Setting the Stage
Conversion rates for online advertising seem dismal. The chance that any person who receives an advertising message will click through to your site is a fraction of a percentage, and the percentage of those who click though who convert is a fraction of a percentage.
The common practice is to flood the market with advertising, maximizing reach, so that the fraction of a fraction adds up to significant sales. A more cost-effective practice would be to improve those percentages.
The author "sells" statistics for a bit - indicating that because of the unique nature of the Web (everything is traceable) and the large numbers involved, monitoring your Web site traffic patterns can have highly relevant results, and he lauds analyzing this data, the behavior of your actual audience, on your actual site, performing actual tasks, as being far more relevant than surveys, focus groups, or laboratory experiments.
The Three Keys to Online Marketing
The author does the usual "funnel" diagram - worth noting because his terms are a little different than I've seen in other sources:
- Acquisition brings people to your site - converting some "browsers" into "visitors"
- Conversion persuades them to take an action - converting some "visitors" into "actors"
- Retention establishes on ongoing relationship - converting some "actors" into "clients"
Acquisition
This activity focuses on getting traffic to your Web site, to create an awareness of your company and products, preferably among a pregnant market demographic.
Methods for online acquisition are:
- SEO - Positioning your site so that people will find it in search engines when seeking information on a topic of mutual interest
- Advertising - Paid promotion on other Web sites, whether pay-per-view or pay-per-click
- Affiliation - More of an ongoing relationship with other sites, where the operator earns a commission
- E-mail - Sending messages to potential customer to direct them to your site. It can be to a cold list of unfamiliar persons or a house list of existing customers (or those who expressed interest in being marketed)
- Promotion - Getting third parties who have no commercial interest (i.e., they aren't being paid by you) to promote your company or products to others. Blogs and social networking fall into this category.
Traditional (offline) acquisition methods are not to be abandoned. Brand awareness offline increases the chance that an individual will recall your company and seek you out of their own accord.
- Advertising
- PR and Media Coverage
- Industry Analysis
- Trade Shows and Events
- POS promotions
- Client referrals
- Outdoor advertising
- Promotional items
- Direct marketing
EN: Traditional media also improves the esteem of your company in the eyes of potential customers. Companies that market offline are seen as more reliable and trustworthy than pure online players,
Conversion
Conversion is the main topic of this book: it is taking a person who has expressed an interest (by visiting your Web site) and getting them to perform an action that is beneficial to your organization. The action is traditional a purchase, but it can be other things as well - providing information, downloading additional information, or just exploring your site.
The core statistic is the conversion rate - the percentage of visitors who actually perform this desired action. Conversion rates vary differently among industries and competitors, such that a "standard" rate is not a reliable benchmark. Instead, you will have to depend on before-and-after metrics within your own site.
Conversion does not occur in a vacuum - there are a number of factors that may have nothing to do with your site:
- Brand strength - The "faith" visitors put in your brand by virtue of their previous brand exposure
- Commoditization - The degree to which your products are regarded as undifferentiated by the market
- Cycles - Certain products have a cyclical (typically seasonal) demand
- Channel Preferences - Certain customers have a preferred channel for certain products, and simply prefer to buy offline.
- Commitment - Not everyone who visits your site has the intention to commit an action
- Anxiety - There si still a tendency for customers to have misgivings about the online medium, and this is largely independent and difficult to influence
Offline conversion rates cannot be applied to the online medium - it's not an apples-to-apples comparison.
Retention
Retention is the conversion of a one-time buyer into a regular customer, and this is critical to the long-term success of an organization. Retention programs (should) start immediately upon completion of the action, and involve communication in order to encourage future interaction.
It's worth noting that the company lacks power in the customer relationship: the decision to interact again is solely the customer's, and there are increasing constraints on the company's ability even to solicit them in the future. You must obtain permission to contact them in the future, though it is found that as a relationship progresses, that permission will be easier to come by.
Some of the methods for customer communication are:
- E-mail - The most obvious form of customer communication, but e-mail has been abused to such a degree that it has lost much of its value, and it is increasingly difficult to get a customer to accept (and then even read) e-mail from a company
- Newsletters - Are like e-mail, except that they are sent on a regular schedule to a broad audience. The more complex the product, and the greater the need for ongoing support, the more amenable customers will be to receiving a newsletter.
- Blogs and Feeds - The company can publish a blog or a newsfeed and encourage customers to subscribe. This is similar to a newsletter, though it's more of a "pull" then a "push" medium.
- Rewards Programs - Using a reward of "points" system to encourage repeated use can give a customer an incentive to remain engaged
Of importance: every interaction with a customer contributes to your success in maintaining an ongoing relationship with the customer - but it can also be damaging to your relationship.
The Myth of Perfect Conversion
The goal of a 100% conversion rate is a myth. This is largely because with Web site visitors, there are a significant proportion who are not prepared to take an action, regardless of what you do to incent them.
Fundamentally, divide the audience into three segments:
- The "no" customer who will never take the desired action - They may be a casual surfer or someone doing research or competitive analysis, and are not "real" prospects
- The "yes" customer who will always take the action - This category have come to your site with a strong intention to do something. They do not need further persuasion (though you msut take care not to dissuade them)
- The "maybe" who is on the fence - This category has some latent interest and the ability to act, and will make their decision based on their experience of your site.
The third group is the focus of your efforts, however, the first two define a floor and ceiling for your conversion rate: You will always get the "yes" customers (unless you do something painfully wrong) and you will never get the "no" customers.
It's also worth noting the "conversion" may not happen immediately - it may be delayed for hours, months, or years.
Conversion as the Weak Link
In the marketing world, a lot of time and resources are spent on reaching potential customers, and customer retention has come into vogue over the past couple of decades, but little attention has been paid to conversion - so there is a distinct lack of tools or theory that are available presently.
However, the author sees conversion as the "new battlefield" for the coming years, and the companies that do it ell will reap the reward of their efforts.