Domain name investing is a numbers game and some numbers are more important than others.
There are two key numbers when you consider the economics of domain investing: your average sale price and your sell-through rate.
The sale price is self-explanatory. The sell-through rate, however, is a bit more complicated, and a very small change in the rate can have a big impact on a domain investor’s bottom line.
Let’s take a look at these two numbers and how you can use this information to your advantage.
Sell-through Rate Defined
The sell-through rate is the percentage of your portfolio that you sell in a year. Someone with 1,000 domains and a sell-through rate of 1% sells 10 domains per year.
That might seem like a small number but it’s a typical sell-through rate for a domain investor that holds a large portfolio of domains.
Using 1% as a baseline, a small change can have a big impact. Moving the needle to 1.5% is a 50% increase in sales for the year.
Doing the Math
Let’s keep the same domain investor with 1,000 domains in mind. If her sell-through rate is 1.0% and the average sale price is $3,000, she’ll generate $30,000 in sales per year. If her rate moves up to just 1.5%, the same investor grosses $45,000 for the year.
It’s a significant difference for improving a statistic from 1.0% to 1.5%, a seemingly trivial amount.
With a bit of optimization and effort, investors can move their portfolio to a 1.5% or better sell-through rate. This changes the economics of their portfolio and allows them to grow their investment returns.
How to Improve the Sell-through Rate
If it can make such a difference in your profits, how can you improve your sell-through rate?
Every domain sale counts. Going from 1.0% to 1.5% on a 1,000 domain portfolio is an additional five domains sold per year. Getting one or two extra sales from various marketplaces or networks adds up.
With this in mind, it’s important to fill up your sales funnel. Here are ways to make sure your domains reach the most possible buyers:
- List domains on distributed networks – SedoMLS and AfternicDLS are domain name sales networks that get your domains in front of domain buyers on many websites. For example, when a domain is listed for sale on SedoMLS and someone searches for it at Namecheap, Namecheap shows the domain name to the searcher and they can buy it through Namecheap. Listing domains on distributed networks like this is the biggest source of sales for many domain investors.
- List on other marketplaces – While distributed networks like Sedo and Afternic have the broadest reach, also take the time to list your domains on smaller marketplaces. It takes very little effort but can help you increase your sell-through rate. It takes just a few minutes to list your portfolio with DomainAgents, for example. Squadhelp is another marketplace to consider.
- Point your domains to for-sale landers – People generally find domains for sale in one of two ways. One is they find it listed in a marketplace or distributed marketplace listing. The other is that they type the domain into their browser and see a web page that tells them the domain is for sale. It’s critical that your domains point to landing pages that say the domains are for sale. Optimize those landers, too. They should have a simple form people can fill out to inquire about the domain name. Bonus points for including a phone number on the landing page.
- Use buy-now prices – eBay has changed over the years. In the beginning, everything on eBay was sold in an auction. Over time, people got tired of wasting their time in auctions so eBay offered “buy now” prices in which items sell for fixed prices. Similarly, people don’t like to waste their time when buying a domain. They are much more likely to click the buy button if there’s a price listed for the domain rather than asking them to make an offer. For most domain inventory, it makes sense to list a price. It will help you avoid tire kickers and close more sales.
- Do outbound – A final way to fill up your sales funnel is to do outbound sales. This is time-consuming and something that most domain investors don’t do. But some investors have found that it’s worth taking the time to contact relevant buyers for their domains.
Filling the top of the funnel is necessary, but there’s another key step to increasing your sell-through rate: follow up!
Domain inquiries can go cold. Set up a system to follow up with potential domain buyers from time-to-time. Maybe the price was too much for the buyer when they first inquired but their circumstances have changed. Or, perhaps you can close a sale by lowering your price a bit.
Put it into Action
There’s a clear bottom-line value to increasing your sell-through rate, even by half of a percent. It won’t happen magically, though. Put the action-items in this post into your plan for this year and see what impact it has on your sell-through rate — and bank account!
The post The Importance of a Domain Name Sell-Through Rate appeared first on Namecheap Blog.