Conversion Rate Optimization
SEM agencies typically will do a lot of work on your Adword account, they’ll fiddle with copy, keywords, etc., but they’re less happy rolling up their sleeves and hacking your site to improve conversion rate.
But when should you start work on conversion rate optimization? Never without stringent testing. Assuming your site is reasonably designed, and your product offering is reasonably priced, you should be able to achieve 6-10% click through rates (CTR), and 6-10% conversion rates. So roughly 1 in 10 clickthrough, and 1 in 10 of those on the site buy.
You can increase your CTR by analysing your copy and keyword cohesion. Spin out the higher CTR keywords into their own ad groups, and just use the target keyword in the Ad title. Speak the language of your customers.
But to increase your conversionr rate, you’ll need to roll up your sleeves and start someone serious work on the design and information hierarchy of your site. But again, I’d stress, don’t do it without testing. These guys know their onions, and their 101 tips for using the Google Optimizer are an excellent place to start.
What should I budget for an ecommerce start-up?
It’s a good question that gets answered in lots of different ways. I’ve got £30k to spend on this site, and it should be better than Amazon.com is a quite frequent approach. Your web agency will always want to know what your budget is - in some ways it’s a fair question; how else can they know what they’re going to build for you.
But when you budget, you’ve got to think way beyond the site build. You should see the site build as opening the door of your new office. More often than not, clients come with an expectation that they’ll spend £8k on the website, and their Adword budget for year 1 is £2k. I’ve seen this 80/20 approach operate at all levels. It’s wrong (not Pareto, he’s never wrong). You’ve got to flip it. Spend 20% of your budget on the site build, and 80% on Adwords, link building and content work (spread this over twelve months, and don’t expect a return in year 1 - you’ll get one, but it’s nice to be surprised).
So, you’ve got a £10k budget. Spend £2k on the site, and £8k Adwords. Or, £20k on the site, and £80k on Adwords. That’s how it works.
Funnel Analysis in OS Commerce
Google Analytics has a great tool which enables you to analyse how your sales funnel is functioning on your website.
Ecommerce sales are just like any other sales. You fill the funnel, lots fall out, and at the end you get a sale. The trick is to make sure that you’re funnel is a funnel, not a leaky colander.
Google Analytics lets you chart each stage of the funnel for analysis. Here’s what a funnel should look like if you’re using OS commerce. I’ll post shortly on the results of this analysis.
How to achieve a 25% conversion rate on Google Adwords
Does this headline sound impossible to you? Generally speaking we consider a 10% conversion rate to be a good cross-industry average, but if you get everything just right, it’s possible to exceed 10%.
The key to achieving stellar conversion rates is rigorous testing and analysis of the data. First of all, make sure you’ve got the right tools to hand. You need Adwords Conversion Tracking set-up, and you need Google Analytics set-up, and then you need to link both accounts. When you’ve done all that, you’re ready to play.
Run your Adwords for a few days. Make sure your Adwords follow the usual rules. Now you’ll have some meaningful data to play with. Analytics will tell you exactly what’s going wrong with your landing page. The first thing I look for is the bounce rate. The bounce rate measures what percentage of visitors leave the moment they enter. You can expect a reasonable amount of organic traffic to bounce, it’s the nature of the web. But if you’re bouncing +50% of your paid traffic you’ve got one of three problems:
1. Your Adword is misleading. You’re offering a £7.99 Adword, but landing them at a £12 product page.
2. Your Landing Page is uncompelling - the visitor likes the Adword offer, but is unconvinced upon arrival.
3. There is a technical problem - 404 - page not found sites don’t sell much.
Your next port of call is the exit page analysis. Analytics will tell you how long people are spending on your site, where they enter and most importantly where they leave.
Back to 25% conversion rate on Healthspark. As you will recall this is a start-up store which is best described as in beta release. We’re doing loads of testing, and landing page analysis. We currently have PayPal and GoogleCheckout, but are waiting for the bank to provide a Merchant Account so that we can have an integrated payment system. My gut feeling was that payment was hindering sale conversion. This is often the case, customers are fickle, and a slow site, or anything slightly unusual will spook your potential customer.
However, Analytics revealed a high bounce rate on the Rosehip page, and it turned out that the default offer was putting customers off. The Adword itself gave a specific price offering of £7.99, but the options on the landing page defaulted to a 2 for 1 offer at £12.99. Switching this default option off lifted the conversion rate from 5% to 25% with a cost per customer acquisition of £1.50.
What this anecdote reveals is that micro-testing, and daily improvements on both your Adwords, and ecommerce platform are crucial if you want to win.
What’s a good CTR (click-through rate) for Adwords?
You won’t find a definitive answer on this, as it varies greatly depending on the market and keyword. There are many campaigns with very low CTR’s (<1%) that still manage to deliver profits, but a high CTR is vital for several reasons:
Google rewards a high CTR with a lower CPC (cost per clickthrough). As a rule, Google will always reward content that is more relevant to searchers, and an Adword that delivers a high CTR, must by definition be delivering content that searchers want. It helps of course, that a higher CTR also delivers more profit to Google’s bottom line. Aiming for a high CTR is a great way to beat your competitors in the cost of customer acquisition.
SEO specialists spend a lot of time optimising your page, so that good content is rewarded (good tags, good inbound links), but as always in Adwords and Organics, relevant content is the key.
Seth Godin would like this, if you’ve got something worth saying, and customers want to hear it, Google will reward you.
If you’re delivering a high CTR you are consistently reaching the right audience for your product, so unless your Ad is a blatant lie, you should have a high conversion rate. Watch for a high bounce rate on your site generally. If you’re suffering from a high bounce rate, something’s wrong with your landing page.
Google will also reward you with a lower CPC if you achieve a high CTR, and a low bounce. Its algorithm will also look at the keywords and copy of your Adwords to ensure they cohere with the target landing page.
Finally, a higher CTR maintained over a period of time you will achieve a lower CPC as Google also rewards persistent advertisers - that’s why you shouldn’t plan your entire online strategy around 24 hours of testing.
As always the way to achieve all of this is lots and lots of testing.
Chitika Premium Units - AdSense watch out!
I’m really impressed with Chitika’s behavioural targeted Ads. The Ads show in the context of the blog, and only show when the blog/content is directly relevant. This makes AdSense look like a scatter-gun approach, and surprisingly ham-fisted.
Chitika’s model is based on much less traffic, but it is highly targeted. Moreover, the quality of the click is higher, because the traffic hasn’t been irritated by lots of other irrelevant advertising. This is a bright future for context advertising - where you only get the advertising you want.
Nice to see Google’s monopoly being challenged. If I was Google, I’d do even more with Google Checkout, and make sure that adverts are only served to those likely to buy, so that Ads are served not just on context but on your previous buying patterns. Then you’d only get really useful ads when you need them. You don’t need a holiday ad when you’ve just got back from holiday.
You can see the Chitika Premium Unit in action on this page, by clicking http://baldysblog.com/#chitikatest=mortgage
Turning Customers into Broadcasters
In SEO and SEM we spend a lot of time filling the funnel. The more people we get to your website, the more chance we’ve got of creating a customer. If we’ve done our job properly, 10% of these visitors will turn into paying customers, so the more you fill, the more you make?
Well yes, but if you spend all your time focussing on the funnel, you will forget to make a business so spectacular, that your customers forget to flip the funnel, and shout down it to all their friends. Here’s some reasons why customers might flip the funnel when they use your e-commerce store:
1. Spectacular Fulfillment
Amazon has got this so right. When you get an Amazon delivery, you know it’s Amazon, even without the package branding. You know how to open it, you know that the book, cd, etc., will be perfectly presented. You’re content. It’s almost perfect, but its ubiquity gives smaller players something to aim at. Consider Seth Godin’s experience when he ordered from CD Baby:
Your CDs have been gently taken from our CD Baby shelves with
sterilized contamination-free gloves and placed onto a satin pillow.A team of 50 employees inspected your CDs and polished them to make
sure they were in the best possible condition before mailing.Our packing specialist from Japan lit a candle and a hush fell over the
crowd as he put your CDs into the finest gold-lined box that money can
buy.We all had a wonderful celebration afterwards and the whole party
marched down the street to the post office where the entire town of Portland
waved ‘Bon Voyage!’ to your package, on its way to you, in our private
CD Baby jet on this day, Tuesday, June 18th.I hope you had a wonderful time shopping at CD Baby. We sure did.
Your picture is on our wall as “Customer of the Year”. We’re all
exhausted but can’t wait for you to come back to CDBABY.COM!!
2. Coupons
Coupons are a great way to reward your customers for re-ordering, or for flipping the funnel. Why not give your customers £10 to give away to their best friends? If your product and service is great, your customers should feel great about recommending you to their friends, and even better if their friends get cash benefit.
3. Email Marketing
I do not mean spamming your customers with useless crap. Do not send your customers context-less advertising. This is a serious misuse of email. Email is so overrun with useless communications (even internal business communications have now tipped into meaningless CC drivel that we don’t need), that your emails should be carefully crafted to be extremely useful and targeted. I really don’t mind receiving Amazon emails that have book selections that reflect previous purchases, and I really don’t mind receiving holiday offers from Expedia that reflect when and where I’m likely to go.
Questions you should ask if you want to make money online
1. Are you selling a physical or a digital product?
My forthcoming book will be focussed on selling easy-to-shift physical product that people are actually searching for. It’s possible to make good money out of shifting digital product (many of you will be reading this as a free blog though!), but in general the digital market faces certain problems for the budding e-entrepreneur. The main problem is that the content that people really want can already be obtained by suppliers with massive leverage (e.g. Apple - iTunes) or illegally (e.g. LimeWire). You can pitch original content, software widgets, ebooks etc., but you’ve got a lot of work to do in establishing a market that doesn’t already exist.
At least with physical product, you will be shifting stuff that people want, and they know they want it.
2. What barriers to entry are there?
Ideally, you need a market which is difficult to enter or understand. Establishing supplier relationships for exercise bikes, for example, is fairly protracted.
3. Can you get good supply? Agree terms with your suppliers.
Will you be drop-shipping? (The manufacturer holds inventory, and ships when you get an order). Will you be buying stock? If so, can you buy small quantities, and achieve Amazon like JIT shipping.
4. What’s your price advantage? Put together a spreadsheet of prices
Get comparison prices using searches on Google Adwords, eBay, Amazon Marketplace and a price comparison engine, e.g. Froogle, Kelkoo or PriceGrabber. Calculate your likely margin.
5. How much will it cost to get a customer? Estimate the cost of conversion.
This is an approximate estimation, but you can do the following. Create a test page using a free blog tool (e.g. Type Pad, Word Press, or Blogger.com). Create an Adwords campaign, and look for the amount you’re paying for each keyword for each click-through (CPC). Ideally, you should expect around 6-10% click-through rate (CTR) if you’re Ad is well written, and compelling against the other Adwords being served. Of the 10% that clickthrough, you should be aiming for a 10% conversion rate.
Now, these are rough numbers, but I’ve seen them work across a range of industies. So 100 people see your Ad (100 impressions, cost of an impression = zero). 10 people click through (the exact amount you pay for each click-through is determined by a real-time auction with your competitors, but let’s assume £0.20 per clickthrough). 1 person buys, so the cost of the customer acquisition is £2 (10 x £0.20).
If your margin on a tub of vitamins is £6, you’ve just made £4 profit, and you’ve got a business.
Chitika eMiniMall better than Adsense?
Chitika is an online PPC advertising company geared up for Web 2.0. Amazingly, they seem to be competing very effectively with Adsense (20,000+ site, and 2 billion monthly impressions, reaching 60 million unique visitors a month).
Adsense is Google Adwords for content sites. In an earlier blog, I’ve recommended opting out of the content network when you’re running Adwords campaigns as you can’t be sure where your site will be published. (but if you’re canny, you can do some very effective site specific advertising - we’ve just run a very effective campaign for www.healthspark.co.uk).
Although content Adsense now allows imagery, most of the advertising remains in the Adwords text link format.
Chitika’s USP is that they’ve created some really innovative widgets for bloggers and web 2.0 sites, like the eMiniMall. In the eMiniMall, this mini-shop concept works really well, particularly in product-specific blogs. Users have reported a 50% increase in CTR.
Over the next few weeks we’ll be trialling the eMiniMall over at naturalhealthlibrary.org, and I’ll post the results when I’ve got them.
Google Analytics Data loss
You may have seen this recently on the Google Analytics login page:
System Message: Analytics Processing Delay from April 30th to May 5th
Google Analytics experienced a data processing error from April 30th to May 5th. Almost all of the data has been recovered and is currently being reprocessed. The recovered data will be reflected in your reports within a few days. Please note that a small percentage of data, particularly in the area of e-commerce reporting, was not recoverable from those dates.
The trouble with free software is that you can’t really complain when you get this kind of loss, it just goes with the territory, and at least Google are sorting it out, almost. The worrying bit is the loss of e-commerce data, because these are the sites who live by this data.
I love Analytics. I’ll do a post shortly on how to get the most of its impressive integration with Adwords, but I can’t help but feel frustrated (and a bit paranoid) about how Google handles the data. For example, when you set-up conversion goals, you won’t see any real conversion data for 24 hours. Why is this? Are Google’s servers so slow, they can’t cope with the request for 24 hours? Nope, they’re slow enough to make sure you have to experiment with your campaigns to achieve success. Experimentation = Adspend.