basics of website visitor conversion

8/14/2019 Basics of Website Visitor Conversion

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The Basics of WebsiteVisitor Conversion

A Whitepaper from TopicaJanuary 2007


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The Basics of Website Visitor Conversion 2

www.topica.com

The Basics of Website Visitor Conversion

Table of Contents

A. Introduction.................................................................................3

B. The Conversion Equation..............................................................4

C. The Components of Website Visitor Conversion............................5

C.1. Acquire

C.1.1. Capturing the Lead...................................................5

C.1.2. Qualification Data.....................................................6

C.1.3. An Automated and Effective Welcome.........................7

C.2. Convert

C.2.1. Buyers Decision-Making Process................................8

C.2.2. Work with Available Information.................................9

C.2.3. Keep the Conversation 2-Way....................................9

C.2.4. Targeted and Relevant Conversion Campaigns............11

C.3. Grow

C.3.1. After Purchase Up-sell Opportunities.........................11

C.3.2. Increase Customer Lifetime Value.............................12

D. Summary....................................................................................14

E. The Topica Solution.....................................................................14


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Editorial Update:The Basics of Website Conversion Whitepaper was initially launched on May 2006. Due to its success,Topica is releasing an updated version to guide small and medium sized businesses with their onlinemarketing plans for the holiday season.

Due to the dynamic nature of the e-commerce industry, statistics were also updated.

A. Introduction

E-commerce has been a powerful marketing channel over the past few years. eMarketer estimates thatretail e-commercesales will increase anaverage 18.6% peryear between 2005and 2009. As moreconsumers utilize the

internet to purchasegoods and services,

small and mid-sizedbusinesses are

finding it appealingto do businesses onthe Internet. In fact,according to the

Yankee Group, over2 million small andmid-sized businessesdo business onlinetoday.

This is all very goodnews to those sellingadvertising and paid search, or operating affiliate networks and other traffic-generating services. Withmore businesses moving onto the Web and actively marketing online, there is also increasing competitionfor available advertising inventory. This trend is particularly affecting small and mid-sized companies, astheir budgets are more constrained and, therefore, their options for purchasing online advertising aregenerally limited. As a result, demand for popular advertising inventory is on the rise, and so are prices.According to eMarketeradvertisers spent an average of $71.51 per user, which eMarketer projects willincrease to $88.28 in (2006) and will inch close to the $100 per user mark in 2007.*.

But price increases are not the only trend negatively affecting the online marketers success. Not

surprisingly, Forester Research has found that with more ads, performance of online programs isdecreasing and resulting in fewer conversions of first time visitors and higher shopping cart abandonmentrates. Consequently, marketers have to spend more to drive traffic to their Web sites and, at the sametime, are faced with lower conversion rates, all leading to an ever increasing cost per customer.**

*Source: eMarketer US Online Ad Spending: Peak or Plateau, October 29, 2006


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**It is recognized that not all businesses are interested in strictly transacting sales online. For simplicity, thisreport uses the term customer; however, these concepts can be applied to donors, sponsors, clients, members,or any other relationship a site might be striving to create.

B. The Conversion Equation

Currently only 1% - 3% of all website visitors convert into customers. How does that affect a sitesbottom line? 97% of the traffic driven to a website will leave without ever taking action, if the onlyoption to engage is to complete a purchase. For example, assume a company is spending $4500 on anadvertising campaign and is generating 3000 additional site visits, the campaign results might look likethis:

Marketing budget: $4,500Visitors (clicks) generated: 3000Cost per website visitor: $1.50

Visitor conversion rate: 3%Customers generated: 90Cost per customer: $50

* Each new customer must spend $50 just for the campaign to break-even.

There are three areas where this model can be influenced.

Increase the marketing budget. Spending more to generate more traffic is what many companiesare doing. It is simple thinking: more visitors will equal more leads, which will create morecustomers. However, while just throwing money at the problem is often the easiest solution, itdoes nothing to solve the inefficiencies of the model. It wont lower the cost per click, lead, or

customer. Lower the cost per visitor. This can be done through renegotiating advertising costs for

advertising placements or optimizing advertising campaigns to achieve higher click rates.This ismore strategic in thinking, as it can reduce costs throughout the model. Yet with the increasedcompetition for advertising online, only those companies with large online budgets or strong

advertising agency ties have enough leverage to really negotiate for lower costs. For thosecompanies competing for paid search terms and targeted, niche display advertising, there will belittle success in this area. On the other hand, tweaking the creative/copy can be done by any sizecompany and should be done as the company learns more about its target customers but willnot make dramatic change in the cost per customer.

Improve visitor conversion rates: In the model above, if the conversion rate could be improvedby only 1%, the number of customers would be increased to 120 (33% increase) and the cost percustomer would decrease to $37.50 (33% decrease).

By focusing on improving conversion rates, a company can affect the overall success of online marketingchannels, make more money from current advertising and traffic-generation, and increase the flow of newcustomers to which it can continue to market and encourage repeat business.


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More Leads: There are ways to add onlineleads to the companys prospect databaseand email campaigns that are not from trafficon the company website. One of the mosteffective ways is through co-registration.Co-reg is the placing of a sign-up form foryour email newsletters on a network of sitesacross the Internet. When a subscriberrequests information from one of these sites,he is offered some marketing explanation of

your offering and the option to sign-up foryour communications as well. This can be avery effective way of augmenting your ownsites lead acquisition plan.

C. The Components of Website Visitor Conversion

C.1. Acquire

C.1.1. Capturing the LeadCompanies operating on the Web are driving traffic to their site in myriad ways: paid-search, display

advertising, sponsoring industry newsletters and blogs, organic search, and more. The goal of all thiseffort to get traffic to the company website or store is to create new customers, but only a small

percentage of these visitors are ready to convert in theirfirst visit. So, the first step to a solid conversion plan is toacquire leads to capture those visitors not quite readyto commit, yet that could be convinced to purchase in the

long term. ALead is the identity of a person or entitypotentially interested in purchasing a product of service,according to Wikipedia.

While these visitors are not ready to convert during theirvisit, their interest level is high enough to request further

information. This interest can be leveraged by offering avalue exchange. This is the offer of a newsletter, specialoffers, or other incentives that might be valuable to thesite visitors in exchange for information thats valuable tothe business namely, information about the visitor.


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Value Privacy: Make visitors comfortablewith providing their information by assuringthem that their information will not beshared, rented or sold. Place a link to thecompany privacy policy next to any leadcapture form. Most importantly, adhere tothat policy to protect the companysreputation and sales.

Recipe for Success: Consider the wildpopularity of grocery store membership/clubcards and music fan clubs and create amembers only program. Provide thesebenefits to those that submit a lead form.Allow only these members to receive emailpre-announcements of sales or newproducts, or create a membership numberthat allows them to receive a perk like freeshipping on a certain order size. Toencourage return business, incorporate anoffer of membership as a follow-up email toany purchasers not in the program.

These efforts should be maximized by placing lead capture forms on the targeted landing pages wheretraffic arrives, as well as strategically throughout the company website. The most effective of these leadcapture forms ask for email addresses andget permission to email on a regular basis. Subscriber opt-informs can offer regular email updates on relevant industry tips and advice (e.g. a ski shop might offer freesnow reports), sneak peeks at latest merchandise, or email-only promotional offers.

C.1.2. Qualification DataIn addition, these forms should be used to capture usefuldemographic information about the lead. Deciding whatinformation to request in the forms may seem like a simpletask, but careful, thoughtful planning will reap futurerewards. As a company grows its list of leads, it willinevitably want to segment that list and target potentialcustomers with specific email offers or information. But inorder to segment out a certain audience, a business must

have the data on the subscribers to do so. If, for example, itis important for a clothing retailer to segment promotions tomen and women, then gender information should be

collected when the subscriber signs-up. Efforts made earlyon to collect useful information will pay off later withhigher open rates of more relevant email campaigns andincreased sales. A few other demographic to be considered:

Physical address especially if direct mail is part ofthe marketing mix

Purchase timeframe Product interest Phone number very hard to capture real data

unless potential customer is ready to buy Industry particularly for business leads

How much of this information should be required in theform? There are a couple schools-of-thought on this subject. For some, its better to require just theabsolutely necessary; perhaps thats email address and product interest. On this side is the argument thatmore information can be gathered later, and its more important to get subscribers into the database andbegin marketing to them. On the other side is the position that marketing should be done only to thosewilling to engage to put some informational skin in the game. The answer, therefore, is to test and seewhat kinds of lead acquisition rates can be achieved. If the numbers arent matching the goals set, thenthe forms can be made less or more restrictive.


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C.1.3. An Automated and Effective WelcomeIn addition to collecting the right information, a lead acquisition plan should include a process forproviding an immediate response to the potential customer who subscribes.

This welcome message should reinforce the companys marketing message, set expectations for thetype and frequency of communications, remind them that they have opted to allow the company to send

informational emails, and provide them a chance to confirm that email subscription. This will lay thegroundwork for successful conversion marketing campaigns to come.

Tips for creating an effective lead acquisition process:

Make the most of paid traffic being driven to the company site or targeted landing pages Plan ahead and ensure that the correct information is being gathered Create relevant and compelling offers Respond immediately to each person that provides contact information


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Stay CAN-SPAM Compliant:

The CAN-SPAM Act of 2003 took emailmarketing a big step forward. Thelegislation cracked down on unsolicitedemail and provided rules to ensurebusinesses are sending only legitimate,compliant email messages: Dont send false or misleading

information Dont email after a recipient opts out or

objects to the emails Dont harvest email addresses from the

Internet or generate them randomly Dont send commercial email from a

computer you are not allowed to access Include a valid postal address and an

opt-out process with every email

Include a warning label for explicitcontent in the Subject line

C.2. Convert

C.2.1. Buyers Decision-Making ProcessOnce the lead acquisition plan is in place, similar thought must be given to the initial conversion process the systematic nurturing of these leads so that they can be convinced to make the first purchase.

Creating an intentional system of conversion requires an understanding of the buyers decision-makingprocess. The process of deciding to make a purchase follows five key steps: Needs Recognition/ProblemAwareness, Information Gathering, Evaluation of Alternatives, Purchase, and Post-Purchase Evaluation.

On smaller purchases the decision maker will often skipsteps in this model from needs recognition toevaluation of alternatives or even straight to thepurchase. But in larger or more meaningful purchases,and particularly with merchants that he has not donebusiness with before, a prospective customer may spendquite some time and/or effort in the informationcollecting and evaluation steps. This decision processapplies to all types of purchases products, service,information, entertainment, or even causes.

Online advertising seeks to elevate the valueproposition of a particular brand to those people in theNeeds Recognition/Problem Awareness andInformation Gathering phases. And, it is during theInformation Gathering and Evaluation of Alternatives

steps of the process that the online marketer can makethe most impact on conversion of traffic into customers.Not coincidentally, prospective customers are likely to


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request information through an online form while they are in this phase. So, heres the opportunity:

- Provide relevant information,- Create rapport,- Present compelling and relevant product or service options

so that the lead can be moved through the purchase decision-making process from information gathering,to evaluation, to purchase. Throughout this process, the more that can be learned about the prospect, thebetter the communications can be targeted to close the sale and the more likely that a promotion is offeredthat fits the desires of that prospect. The goal should be to actively manage the purchase decision processby providing relevant information to prospective customers.

C.2.2. Work with Available InformationIf the lead acquisition efforts were done well, a company may be able to send targeted email campaignsright from the start. For example, a music retailer may be able to segment its list based on genre of

musical interest, if that was part of the lead capture form. Otherwise, the conversion efforts may have tobegin with generic newsletters, but even these, if written and designed well, can create trust, impartknowledge, and present options for purchase.

C.2.3. Keep the Conversation 2-WayThrough the addition of polls and surveys into regular email campaigns, online marketers can increasetheir knowledge about prospective customers. The purpose of these polls should focus on specificdemographic information, not market research that can be achieved elsewhere such as, what new

piece of equipment are you likely to buy this windsurfing season? or when do you expect to take yournext international vacation? This information should be captured and added as a demographic in thedatabase. This can not only help with ongoing targeting of these prospects, but can also allow marketersto create automated promotional campaigns based on that new information.


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Example of Behavioral Targeted Autoresponder:

Other ways to gather additional information about prospects include analyzing click-behavior, drivingsubscribers to forms with further qualifying questions, and capturing shopping-cart abandonment data.

Behavioral targeting is a powerful segmentation tool. It allows marketers to target prospectsbased on the links they have clicked or pages they have visited and non-openers of email. Forexample, an investment online publisher may promote different analyst reports to those whoclicked a link titled risk-averse money management differently than those that clicked hotstock picks. Or, if a particular Subject line didnt garner the opens that were expected for acampaign, re-working the Subject line and re-sending to non-openers may increase the statisticsfrom the campaign dramatically.

1. Newsletter is sent tosubscriber containinglinks to numerous audiosamples.

2. When subscriberclicks to listen to a song,genre preference data isimmediately sent back tothe database.

3. Selection triggersAutoresponder, offeringmore selections from thesame musical genre.

4. Subscriber makespurchase.


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One Huge Marketing Vehicle: eMarketer estimates that 147 million people in the U.S. useemail, almost every day.

Driving subscribers to provide more information in forms like update your profile can also behelpful in continually learning more about prospective customers. Pre-populating the form withthe information you already have will make it easier on the prospective customer to simply addentries for qualifying questions. Promotional offers can be offered as an incentive to completingthis form.

Shopping-cart abandonment data can be captured when a user leaves a purchase mid-transaction.

Email follow-ups can relay that the information has been stored for the subscribers convenienceand can offer contact information for customer support in case there are any additional questions.Discounts can also be offered to encourage the sale.

C.2.4. Targeted and Relevant Conversion CampaignsWith a strong and flexible database supporting online marketing efforts, marketers can make the most ofthese data through a wide-variety of targeted campaigns. Ultimately, this is the goal to understand theprospective customer, his interests, purchase intent and timeframe so that the right offer can be presentedto the right customer at the right time.

Tips for creating an effective lead conversion process:

The more data that you collect about your prospects, the better youll be able to offer them

relevant promotions or information. Visit the Topica Resource Center at www.topica.com/resources to download Elements of

Successful Email Messages for tips on creating effective email campaigns.

Keep it simple it might be tempting to create automatic responses to trigger on every event onthe website and actions to the email, but keep in mind that subscribers can get fatigued by too

much quality communications. Prospects will definitely respond to over-emailing throughunsubscribes and complaints.

C.3. Grow

Recent research conducted by Bain & Company suggests that increasing a customer retention rate by only5% can increase the average customer lifetime value by 35% to 95%. As the old marketing axiom goes,its easier to keep a customer than to get a new one. With a strategic lead acquisition and conversionmarketing plan in place, customer retention should be the final communications piece to help a companyreally grow.

C.3.1. Post-Purchase Up-Sell OpportunitiesThe best time to start marketing to customers is immediately after their purchase. Once a person hascompleted a purchase, he enters the final stage of the buying decision process: post-purchase evaluation.In this phase, customers may react in a variety of ways. Some customers will be reconsidering theirpurchase and may, in some cases, even be suffering from buyers remorse. On the other end of thespectrum, others might be feeling a buyers high.

It is the job of the online marketer to help the customer feel confident he has chosen both the product andmerchant wisely. This can be done through diligent follow up to the sale. Communications should at a


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minimum include a sincere thank you, any pertinent information on shipping or accessing thepurchased information, and contact information for assistance, if needed.

In addition, effective post-transaction communications will not only show that the merchant understandsthe customers desires and needs, but are also a great up-sell opportunity. They can promote compatibleor similar products that might also suit the customer, at a time when the customer is in the buying mood.

Automating these communications can promote add-on sales that can also greatly affect the bottom line.

C.3.2. Increase Customer Lifetime ValueAs mentioned, it is more expensive to gain a new customer than to keep a current customer. Theknowledge gained during the lead acquisition and conversion marketing phases can help drive long termcustomer retention programs. Because the database contains all the demographic information gatheredthroughout the process, in addition to purchase information, customer promotions and communicationscan be targeted even more effectively. The goal is to provide relevant and targeted content that addresses

the customers interests and encourages future purchases both by being a trusted-source and by providing


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incentives to purchase. For example, customer campaigns could be targeted to customers who havepurchased a particular product only once, or customers that havent purchased for 6-months, or frequentpurchasers in addition to demographic targeting that allows for product-type targeting. A targetedcustomer promotion might look like this:

Tips for effectively converting customers into repeat buyers:

Know thy customer use data gathered both prior to the sale and the purchase information totarget add-on, complementary or repeat purchases.

Continue to work on rapport and building trust. Dont let too much time lapse between purchases; provide incentives to draw customers back

onto the site. If the purchase is of a service or membership and there is an expiration date, be sure to automate

email reminders close to the expiration date that prompt and sell renewals.


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D. Summary

With increasing competition for popular advertising and lower conversion rates on the rise, marketerssensitive to controlling and reducing their cost per customer need to focus on optimizing conversion.To increase conversion, it is important to isolate the share of the traffic that is not ready to convert yet, buthas developed a high interest level to request further information while moving towards a purchase at a

later time. This can be accomplished through data collection on various pages of the website or onspecial landing pages, in combination with instantaneous messaging leveraging the provided data.

By providing relevant information to interested site visitors, online marketers have the chance to achievedramatic improvements of their conversion rate, cost per customer, and marketing ROI. Further, by usingthe information gathered during the lead acquisition and conversion processes, businesses can grow

ongoing revenue by creating both add-on sales and repeat business.

E. The Topica Solution

Topica helps small and medium sized businesses acquire, manage and convert online leads into

customers. Over 4000 businesses in over 20 countries have chosen Topica including Donor Digital,Vitamins.com, WebTickets.com, and divisions of leading organizations, such as International Data Group(IDG), IBM, Corp. and Hachette Publications.

Interested in implementing any of the suggestions in this report? Let a Topica representative

explain how to create similar initiatives for your company. Please call (415) 344-3878 or visit

www.topica.com.

Topicas team of experts continually produces industry-leading webinars, articles and best practicestrends to help companies build and manage their own successful conversion marketing programs. Toreceive the latest updates on email and conversion marketing visit Topicas Resource Center atwww.topica.com/resources.

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