefits also allows you to decide on whether or not a strategy is worth investing on: since you’ll be considering at least two metrics that’ll help you determine your ROI, you can make better investment decisions so your company can move forward.

Also, indirect revenue encourages you to look beyond the obvious metric -- sales in terms of numbers -- so you can also look into optimizing your email campaigns for both direct and indirect revenue.

So there you have it. I hope this video helps you with your company’s growth as a brand and as a business! Any other insights you’d like to add? Let me know in the comments below. Chat to you next week! Cheers.

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Music featured in this episode was "Celery Man" by Birocratic and can be found at @birocratic. This podcast was produced by comealivecreative.com.