By Brian Massey,
Conversion Scientist, Conversion Sciences
The press release from July 19, 2010 announcing quarterly earnings for 1-800-PetMeds stated:
“Our focus in fiscal 2011 is conversion optimization, and the expansion of our product offerings into pet supplies.”
1-800-PetMeds was already one of the highest converting online retail websites according to Marketing Charts. A year later, 1-800-PetMeds announced that, while company performance overall had been hurt by pricing pressure, online sales had increased by 3.4%. Plus, 73% of their business came through the website, up from 70% the year prior.
“If you’re not growing, you’re dying.” This is the mantra of the modern business. Conversion optimization apparently made a difference to 1-800-PetMeds. Is conversion optimization a part of your growth strategy?
Find new customers
Finding new customers is the most expensive way to go to market for most businesses. It typically requires some outbound program, through advertising and marketing. Typically, when a business stops marketing and advertising, the flow of new customers stops as well.
Note that the cost of advertising is best measured as an acquisition cost: the total dollars spent divided by the number of new customers. Conversion optimization can decrease the acquisition cost of new customers, meaning a business can grow revenue more with the same advertising dollars.
If you’re expecting new customers to account for 10% of your growth this year, and you use conversion optimization to decrease acquisition costs by 10%, you can count on an eleven percent increase.
Sell more to existing customers
Existing customers are typically the best way to grow a business. Like new customers, existing customers require some sort of outreach, but the cost is often less than advertising since the business already has a relationship with them.
Your conversion optimization strategy will help more of your customers to buy again.
Many online businesses can’t depend on frequent repeat purchases. For example, people don’t buy dishwashers very often. For these businesses, every sale is critical, and an optimized site will bring revenue growth from these rare or occasional purchases.
Launch new products
In July of 2010, 1-800-PetMeds pledged to grow by introducing new products, including pet supplies. New products open doors to new grazing lands for prospects and provide more to sell to existing customers. Launching the wrong products can destroy the best laid growth plans.
Conversion optimization offers a way to ask your visitors if they think a new product will fly and at what price. Split testing is a tried and true tool of the conversion optimizer and a great way to test-launch new product ideas. Focus groups can mislead. Why not let the visitors to your website tell you with their dollars and actions?
Turn more prospects into customers
Perhaps the reason that this strategy isn’t listed on more “forward-looking” corporate earnings reports is that the statement elicits a great big “Duh” from most readers. Of course you want to turn more of your prospects into customers! Isn’t this what sales and marketing are all focused on?
Most businesses are still focused on getting more eyeballs. It’s the advertising and marketing that gets the attention.
This is an opportunity for you. Next quarter, when you fire up PowerPoint to present your growth plan, add “Conversion Optimization” to the list of growth strategies. At the least it can hedge your bets should your new marketing campaigns underperform. At best it can add significantly to growth and to the bottom line.
About the Author
Brian Massey is the author of The Customer Creation Equation: Unexpected Formulas of The Conversion Scientist™. He is the Conversion Scientist at Conversion Sciences and he has the lab coat to prove it. His rare combination of interests, experience and neuroses was developed over almost 20 years as a computer programmer, entrepreneur, corporate marketer, national speaker and writer.
Conversion Sciences was founded to fill the Web with helpful, engaging and entertaining online Web sites that convert visitors into leads and sales. The company has helped dozens of businesses transform their sites through a steady diet of visitor profiling, purposeful content, analytics and testing. “There are places on the Web that make you feel like they were built just for you,” he says. “Is yours one of these? It could be.