Wildcard Friday – Search and Conversions – Strengths Meet Weaknesses

By Nik

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There are no quick fixes to revenue growth for online stores. Everything you do will take time on the aggregate. That doesn’t mean that there aren’t efficient things which you can easily act upon to grow your revenue. There surely are.

As a business owner, you already know that there have been shining moments of management that you can remember over the years; the day I decided to invest in pushing product x; the month that I redid my left-navigation to be simplified; the investment in ranking for keyword y. Well, today we’ll discuss how you can achieve those shining moments on a more regular basis.

So what do you need to know? Well, you need to know quite a bit to even start this process – you’ll require a hunch. You’ll also require revenue tracking for whatever analytics program you use.

In this example, we are looking at 3 concepts for a kids store: toys, books and clothes. Essentially, we’re looking at aggregate data that comes from traffic that is toy based, versus books based, versus clothes based. The idea is that we may find some highly efficient to-do’s.

We start with visits. At first glance, it seems like clothes is a huge winner on the traffic side bringing in 100 times more visits than toys. When we introduce conversion rate, the story shakes up a bit: now, even though the traffic on toys has been quite lower than clothes, it presents itself as an outlier: on average the toys section is connecting with visitor’s expectations 3.6 time more effectively than the clothes sections.

Revenue then makes the business effect that much clearer: toys is a clear winner in terms of its impact to the revenue of this online store, while clothes is making a very poor impact. Books is coasting easily as a well-balanced source of traffic and sales.

We then calculate a figure that plays into marketing budgets: value per visit. By dividing total revenue generated by a concept over its total number of visits, we arrive at the value of every additional visit for that particular concept. It tells us where we can invest dramatically in more search traffic at more aggressive costs because the generated revenue allows for it. Here, toys is a big winner once again – with only 1,500 visits in the door so far it would be fair to surmise a major opportunity to drive more SEO and PPC traffic for toys terms which would scale in a very profitable fashion.

When we look at the site-wide average for value per visit, it is clear that clothes has plenty of room for improvement and toys has a major opportunity for scale.

Concept Visits CR Revenue Value/Visit
Toys 1,500 1.8% $25,000 $16.67
Books 15,00 1.0% $2,500 $0.17
Clothes 150,000 0.5% $2,500 $0.02

Now I know a demoralizing scenario when I see one – but I also know that discovering the silver lining of any situation is an invitation for efficient next steps for improvement.

For the toys concept, your next step is to increase traffic as quickly and aggressively as possible. Aggressive SEO to rank naturally for more terms, bigger budgets and more prominence from a PPC perspective. That landscape allows for so much flexibility here given the astronomical value/visit that you have cart blanche in terms of how strong you can go to market. For every online store, there is a concept like this – the conversion winner!

Clothes is very disappointing on the revenue impact side. The first inclination of a business owner would be to consider just divesting from this traffic. But think about the work and investment that may have gone into bringing in that much traffic – this is a major win on the search traffic side. It may partly be because of organic SEO positions that have been attained and retained at difficult effort and large investment. On the PPC side, effective management probably went through hoops to achieve the relevancy scores, click-thru rates and well catered ad copy that is bringing in such an onslaught of targeted traffic. So what can you do? Well, your business can learn to adapt in terms of conversion. With conversion testing against the challenge of: bring clothes traffic up to a conversion rate of let’s say 1% (still less than toys) and increase the AOV (which is currently around $3 if you do the math) to $6, which is still less than the $925 per order achieved by the toys section, the clothes section would quadruple in its impact to the bottom line.

Throughout your store, you’ll find concepts where a strength in traffic is met with a weakness in conversion and vice-a-versa; each instance presents an opportunity to only take one step towards a major win. I hope this was helpful and that you will take the time today and this weekend to think about where you can make these efficient investments into great improvements for your bottom line.

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