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You are here: Home / Archives for Conversion Rate Optimization

The Real Reason for Amazon’s Success

May 31, 2018 by Charlie Liang Leave a Comment

Amazon has and will remain one of the worlds fastest growing companies. Since 2006, the online retailer has grown an average of 31% year over year, with no end in sight. 

To maintain their massive growth rate, Amazon has been expanding by acquiring everything from Whole Foods to Zappos. This allows them to dominate their competition but Amazon’s key obsession and rapid optimization is what sets them apart.

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7 Ways You Should Have Advanced Your Digital Strategy in 2013

January 21, 2014 by Tyson Kirksey Leave a Comment

Wow, it’s January 2014 already! If you’re like me, 2013 was a fast-moving combination of wins, near-misses, regrets, accomplishments, failures and fun. Amongst it all, I hope you can look back and count 2013 as a pivotal year for your online strategy. Before we dive into 2014, I’m thinking of seven ways you could have, no make that should have, advanced your digital strategy.

1) Implemented a Tag Management System
I’ll start with this one; it’s a no-brainer. If you don’t have a Tag Management System in place yet, forget the other six items on this list and immediately go sign up for Google Tag Manager. It’s free, and it will save you countless hours and headaches in the future. It’s not the only good solution out there, but it’s a good place to start for 95% of businesses or organizations.
For more on Tag Management, check out these great posts: https://www.webanalyticsworld.net/category/tag-management

2) Planned a Migration to Universal Analytics
If you are using Google Analytics, you’ve undoubtedly heard about Google’s next generation framework dubbed Universal Analytics. It’s the first fundamental overhaul to the Google Analytics measurement model since Google purchased Urchin in 2005, and it will open the door for tons of great features in the future. Unfortunately, for many users, the value of Universal Analytics has not been made clear enough. While at the moment there are still some features missing that some GA users depend on (remarketing support, DFA integration, etc.), an upgrade already makes sense for many businesses. The simplified codebase, server-side options and ability to define and use custom metrics and dimensions make Universal Analytics appealing already.
Google has made transitioning to UA fairly easy, but there are still some coding changes required. If you’ve taken my advice on #1 and are utilizing a TMS, this shouldn’t be so bad. Go ahead and put a migration plan together for Q1 of 2013 and make it a priority to switch to UA. You’ll be able to quickly implement new features and functionality, including the oft-cited promise of tracking users across devices with the UserID override capabilities.

3) Executed a Smart PLA Strategy
It’s not much of a stretch to say that PLAs took over the SERPs in 2013. If you sell products online, but aren’t in the mix of Product Listing Ads, you missed the boat. PLAs offered merchants low CPCs and high conversion rates, but lately CPCs have been climbing fairly dramatically (53% increase since last year).

There is a difference, however, in having PLAs and having a smart PLA strategy. The default way of adding products to an AdWords account is actually very dumb, and it produces a lot of bad results for merchants. At this point, without a granular, product-specific PLA strategy, you may be underwhelmed with PLA performance. Smart merchants are using 3rd party tools and services to bid efficiently by inventory, category, profit margin and other key data points. Breaking out products efficiently into campaign and ad groups allows for greater control and precision bidding – just what SEMs are used to.

4) Advanced Your Remarketing Campaigns
You do have a remarketing program, right? OK, good. But how sophisticated is it? The best remarketing campaigns are built with highly dynamic designs, reach audiences across multiple platforms and are based on specific visitor behavior and time. If you are still throwing all visitors into one bucket called “All Audiences,” it’s time to take it to the next level.

5) Cursed Google for Taking Away Keyword Data
Ok, this won’t exactly “advance” your strategy, but it needs to be done, am I right? Moving on…

6) Developed a Custom Attribution Model
Attribution modeling used to be only for the elite: the 1-percenters. Not anymore. Many folks don’t even realize that there’s a pretty nifty Attribution Modeling Tool just waiting to be used in their own Google Analytics account! Yep, and it comes with seven built in models and the ability to create all kinds of exciting custom models. Further, in 2013 Google added the ability to integrate GDN display data to spice up those attribution models (see my earlier post about this here).
If you are still using Last Click, prepare to have coal in your stocking this year.

7) Invested in Conversion Rate Optimization
Acquiring traffic to a website has never been more difficult or expensive. On the SEO front, techniques that used to work don’t work as well anymore, and Google is methodically pushing organic results farther and farther down the page. On the paid side, CPC costs continue to rise and competition is fiercer than ever. As traffic acquisition becomes harder and harder, it’s surprising that more businesses aren’t focusing their attention to Conversion Rate Optimization. For most organizations, it is much more affordable to increase their conversion rate by 20% than it is to increase their total traffic by 20%. But did you know that for every $92 we spend on acquiring traffic, only $1 is spent helping that traffic convert to a lead or a sale?

Our clients are finding CRO drives tremendous value across all of their online channels, and at a fraction of the cost it would take to produce similar gains through acquisition alone. If you missed this opportunity in 2013, let next year be the year you start a Conversion Rate Optimization journey.

That’s my list, but you probably have others, right? Chime in below and let us know how you made out in 2013, and what’s on the list for this year!

Case Study: Why you should Stop Optimizing for Conversion Rate

December 19, 2012 by Himanshu Sharma 23 Comments

Once upon a time, marketers used to optimize for conversion rates. Conversions Rate Optimization (CRO) was all the rage. Then came the enlightenment and the rest is history. Make no mistake about it; it will happen one day as every marketer will be busy optimizing for revenue and cost and we may call them as RCO (Revenue Cost Optimization) experts. But why wait for that day when we will no longer be able to get this competitive advantage of being a RCO expert. Why not start focusing on optimizing for revenue right now and gain the ‘first mover advantage’.

 

The problem with CRO is that it is a sub optimal way of optimizing your business performance and I will prove it to you through simple but powerful case studies in next few minutes. CRO was good for its day when marketers were new to the concept of user experience and landing page optimization. But this is not the case anymore. Today we are looking for revolutionary ways to optimize our business and marketing performance and for this to happen we first need to change our old habits like ‘focusing on conversion rates’
 

“The measure of intelligence is the ability to change.”  ― Albert Einstein

“Those who cannot change their minds cannot change anything.” ― George Bernard Shaw

 

The most obvious way to increase profit is to increase revenue and decrease cost per acquisition. The first thing that we need to understand is that there is not always a positive correlation between conversion rate and revenue. Which means increase in conversion rate is no guarantee of increase in revenue. Similarly increase in conversion rate is no guarantee of increase in profit. Throughout this post whenever I talk about conversion rate, I am talking about e-commerce conversion rate. But it is also equally valid for goal conversion rate.

 

  

Case 1: Negative Correlation between Conversion Rate and Average Order Value

 

Consider the following hypothetical scenario:

 

Orders

Visits

Conversion
 Rate

Average Order
Value

Product
 Revenue

Nov

100

5000

2.00%

$150

$15,000

Dec

200

6000

3.33%

$50

$10,000

% Change

100.00%

20.00%

66.67%

-66.67%

-33.33%

 

From the table above we can see that the revenue has gone down by 33% in the last one month even when the conversion rate has improved by 66% in the same time period. This has happened because average order value went down by 66%.  So increase in conversion rate has not resulted in increase in revenue and at the end of a day all that really matters is revenue esp. for a marketer.

Now look at the alternative scenario:

  Orders Visits Conversion
 Rate
Average Order
Value
Product
 Revenue
Nov 200 6000 3.33% $50 $10,000
Dec 100 5000 2.00% $150 $15,000
% Change -50.00% -16.67% -40.00% 200.00% 50.00%

 

Here conversion rate has decreased by 40% in the last one month but the revenue has increased by 50%. This has happened because average order value increased by 200%. So decrease in conversion rate has resulted in increase in revenue. 

  

Case 2: Negative Correlation between Conversion Rate and Transactions

 

Consider the following hypothetical scenario:

 

Orders

Visits

Conversion
 Rate

Average Order
Value

Product
 Revenue

Nov

100

5000

2.00%

$150

$15,000

Dec

70

3000

2.33%

$150

$10,500

% Change

-30.00%

-40.00%

16.67%

0.00%

-30.00%

 

We can see that the revenue has gone down by 30% in the last one month even when the conversion rate has improved by 16% in the same time period. This has happened because number of transactions went down by 30%. So increase in conversion rate has not resulted in increase in revenue.

Now look at the alternative scenario:

 

Orders

Visits

Conversion
 Rate

Average Order
Value

Product
 Revenue

Nov

70

3000

2.33%

$150

$10,500

Dec

80

4500

1.78%

$150

$12,000

% Change

14.29%

50.00%

-23.81%

0.00%

14.29%

 

Here conversion rate has decreased by 23% in the last one month but the revenue has improved by 14% in the same time period. This has happened because number of transactions increased by 14%. So decrease in conversion rate has resulted in increase in revenue. 

 

Case 3: Positive Correlation between Conversion Rate and Acquisition Cost

 

Consider the following hypothetical scenario:

 

Orders

Visits

Conversion
 Rate

Average Order
Value

Total Revenue

Spend on Traffic Acquisition

Gross Profit

Nov

100

5000

2.00%

$150

$15,000

$2,000

$13,000

Dec

250

10000

2.50%

$70

$17,500

$7,000

$10,500

% Change

150.00%

100.00%

25.00%

-53.33%

16.67%

250.00%

-19.23%

 

Here increase in conversion rate has resulted in increase in revenue by 16% in the last one month. But the cost of acquiring traffic has also increased by 250% which eventually resulted in decline in Gross profit by 19%. This usually happens when we focus more on acquiring average/low value customers than best customers. I have talked more about this issue in the post: Beginners Guide to Maths and Stats behind Web Analytics

 

All of the above case studies suggested that focusing on conversion rate is not the best way to optimize business and marketing performance. We should rather focus on improving revenue and decreasing cost per acquisition. Other than these case studies there are some other very strong reasons not to optimize for conversion rates:

 

1. It is not very practical to optimize conversion rate as it is a ratio metric and you can’t set achievable numerical targets for it like improve the conversion rate of the website by 10% in the next 4 months. You will always get some traffic which won’t convert, no matter what you do to improve user experience.

 

2. CRO has got data collection issues, data interpretation issues and data reporting issues. I have explained all these issues in great detail in the post: Here is Why Conversion Volume Optimization is better than CRO

 

3. Conversion rate calculations are horribly prone to errors and they do not reflect effect size (i.e. signal) more accurately than conversion volumes. I have explained these issues in great detail in the post: What Matters more: Conversion Volume or Conversion Rate – Geek Case Study

 

Now it is your turn. Do you agree with my post? Please share your thoughts and insights.

 

Learn the Secrets and Power of Web Analytics Driven Testing

September 26, 2012 by Rich Page Leave a Comment

If you are a reader of this blog, there is pretty big chance that you are using web analytics data to monitor and track your website. But are you doing a great job of using web analytics data to power your efforts to test and improve your website? My name is Rich Page, and I’m here to reveal the power and benefit of web analytics driven testing!

I used to be a web analyst for many years, including for Disney Online, and I learned many great web analytics tricks, and was always fascinated with using these to test and improve websites. After making the leap into the testing and conversion rate optimization world, I quickly realized just how important web analytics were to effective website testing.

To help give you a great kick start on this, here is an overview of the benefits of web analytics driven website testing and key things to learn. These will help improve your testing efforts and give you much more ROI from your website test results (and make you look like a rockstar!)

Ben­e­fits of using web ana­lyt­ics to power and improve your test­ing efforts

First let’s get started with the benefits of using analytics to drive your testing efforts:

  • Web ana­lyt­ics helps you dis­cover, mon­i­tor and set tar­gets for your key suc­cess met­rics (for exam­ple shop­ping cart aban­don­ment rate or signup form com­ple­tion rate). These will be vital to use and mon­i­tor dur­ing your test­s to under­stand how well your test efforts are performing.
  • Web ana­lyt­ics helps you under­stand and pri­or­i­tize what pages need opti­miz­ing most on your web­site, rather than sim­ply guess­ing what you should test. For exam­ple, you shouldn’t be test­ing pages that have very low traf­fic or have a low impact on your con­ver­sion goals.
  • Web ana­lyt­ics helps arm with you infor­ma­tion that can improve web­site deci­sion mak­ing, which is often crit­i­cal to over­come prob­lem­atic HiP­POs (High­est Paid Person’s Opin­ion) who often only allow the testing of things they want, or and often incorrectly think they know what is best for your website visitors.
  • Ulti­mately, web ana­lyt­ics pro­vides amaz­ing vis­i­tor insights to help cre­ate even bet­ter test ideas. These web analytics driven test ideas will usu­ally have a greater chance of see­ing more sig­nif­i­cant con­ver­sion lifts than random test ideas (based on my experience with clients).

Key things to do with your ana­lyt­ics to help power and improve your testing:

To help give you a kick-start in using your analytics to improve your testing, here are some effective simple things to analyze and look out for:

  • Ana­lyze your key con­ver­sion fun­nels. Pages within your checkout flow and sign up process are enormously influential on your conversion rates, and you should analyze them to look for ones that have par­tic­u­larly high exit rates or drop-off rates. In many analytics tools you can even analyze form abandonment to find problematic form fields.

    Once you have found offending pages or page elements, run tests to better find variations that improve them and increase con­ver­sion rates, for example by focusing them better, repeating benefits and risker reducers, and also removing un-necessary form fields. These con­ver­sion fun­nels can easily be set-up and analyzed in Adobe Site­Cat­a­lyst using the ‘Fall-Out Report’ and in Google Analytics as Goals. 

  • Start higher up the con­ver­sion flow fun­nel. When ana­lyz­ing your con­ver­sion flows, find the top entrance paths to the first page of your con­ver­sion flow. For exam­ple, if you are try­ing to opti­mize your reg­is­tra­tion flow, you should find out the top pages on your website that most of your vis­i­tors arrive from, and opti­mize those pages too. This will amplify any effects of the improvements you have made to your conversion funnels.
  • Review your top entry pages for any pages that have high bounce rates. These are great can­di­dates for test­ing and opti­miz­ing because so many visitors go through them and they have much higher traffic, and therefore will yield you better conversion improvements, quicker. Again, focusing and reducing clutter on these pages will improve bounce rates, along with making sure they help solve your visitor’s major needs on them.

    Remem­ber to also check the key­words or sources they are arriv­ing on these pages to see if there are any issues with con­tin­u­a­tion of messaging, as this can often cause high bounce rates too.

  • On pages that you are con­sid­er­ing test­ing, use your visual ana­lyt­ics reports. These will help you under­stand what vis­i­tors are click­ing on and their pos­si­ble intent (and quite often this is different than you may have expected!) This helps you under­stand and pri­or­i­tize which page ele­ments may need test­ing and opti­miz­ing the most, rather than guessing and potentially risk wasting time on elements that have low impact on conversions. Google Analytics has newly improved ‘In-Page Analytics’ as their visual report for you to use, or you can use low cost tools like CrazyEgg to do more in depth visual analysis. 
  • Improve your test plans with ana­lyt­ics insights and data. When cre­at­ing a test plan for each of your tests, you should always include the web ana­lyt­ics insight you found that led you to think of the test idea. You should also include key success metrics that will be improved (like signup completion rate or average order value), the likely impact on revenue and estimated targets to beat). This will help oth­ers in your organization under­stand your logic for the test, and help with pri­or­i­ti­za­tion efforts to get it launched.
  • Ensure strong col­lab­o­ra­tion between web ana­lysts and website test­ing man­agers.  Doing this will help increase the amount of test­ing insights being generated and increase the amount of learnings to improve testing process in the future. Therefore you should encourage regular weekly meeting and reviews with these members to review current and proposed tests to try and improve them further. Keeping a project plan with your tests is very important to review in these meetings too. This collaboration will also help to build a testing culture in your organization – key to a long term effective testing program.

Get a better testing tool to make better use of your analytics data!

And lastly, to make your analysis and testing even more powerful, make sure you are using a testing tool that integrates with your web analytics tool. For the best example of this, if you are using Adobe SiteCatalyst, you can easily use your segments in that tool to target your tests in Adobe Test&Target, and this seamless integration allows you to perform detailed test analysis in SiteCatalyst. For a much simpler version of this tool integration, you can now use your Google Analytics segments to segment your tests in their new Content Experiments feature (the old Google Website Optimizer).

To learn more about this subject, you are going to love my new testing and optimization book called ‘Website Optimization: An Hour a Day – particularly if you are a web analyst because it places a lot of emphasis on the importance of web analytics to test and optimize websites better. You can even get the first chapter free!

eCommerce 101 – Part 2: Developing your Strategy

August 2, 2012 by Chris Elvery 4 Comments

In this series I want to give the benefit of my experiences as both a traditional and online retailer and more recently (well 10 years!) as an ICT Specialist who has worked with numerous “bricks and mortar” and ecommerce businesses.

2. Developing your strategy

In the last installment (see ecommerce 101) we looked at getting started and explored some of the questions that need to be considered before thinking about starting to trade. In the second of the series I’d like to explore a key component of any online business and that is the development of your digital strategy.

The term “Digital marketing” is regularly bandied around, but what does it actually mean? For many it comprises of no more than Search Engine optimisation, but with the rise (and rise) of social media, Google may well not be the first port of call for any potential customers – latest research says that 60% of web browsers first engagement with your brand will be somewhere other than your brand’s website. As Google moves inexorably towards more and more personalised search results, achieving that coveted #1 position for your brand’s website becomes increasingly challenging. The old rules of “nuke your website through seo and they will come” no longer stands. It’s now more about a “blend” of activity across a variety of digital mechanisms – all working in harmony to achieve the desired results.  

So, where do we start? Some considerations:   

Who are your customers?

Image of 3d stickmen and speech bubblesSimple, you’d think, but if I had a £ (or $!) for every time I’ve heard the response “everyone”, I’d frankly have a lot of £’s (or $’s)! Even the most all encompassing retail range has key customer groupings – whether that be for the entire range (if a niche area) or for a subset of the range (for more “variety store” retailers). It is important that time is spent developing personas for these customers – Are they male or female? What age? What type of job do they do? what ‘s their lifestyle? Where do they hang out online? How do they want information delivered to them? What’s the style of delivery that will engage them? How do they buy? There are plenty of articles on the web about persona development and how to go about it. By doing this you for your (eg top 3) customer personas you’ll have a clear idea of what makes them “tick” and as a result how they are likely to engage and what they are likely to engage with. 

Who are your competitors and what can you learn from them?

This area of research is too often omitted. You can learn a lot of very valuable lessons – both good and bad from researching your competitors. This phase will help to inform your positioning within the market place.  

How will people get to your website? (what’s your inbound marketing strategy?)

Getting traffic to your site is key and you need to define how you will engage with the market and entice them to your offering. For more information have a look at the Web Analytics World article here.

What are the key performance indicators against which success will be measured?

As with any business you need a set of metrics against which you can measure your success. The “blunt” ones are traffic to the site and conversion to sale, however certainly for an ecommerce store you also need to consider margin, spend per head, basket value, customer retention, value of “dead stock” etc

What do you want to achieve and how will you know when you’ve been successful?

This is an interesting one and something I fell foul of on my first ecommerce site back in 1998 – I was so tied up in adding new product to the site, trying to be the most definitive in the market place that I’d lost sight of the fact that my original goal was to make as many profitable sales as possible. What I hadn’t realised was that I was achieving this goal from less than 20% of the catalogue and that if I factored in the additional time to source, photograph and add the other 1600 items, then my profitability was shot! What I’m trying to say is – have a goal and aim for that. Don’t lose sight of it and make sure that you test all your assumptions/ actions against it. 

What channels should you spend your money on and in what proportion?

Image depicting inhouse and outsourcing resourceAn interesting one and one where I’m starting to see a ground-shift. Overblown websites are a thing of the past as people require information in a flash. Social Media also has its part to play with “traditional” web content now being deployed across a wider digital estate, with traffic then being delivered back to the site for conversion to sale. Again, this is a huge subject and not one I intend to go into here, however what I would say is that in my recent experience, of total online marketing budgets, less is now being spent on the website as more is being devoted to social media. So just consider this before blowing all your money on the best website in the world ever – it may not be your customers preferred choice for first engagement.   

Consider PEST (Political, Economic, Social, Technological) factors 

As part of any ecommerce build you need to consider the territories you want to target and what impact that will have on your strategy. Multilingual sites and local hosting/ SEO is a given for businesses that want to develop overseas markets, however, far fewer businesses consider the variants in the Social Media space in countries throughout Europe, let alone the rest of the world. You’ll need to consider the language and tone used, different design and user experience requirements, shopping behaviours in different territories etc.  eConsultancy has a useful guide on the subject of the Internationalisation of eCommerce .

The other key consideration is the product – what sells in one territory and is seen as the height of fashion – is not necessarilly the case in another territory – eg you only have to go on vacation somewhere where there are multiple nationalities to realise that fashion tastes vary dramatically across the world!   

Summary

It is important to realise that the answers to these question will impact on everything from the technical build of your site to the resources you bring in to manage marketing, your online spend allocation etc. The findings from many of these questions particularly around customers and competitors should actually serve to validate your business (by establishing market size, reach and commerciality) as well as shape up a digital marketing strategy tailored to reach and service a target customer base.

Because attaining accurate and insightful information on all of this is so vital for success it’s important to realise the importance of bringing in specialist help in these planning stages (unless you possess all of the relevant skills yourself). For example – When researching customers and competitors this requires interrogation of Google data, in-depth commercial competitor analysis, an assessment of competition vs opportunity in the search space, Adwords search and display network analysis related to space in question etc. It also requires a wider digital analysis in the space to determine key influencers, authority sites, an analysis of  the social landscape etc

When it comes to Analytics you will need help to  determine an analytics strategy which can deliver insights and actionable information. Tracking traffic and conversion to sales is not enough. Multiple insightful metrics such as engagement levels, visitor segmentation and tracking success of different traffic sources etc can all provide useful actionable information. With advanced analytics tools you can often link to publishing capability to dynamically display more relevant information to users based on their referral path to your site, their behaviours on your website etc.

Next time, we’ll look at how to specify your eCommerce requirements.

Read Part I of Chris’ eCommerce Series: Getting Started

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