Conversion optimization basics: how to extract more value online

transcript

How to extract more value online using conversion optimization

A/B testing, multivariate testing, segmentation and targeting

Agenda Intro: why bother about conversion

optimization? Testing

A/B testing Multivariate testing

Segmentation and targeting Conclusion

Created by Alexander Levashov, 21 Nov 20132

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

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

For commercial organizations value means money

Fundamentally there are 2 ways to get more value Sell more units

To more customers More units per customer

Get better margin Sell for higher prices Have lower expenses (cost per unit)

What Daniel can do?

Bring more new customers to online store

What Daniel can do?

Increase prices

What Daniel can do?

Extract more value from existing flow of prospects and customers and current prices

Conversionoptimization – getmore sales (or other target actions) per100 visitors

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 Faster website load Support of multiple devices Better content and UX More relevant offers

Sample calculation

Baseline OptimizedConversion 2% 2.25%

Visits per day 100,000 100,000

Sales per day, number 2,000 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

Daniel is happy as well as his boss

Testing

Why test? A/B testing Multivariate testing

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

Testing process

Select what to test

Review control

Make hypothesis

Prepare challenging

versionsTest

Review results

Select the winner

A/B testing

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

A/B testing example

Sample of A/B test – we change branding graphic only

Original (control) version New, challenger version

A/B testing example: implementation

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)

Original (control) version (A) New, challenger version (B)

All traffic

Next step

Multivariate testing

We change more than one element simultaneously

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 requiredNote: good MVT tool does not need to run every possible combination

Sample report

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

Segmentation and targeting

What is segmentation Segmentation as a part of conversion

optimization Approach to segmentation

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)

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.

Types of segmentation

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

Segmentation in conversion optimization

General marketing

segmentation

“Digital” segmentation

Digital segmen

Digital segme

ntDigital

segment

Digital segme

Digital segmen

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 categoryPeople who abandoned shopping cart, but returned to your online store

Approach to segmentation and targeting as a part of conversion optimization

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.

That is it!

Thank you for your attention!

Contacts:Alexander LevashovEmail: alex@levashov.biz Phone: +61 (0) 401 744597Skype: altima-interactiveLinkedIn - http://au.linkedin.com/in/alevashov/

Conversion optimization basics: how to extract more value online

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