Category Archives: channeladvisor

Lead Conversion at the Heart of RichFX Acquisition by ChannelAdvisor

ChannelAdvisor CEO, Scot Wingo, wrote a great post today about their acquisition of RichFX. At first blush, RichFX appears to be all about sexy rich media sizzle (PDF), but Scot’s post zeros in on the meat he’s after: lead conversions.

RichFX brings to ChannelAdvisor a stable of top internet retailers, but more importantly, brings a suite of rich solutions that grow sales conversions. Some examples Scot provided are:

Scot calls the category “conversion enhancers” — I think his marketing guys will find a better term. He then does some algebraic simplification to show why conversion rates are so important, resulting in:

Return on Marketing Spend (ROS) = Conversion Rate (CR) * Average Order Value (AOV) / Cost Per Click

Therefore, ROS goes up when CR or AOV go up, or CPC goes down. ChannelAdvisor’s suite already had AOV and CPC optimize tools. The RichFX acquisition completes the trifecta, ramping CR (and further boosting AOV).

Scot’s post concludes with a couple examples with real dollars worth reviewing. Congrats Scot on the acquisition and the greater capability to maximize etailer ROS…

A Double Dash of Dingo…er, Wingo

Scot Wingo is one of my all-time favorite entrepreneurs (and current Inflexion Advisor). It doesn’t hurt that he was one of the first entrepreneurs I backed (AuctionRover) and proceeded to knock it out of the park in less than a year (acquired by GoTo/Overture). He builds great teams, a passionate culture and eats competitors for breakfast. I think he’s also the guy who launched the “startup office dog” trend with his border collie Mack — a 3-time serial dogpreneur.

Yesterday Wingo came up a couple times.

First, because his latest company, ChannelAdvisor, acquired competitor Marketworks — giving the combined entity $2.5 billion of gross merchandise value (GMV). If accurate, that would be about 5% of eBay’s $52.5 billion global GMV! Congrats Scot, Aris, Michael and the whole CA crew on your latest step towards world domination.

Second, when talking with a current portfolio company I remembered one of my early discussions with Scot while starting ChannelAdvisor (CA). It was the worst time in the market and being profitable was even more critical than it is today. CA wasn’t profitable, but Scot came up with a great way to demonstrate progress towards that goal. Specifically, Scot started reporting CA “divisions” based upon the categories of products they were managing. For example, consumer electronics and luggage may have been profitable; whereas tools and home products were not. Thus, being profitable in 2 of 4 divisions was better than being profitable in 0 of 1 companies. This way of telling the CA story was a lot more palatable, and helped investors understand a path to company profitability. Some might call it “spin” and the idea of “divisions” in an early-stage company seemed crazy, but it really helped align company resources and tell the CA story. From that story forward, ChannelAdvisor has secured over $60M in funding, grown many times over, acquired its closest competitor and is the leader in auction management.

Does your startup have profitable “divisions” that get lost in the broader story?

Related images: scot wingo, aris buinevicius, michael jones, auctionrover, channeladvisor, marketworks

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