How to extract more value online
using conversion optimization
A/B testing, multivariate testing, segmentation and targeti...
Agenda
Intro: why bother about conversion optimization?
Testing







A/B testing
Multivariate testing

Segmentation ...
Intro
Value
Ways to extract it
Conversion
How conversion can be improved
Sample results








3

Created by Alexand...
Meet Daniel
E-commerce manager in
ASX200 business (retail)
Responsible for online
business
His duty is to improve both
top...
Value
For commercial organizations value means money
Fundamentally there are 2 ways to get more value






Sell more u...
What Daniel can do?
Bring more new
customers to online
store



6

Created by Alexander Levashov, 21 Nov 2013
What Daniel can do?
Increase prices



7

Created by Alexander Levashov, 21 Nov 2013
What Daniel can do?
Extract more value from
existing flow of prospects
and customers and
current prices



Conversion
opt...
How can we increase conversion?
Give more value to customers









Discounts/specials
Better customer service
Lon...
Sample calculation
Conversion
Visits per day
Sales per day, number

Baseline
2%

Optimized
2.25%

100,000
2,000

100,000
2...
Daniel is happy as well as his boss

11

Created by Alexander Levashov, 21 Nov 2013
Testing





Why test?
A/B testing
Multivariate testing

12

Created by Alexander Levashov, 21 Nov 2013
Why test?
WITHOUT TESTING, OPINIONS ARE JUST THAT—OPINIONS.
ONLY WITH TESTING CAN YOU REALLY KNOW WHAT DRIVES
RESULTS.

“T...
Testing process
Select what
to test

Select the
winner

Review
control

Review
results

Make
hypothesis

Test

14

Prepare...
A/B testing
In A/B test we change one element of the page

15

Created by Alexander Levashov, 21 Nov 2013
A/B testing example

Original (control) version

New, challenger version

Sample of A/B test – we change branding graphic ...
A/B testing example: implementation

50
%

50
%

All
traffic

Original (control) version (A)

New, challenger version (B)
...
Multivariate testing
We change more than one element simultaneously

18

Created by Alexander Levashov, 21 Nov 2013
Multivariate testing example







2 variations of header/logo
3 variations of headline
2 variations of branding gr...
Multivariate testing example

Sample report
20

Created by Alexander Levashov, 21 Nov 2013
Multivariate testing example

Sample report
21

Created by Alexander Levashov, 21 Nov 2013
Testing do’s and don’ts









Make sure that you have enough traffic and time
Choose number of combinations wisel...
Segmentation and targeting





What is segmentation
Segmentation as a part of conversion optimization
Approach to segm...
Definition of Market Segmentation
Segmentation is a marketing term referring to the
aggregating of prospective buyers into...
Definition of Market Segmentation

Webtrends’ definition:
Segmentation is an ability to identify high-opportunity
customer...
Types of segmentation








Geographical location
Demographic
Psychographic (lifestyle)
Behavioral
Time
...

26

C...
Segmentation in conversion optimization
General marketing
segmentation

Digital
segment

Digital
segment

―Digital‖
segmen...
Approach to segmentation and targeting as
a part of conversion optimization

28

Created by Alexander Levashov, 21 Nov 201...
Conclusion
Conversion optimization is a good way to extract
additional value for your business and provides good
ROI if do...
That is it!

Thank you for your attention!

Contacts:
Alexander Levashov
Email: alex@levashov.biz
Phone: +61 (0) 401 74459...
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Conversion optimization basics: how to extract more value online

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Conversion optimization is among the best in terms of ROI ways to extract additional value from organization's digital properties. It can be used across multiple channels: web, mobile, email marketing and can work especially well for online retail/e-commerce and campaign.

This presentation covers basics of conversion optimization:
- Why and when should you bother;
- A/B testing,
- Multivariate testing,
- Segmentation and targeting

Published in: Marketing, Technology, Business
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  • For example, an athletic footwear company might have market segments for basketball players and long-distance runners. As distinct groups, basketball players and long-distance runners will respond to very different advertisements.
  • Geographic• Region of the country• Urban or ruralDemographic• Age, sex, family size• Income, occupation, education• Religion, race, nationalityPsychographic• Social class• Lifestyle type• Personality typeBehavioural• Product usage - e.g. light, medium ,heavy users• Brand loyalty: none, medium, high • Type of user (e.g. with meals, special occasions)
  • Conversion optimization basics: how to extract more value online

    1. 1. How to extract more value online using conversion optimization A/B testing, multivariate testing, segmentation and targeting
    2. 2. Agenda Intro: why bother about conversion optimization? Testing     A/B testing Multivariate testing Segmentation and targeting Conclusion   2 Created by Alexander Levashov, 21 Nov 2013
    3. 3. Intro Value Ways to extract it Conversion How conversion can be improved Sample results      3 Created by Alexander Levashov, 21 Nov 2013
    4. 4. Meet Daniel E-commerce manager in ASX200 business (retail) Responsible for online business His duty is to improve both top and bottom lines of the online business    4 Created by Alexander Levashov, 21 Nov 2013
    5. 5. Value For commercial organizations value means money Fundamentally there are 2 ways to get more value    Sell more units    Get better margin   5 To more customers More units per customer Sell for higher prices Have lower expenses (cost per unit) Created by Alexander Levashov, 21 Nov 2013
    6. 6. What Daniel can do? Bring more new customers to online store  6 Created by Alexander Levashov, 21 Nov 2013
    7. 7. What Daniel can do? Increase prices  7 Created by Alexander Levashov, 21 Nov 2013
    8. 8. What Daniel can do? Extract more value from existing flow of prospects and customers and current prices  Conversion optimization – get more sales (or other target actions) per 100 visitors 8 Created by Alexander Levashov, 21 Nov 2013
    9. 9. How can we increase conversion? Give more value to customers       Discounts/specials Better customer service Longer warranty Unique product range Etc Make a purchase easier for them      9 Faster website load Support of multiple devices Better content and UX More relevant offers Created by Alexander Levashov, 21 Nov 2013
    10. 10. Sample calculation Conversion Visits per day Sales per day, number Baseline 2% Optimized 2.25% 100,000 2,000 100,000 2,250 Average sale, $ $100 $100 Revenue per day, $ $200,000 $225,000 Revenue per month $6,000,000 $6,750,000 Change, $ per month + $750,000 Not bad, especially if the cost associated with that increase is several thousand $$$ - good ROI 10 Created by Alexander Levashov, 21 Nov 2013
    11. 11. Daniel is happy as well as his boss 11 Created by Alexander Levashov, 21 Nov 2013
    12. 12. Testing    Why test? A/B testing Multivariate testing 12 Created by Alexander Levashov, 21 Nov 2013
    13. 13. Why test? WITHOUT TESTING, OPINIONS ARE JUST THAT—OPINIONS. ONLY WITH TESTING CAN YOU REALLY KNOW WHAT DRIVES RESULTS. “Testing your content is like a license to print money.” 13 Created by Alexander Levashov, 21 Nov 2013
    14. 14. Testing process Select what to test Select the winner Review control Review results Make hypothesis Test 14 Prepare challenging versions Created by Alexander Levashov, 21 Nov 2013
    15. 15. A/B testing In A/B test we change one element of the page 15 Created by Alexander Levashov, 21 Nov 2013
    16. 16. A/B testing example Original (control) version New, challenger version Sample of A/B test – we change branding graphic only 16 Created by Alexander Levashov, 21 Nov 2013
    17. 17. A/B testing example: implementation 50 % 50 % All traffic Original (control) version (A) New, challenger version (B) Next step We send a share of traffic to challenger version, keep rest with original version and compare conversion (in our example case it can be click-through rate) 17 Created by Alexander Levashov, 21 Nov 2013
    18. 18. Multivariate testing We change more than one element simultaneously 18 Created by Alexander Levashov, 21 Nov 2013
    19. 19. Multivariate testing example       2 variations of header/logo 3 variations of headline 2 variations of branding graphic 5 variations of text copy 2 variations of form 2 variations of main call-to-action button In this example the total number of combinations will be 2x3x3x5x2x2 = 360 Hardly possible to do multivariate testing manually, a special software is required Note: good MVT tool does not need to run every possible combination 19 Created by Alexander Levashov, 21 Nov 2013
    20. 20. Multivariate testing example Sample report 20 Created by Alexander Levashov, 21 Nov 2013
    21. 21. Multivariate testing example Sample report 21 Created by Alexander Levashov, 21 Nov 2013
    22. 22. Testing do’s and don’ts       Make sure that you have enough traffic and time Choose number of combinations wisely Preview combinations Keep control variation in testing Measure right things Test again It's fine to celebrate success but it is more important to heed the lessons of failure. Bill Gates 22 Created by Alexander Levashov, 21 Nov 2013
    23. 23. Segmentation and targeting    What is segmentation Segmentation as a part of conversion optimization Approach to segmentation 23 Created by Alexander Levashov, 21 Nov 2013
    24. 24. Definition of Market Segmentation Segmentation is a marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will respond similarly to a marketing action. Segmentation criteria: 1) Homogeneity (common needs within segment) 2) Distinction (unique from other groups) 3) Reaction (similar response to market) 24 Created by Alexander Levashov, 21 Nov 2013
    25. 25. Definition of Market Segmentation Webtrends’ definition: Segmentation is an ability to identify high-opportunity customer groups within your marketplace. Why use segmentation? To increase sales, uncover new opportunities and improve customer retention. 25 Created by Alexander Levashov, 21 Nov 2013
    26. 26. Types of segmentation       Geographical location Demographic Psychographic (lifestyle) Behavioral Time ... 26 Created by Alexander Levashov, 21 Nov 2013
    27. 27. Segmentation in conversion optimization General marketing segmentation Digital segment Digital segment ―Digital‖ segmentation Digital segment Digital segment Digital segment Digital segmentation is specific: you can target more segments than with traditional marketing. Example: people who spent 10 minutes on product description page in motobikes category People who abandoned shopping cart, but returned to your online store 27 Created by Alexander Levashov, 21 Nov 2013
    28. 28. Approach to segmentation and targeting as a part of conversion optimization 28 Created by Alexander Levashov, 21 Nov 2013
    29. 29. Conclusion Conversion optimization is a good way to extract additional value for your business and provides good ROI if done in right way. Where to start? Try landing page A/B testing, it is the easiest way to test the water and build a case for your organization stakeholders. 29 Created by Alexander Levashov, 21 Nov 2013
    30. 30. That is it! Thank you for your attention! Contacts: Alexander Levashov Email: alex@levashov.biz Phone: +61 (0) 401 744597 Skype: altima-interactive LinkedIn - http://au.linkedin.com/in/alevashov/ 30 Created by Alexander Levashov, 21 Nov 2013
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