conversion expectations- a metrices for sales growth
Introducing Conversion ExpectationWhat it is and why you need to be using itSerge Milbank
Who are Stream:20? ABOUT US OUR CORE SERVICES Digital Sales Digital Sales1. A digital marketing consultancy, bridging the gap between agencies, technology providers and clients Delivery Planning to optimise online marketing performance Driving incremental Providing the toolkits revenue on Desktop/ and resource for sales2. Work at both ground-level execution and senior- Mobile/Tablet delivery level strategy and planning – onsite and on demand Digital Sales Digital Sales3. Clients work with us in a number of ways, including: Toolkit Organisation • Traditional strategy and planning retainer across Ensuring the correct loyalty & retention and acquisition Optimising your toolkits are • Interim resource at both mid and senior level business structure for implemented for success • Short term pilot campaign management success • Audit and technology/agency selection projects CLIENT SNAPSHOT
The Innovation lifecycle and chasing salesIn the initial stage of innovation lifecycle of an organisation, to drive sales firms tend to do:• For first 6-12 months-setting up multiple channels of marketing, getting them up and running.• Next 12-36 months-Layering best practices of decision making, best budgeting practises, analysing and getting in to recent industry channels.• 3 years+- Trying out new channels, coming up with variations and versions, in short doing new things that could drive sales. when everything is in place, well layered and still the management is looking for growth a question arises what to explore/exploit?
The Innovation lifecycle and chasing sales PUSHING LIMITS LOW HANGING BEST PRACTICE FRUIT6 -12 months 12 – 36 months 3 years + Doing new Getting good Doing current things that things done industry drive initiatives incremental better sales
We have been forced to look for ways to drive incremental growth, beyond where you would normally go
Ironically one of the best metrics seems to be Conversion Rate orConversion Rate Expectation
Conversion Expectation- what is it?• Conversion expectation is what conversion rate you would expect at any given point in time, assuming your marketing activities are, what you would normally do.• Conversion rate – as you would expect this is the ratio of people visiting your site or a section of your site compared to sales (or upgrades or leads, or requests• Any given point in time – Conversion rates are seasonal, and highly correlated with demand levels. More people have a propensity to convert in peak periods and less in lower periods. This means that conversion rates vary based on a point on the seasonal curve.• Your marketing activities – your marketing actually has a large impact on conversion. Key factors are (but not limited to): • Traffic levels – the more traffic you receive, the lower the conversion rate • Offers – the better the offer, the higher the conversion rate • Product changes – if your product improves, so does your conversion rate• Media mix – different media channels deliver different quality of inbound traffic and hence conversion rate
• Conversion rate is used for planning.• Creating an expected conversion rate (Conversion expectation) is not about looking at last year’s conversion rate and upping it a bit to account for improvement in usability.• It is a metric that opens multi-channel sales analysis up to new areas of investigation and importantly reveals approaches to drive incremental sales online.• It is a robust method to establish what the consistency looks like, factoring out all of the influences. If you can accurately explain any movement away from expectation you have a very powerful digital sales planning tool.
We have started using Conversion Expectation What we would expect conversion to be if you did what you would normally do • If you used the same offers • If you had the same products • You had the same media mix • You had the same volume of traffic It is such an important indicator – because it is the most consistent
It is not as complex as trade analysis….but there is a lot of work on the curveto standardise conversion independent of influencing factors
Conversion Expectation – key leversWhat we would expect conversion to be if you did something different • More traffic you pump in, the lower it goes
Conversion Expectation – key leversWhat we would expect conversion to be if you did something different • Depending on the offer you give it goes up
Conversion Expectation – key leversWhat we would expect conversion to be if you did something different • If your product improves, it goes up
Conversion Expectation – key leversWhat we would expect conversion to be if you did something different • Improve the usability, it goes up (marginally)
Conversion Expectation is standardisedVariation from conversion expectation is a standardisedmeasure, precise and independent of influencing factors • You observe change from seasonal expectation in one point • …..and it behaves consistently at other points
Conversion Expectation is standardisedVariation from conversion expectation is a standardisedmeasure, precise and independent of influencing factors • You observe change from seasonal expectation in one point • …..And it behaves consistently at other points • You can predict anywhere on the curve
Offer effectiveness & predictionOnce you have predicted an offer impact, you can layer in traffic – which allows you to estimate sales
Creative Effectiveness testing OBSERVATION CHALLENGE REMEDY Maybe it was performingHigh performing creative within or below in peak periods expectations Traffic weight so high thatLarge campaigns with low conversion expectations Measure against performing creative actually have to be Conversion expectation lowered curve to assess success Is the offer having theHigh performing creative impact and not the in line with great offer creative?
A predictor of cross channel success - Search MISSED OPPORTUNITYPLANNING FOR KNOWN DEMAND
Evaluation of quality of traffic Channel Conversion Growth PredictedChannel Share Expectation Potential Conversion PPC 30% 2% 2.2% Display 10% 1% 0.5% Social Media 5% 1% 1% Affiliates 20% 1.5% 0.75% SEO 10% 2% 2.25% Email 5% 4% 4%
Sales Forecasting • Your base line withResidual Demand low traffic • What it looks like in Traffic Growth higher traffic scenarios • Cross Channel impacts Offer Driven • What it looks like with Growth offers Other Factors • Strategic growth projects
Conclusions• Conversion expectation as a metric allows you to accurately estimate the impact of your initiatives• It provides rigour to your teams and a method to judge performance – taking out external factors• It opens up your ability to plan and take more measured risks