How a digital marketing ‘wizard’ doubled sales
without using magic
IN this column I aim to develop your understanding of conversion rates and show how their improvement can significantly enhance the bottom-line contribution of a website.
I have previously explored branding in the digital medium and, more recently, optimising search engine marketing advertising based on return on advertising spend (ROAS). These topics were mainly concerned with paid media.
Although not being paid media as such (while still being well paid for!), the sales effectiveness of corporate and associated brand/product websites is very much the responsibility of the digital marketer.
In the same way that it is possible to track and optimise digital media response, it is possible to track and optimise the customer ‘pre-purchase’ environment within a website.
To illustrate in real terms, I have summarised the experiences of Netspace Online Systems, a leading Australian owned and operated provider of broadband ADSL services. Netspace has significantly improved its online sales conversion rate by implementing an interactive broadband plan ‘wizard’ in the pre-purchase section of its website.
The digital marketing funnel
As prospective customers are attracted and pass through a funnel (‘funnel’ because as customers travel through they become fewer in number as they self-select out or are filtered out by the site), there are three segments to be measured and optimised:
- Advertising response – Sources of prospective customers, targeting opportunities, cost effectiveness, volume and conversion potential of each source of prospects pouring into the pre-purchase environment.
- Pre-purchase – The online environment created by marketers to meet-and-greet customers as they engage in information gathering and decision making; generally, a purpose-built landing page or website home page. The ideal scenario is for as many prospects as possible to go from the pre-purchase environment to the point of purchase.
- Purchase – This is the revenue-generating section of the funnel, which starts when a prospect clicks the ‘sign me up’ or ‘buy now’ button and ends when the customer successfully completes the sales transaction.
Industry benchmarking
Some readily available industry conversion rates are as follows:
- Advertising response – The average click rate (clicks divided by media impressions/searches) for search engine marketing is around 18% across all sectors, while for search engine optimisation it is around 4%. In stark contrast are banner ads, with a click rate of 0.62%.
(Refer to http://www.doubleclick.com/us/knowledge_central/ documents/trend_reports/dc_q304adservingtrends_0411.pdf and http://www.sempo.org/articles/organic.php)
- Pre-purchase and purchase conversion – These two generally get lumped together as a single ‘sales conversion’ rate. A study of conversion rates published by Fireclick in 2004 concluded that on average 2.3% of visits resulted in a purchase. Refer to http://www.clickz.com/experts/crm/traffic/article.php/3362641)
- A recent Comscore study of search engine click-through and purchase patterns over time found:
- 85% of conversions occurred during a latent (or non-web search) session.
- 15% of online purchases took place immediately following a web search.
- Overall, nearly 40% of all purchases occurred 5-12 weeks after the initial web search was conducted.
(Refer to http://www.comscore.com/press/release.asp?press=526 )
It is reasonably easy to determine how the digital media is performing using adserving data. It is more complicated to determine pre-purchase conversion rates.
Where to start?
It is not impossible, however, and it begins with an analysis of web server/site logs. Thankfully, there are some great tools available to assist in gathering suitable data from which to benchmark conversion rates and other relevant metrics, such as:
- Sources of visitors to your site (proportion of bookmark/direct, search engine referred, links from other sites).
- Unique visits (new and repeat) as a proportion of total visits.
- Product/category activity (page views, unique visits), usage of calculators/simulators, downloads of product specifications, email inquiries about technicalities, etc, as a proportion of all visits.
- Online sales activities (start through to confirmation of transaction, online inquiries/leads) as a proportion of total visits and pre-purchase activities.
The browser-based Nielsen//Netratings SiteCensus (http://www.netratings.com ) and the server-based Funnel Web (http://www.quest.com/funnel_web_analyzer/ ) are worth further consideration.
Create, test and refine the pre-purchase environment
Once armed with the relevant benchmarking information, there are several roads to conversion optimisation:
- Briefing the web design team to implement a templated page layout and copywriting style using a guide such as The Landing Page Handbook, published by The MarketingSherpa, 2005, available for purchase at http://sherpastore.com/store/page.cfm/2182
- Getting really scientific using multivariate testing to find the optimum arrangement of content, functional and design elements on the web page. More information on a commercial service offering can be found at http://www.optimost.com
Netspace Online Systems – broadband plan ‘wizard’
In the broadband ADSL market, those who can acquire customers more effectively than the competition become the survivors. After successfully optimising its digital advertising response, Netspace’s conversion rates came under the microscope.
The decision was taken to adopt a customer-oriented approach to conversion rates improvement by testing and refining the pre-purchase environment. From a customer perspective Netspace’s objectives were to:
- Offer a more informative, purposeful and satisfying experience compared with the competition.
- To tailor recommendations based on individual customer needs.
Developed in Macromedia Flash and subsequently evolved over several iterations was an interactive tool named the ‘Broadband Plan Wizard’.
A short (1-2 minutes) interactive experience was modelled around the customer information-gathering and decision-making process. Prospects answered simple questions about their intended Internet usage and indicated other preferences including price, length of contract, and modem configuration.
The selections were then matched to Netspace’s range of plans to provide the prospective customer with two recommendations that best met their preferences.
To purchase the service online, the prospect could select their preferred plan and link directly into the online purchase process, where several of the mandatory fields were already filled in with the customer’s preferences.
The result: Netspace’s online sales conversion rate more than doubled from less than 1% to just below the industry average of 2.3%. In addition to the increased conversion rate, the wizard provided Netspace with useful customer insights about the:
- Proportion of customers with no existing broadband ISP versus customers churning from other ISPs.
- Plan preferences in regard to contract length, speed, price, modem type, etc.
- Current Internet usage patterns and intended usage for games, banking, downloading MP3s, and watching videos.
A working example of the Netspace Plan Wizard can be viewed at this address: http://view.atdmt.com/IDL/iview/ntspcnet0050000002idl/direct/01
Preaching to the converted?
The Netspace example demonstrates that it is very useful for digital marketers to ‘unbundle’ the conversion rates of the total online customer acquisition funnel into at least three segments: advertising response, pre-purchase, and purchase.
This is because each segment has unique dynamics and characteristics – media, information/decision making, efficient transaction processing – each with different drivers – market forces, customer needs, and internal business processes.
By application of methodical benchmarking, testing, and refinement of each segment, the opportunity is there to increase bottom-line sales performance through improving website conversion rates while also improving the cost effectiveness of advertising response. |
