The Art and Science of Online Conversion

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The Art and Science of Online Conversion

• Andrew Neitlich
• andrewneitlich_at_verizon.net

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Outcomes Today

• Learn the importance of converting visitors to
  customers and the most important levers to do
  it
• Understand key performance metrics and ratios
• Analyze some best practices

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Biography Andrew Neitlich

• Entrepreneur with over 10 income-generating
  websites offering information, adult education,
  and products
• Consultant to universities and technology
  companies on issues related to marketing,
  organizational development, and growth strategies
• Product Manager with MBI Inc./The Danbury Mint,
  one of the worlds most profitable direct
  marketing company
• MBA from Harvard Business School, 1991

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Which Site Would You Rather Own?
SITE TWO
SITE ONE

• 100,000 hits per month
• Marketing cost for these hits 25,000
• Orders per month 100
• Gross margin (Price less direct costs) per
  product sold 250

• 1,000 hits per month
• Marketing cost for these hits 1,000
• Orders per month 10
• Gross margin per product sold 250

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Initial Analysis
SITE TWO
SITE ONE

• Paying .25 per hit
• Cost Per Order 25,000 divided by 100 orders
  250
• Contribution to gross margin (Price less
  direct/variable costs) per product sold 250
• Breakeven per order (250 - 250 Cost Per Order)
  

• Paying 1 per hit
• Cost per order 1,000 divided by 10 orders
  100
• Contribution to gross margin per product sold
  250
• 150 per order gross profit (250 - 100 Cost Per
  Order)
• BUT only 10 sold per month. Can you reach more
  qualified prospects to get the volume up?

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Lesson 1 Know Your CPO

• Driving lots of traffic to a site at a reasonable
  cost (CPC or cost per click/hit) is important,
  but so is the profitability of that traffic,
  expressed in how many orders you get.
• Cost per order or CPO (sometimes cost per
  acquisition or CPA) is a key metric to know for
  any site. It is the marketing cost to get a
  single order.
• If you intend to be profitable on your first
  sale, CPO needs to be less than your gross
  margin.

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But waittheres more
SITE TWO
SITE ONE

• Cost per order 25,000 divided by 100 orders
  250
• Unit margin (Price less direct/variable costs)
  250
• Breakeven contribution per order (250 - 250)
• But now suppose that the average customer on Site
  One buys 3 more products over their lifetime, at
  a 250 gross margin each

• Cost per order 1,000 divided by 10 orders
  100
• Unit margin 250
• 150 per order contribution to gross profit (250
  - 100)
• But now suppose that the average customer on Site
  Two buys 1 more product at a 25 gross margin (in
  other words, they buy only one thing, and it is
  much less profitable than their first order)

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Analysis Continued
SITE TWO
SITE ONE

• Cost per customer 25,000 divided by 100 orders
  250
• Lifetime value of customer in terms of unit
  margin 1,000 (the first purchase and 3 more)
• Lifetime contribution to gross profit 750
• PLUS you are getting 100 of these per month, or
  7,500

• Cost per order 1,000 divided by 10 orders
  100
• Lifetime value of customer in terms of unit
  margin 175 (the initial 150 plus 25)
• Lifetime contribution to gross profit 75
• And you only get 10 of these per month, or 750

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Lesson 2 Keep Raising the Lifetime Value of the
Customer

• Many sites lose money or break even on the first
  customer, knowing that over the lifetime
  relationship, they will prosper
• Example Free iPod
• But the best companies know how to make money
  BOTH up front and over the lifetime of a customer
• Study the repeat purchase patterns of your
  customers and work to increase their loyalty.
  This is the most efficient and effective place to
  generate more sales.

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Key Steps in the Conversion Funnel
YOUR TARGET MARKET
Impressions
Initial Hit or Click
CPC
Multiple Pages/ Time Invested/ Information
Collected
Stickiness, Lead Conversion, Exit Data,
Stickiness Data
Purchase
CPO/Conversion
Repeat Purchases
Lifetime Value/Repeat
Raving Fan
Lifetime Value
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Lesson 3 Not All Hits Are Equal

• Use conversion tracking to figure out the
  keywords that generate sales
• De-emphasize keywords that dont generate sales
• Test and tweak to figure out the optimal cost per
  click for keywords that do generate sales
• Higher cost per click and higher position dont
  always mean higher sales

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Google et al Test Easily
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Real World Example 1
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Real World Example 2
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Lesson 4 Study Visitor Behavior

• Where do they spend time?
• Where dont they spend time?
• Where do they exit?
• How many pages do they see before leaving?
• What percent leave contact information, and via
  what offer?
• What percent abandon the shopping cart?

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Session Time
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Session Depth
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Exit Pages
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Pageview Time
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Lesson 4 Benefits vs. Features People buy a ¼
hole not a ¼ drill

• Focus on benefits, not features.
• People buy for emotional reasons more than
  logical ones include both.
• Whats in it for them money, sex, youth, peace
  of mind/security, the end of struggle, enjoyment,
  adventure, delight of the senses, status?
• Go through each feature you offer and convert it
  to a benefit. That way, you.
• Isolate a primary benefit for each product.
  Everything flows from that.
• The You/I test

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Lesson 5 Know and Share your Unique Selling
Proposition

• Unlike other Xs.
• What sets your product apart?
• Faster?
• Cheaper?
• Longer-Lasting?
• Proprietary?
• Unique understanding of your customers?
• Breadth and/or depth of solution?
• Unmatched guarantee?
• Prove it with testimonials scattered around your
  site
• Goal Come up with a unique edge or a 31
  advantage on some dimension important to the
  consumer

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Lesson 6 Include Testimonials
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Lesson 7 Headlines and Sub-Heads Make or Break
Your Site

• Every line of copy is about getting permission to
  take more of their time headlines and
  sub-headlines especially compel them to read
• Must emphasize a primary, irresistible benefit

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Headline Example 1
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Headline Example 2
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Headline Example 3
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Headline Example 4
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Lesson 8 The Offer Should Make It a Simple,
No-brainer To Order

• Everything the buyer gets
• Price
• Installments
• Guarantee
• Shipping Options
• FREE bonuses
• Free trial
• Yes! Sign me up for The Boxing Fitness
  Trainer Certification Program and FREE Special
  Bonuses, as described on this Website. My credit
  card will be charged five convenient monthly
  installments of only 47.50 , and I understand
  that my satisfaction is guaranteed. I have read
  and agree to the Terms and Conditions. There are
  NO additional charges for taking (or re-taking)
  the test or receiving my Certificate everything
  I need to get Certified is included.

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Lesson 9 Tell Them What You Want Them To Do, Or
They Wont

• Ask for the order
• Yes! Sign me up
• Click here to get started now
• Click here to have your order to your door
  tomorrow.
• Get your free newsletter
• Order now while supplies last
• Send me my.
• Visible, red buttons increase response

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Examples of Calls to Action
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Lesson 10 Ironclad Guarantees Build Trust
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Another Example of a Guarantee
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Reinforced in Copy
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Lesson 11 Offer FREE Incentives

• Shipping (for orders X for holidays)
• Product (ditto)
• Add-on features or upgrades
• Support
• 30-day Free trial
• Membership

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FREE Incentives
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FREE Incentives
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Lesson 12 Dont Be Afraid to Use Power Words

• Free
• You
• Limited
• Exclusive
• Secret
• Order Now
• Save
• Enjoy
• Finally!
• Special Offer

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Lesson 13 Create Community

• Blog (as part of the URL for SEO reasons)
• Forum
• QA
• Social networking
• Surveys
• Enewsletter
• Tons of sticky, ever-changing, valuable,
  educational content
• Articles
• Free Reports
• Tips
• Have a page that talks about you and your story
  or your companys story people like buying from
  real people

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Create Community
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Lesson 14 Follow Up

• 5-7 positive exposures increase sales 173
• Give them a reason to provide their email address
• Use auto-responders so you can do other things
  while you market
• Provide useful, valuable, relevant content (90)
  and an offer (10) every time
• Brownie recipes or real estate comps from a
  realtor?
• Ask people to spread the word and give them an
  incentive to provide referrals

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Follow Up
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You Can Follow Up Automatically
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Follow Up Tips/Newsletter
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Lesson 15 Make It Easy and Fast to Order

• Easy to find shopping cart lots of links on
  EVERY page and navigate them where you want them
  to go
• Ask for the order and give them reasons to order
• Ask for only the information you need
• Dont make it required to set up an account
• We found that 2 page order forms have a 33
  increase over 1 pagers (perhaps because 1 page
  overwhelms)
• If they make an error or hit the back button,
  restore their information so they dont have to
  retype
• Secure connection/ SSL with certificate
• Invite one-click checkout like Amazon.com
• Get the email address first so you can follow up
  in case they abandon the cart
• Have a way for them to reach a live person with
  any problems

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Lesson 16 Test, Test, Test

• New offers
• New prices
• New keywords
• Installments and the number 7
• 47.50 is a magic number for some reason, and
  people generally love installments for purchases
  over 50
• Featured products
• Back to www.momsonedge.com

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Lesson 17 Some miscellaneous points

• Eliminate Flash graphics and heavy images that
  take a long time to load
• Invest in a professional web designer and perhaps
  copywriter so that your site matches the image
  you want to convey
• Make it easy for visitors to contact you in a
  variety of ways show a picture of your office
  (or at least an office?) so they know you are
  real

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Lesson 17 Some miscellaneous points
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Questions?