Using Small Discounts to Convert Customers

This is a guest post by Sean Godier from business-supply.com.

You see it in a lot of places: 20%, 30%, 40%–even half off.  It seems like many online retailers have gotten crazy with the discounting. Black Friday and Cyber Monday have become Everyday Tuesday and Regular Wednesday. And with it comes the pressure for you to compete.

But it doesn’t have to be that way.  You don’t need to sell the farm to routinely convert customers.

How do I know this? Because I recently ran a Spring Metrics Smart Offer which was my most successful one to date—in both conversion percentage and in revenue. The offer? 2% off.  That’s right, TWO PERCENT.  The offer generated 3.4x revenue and a 62% higher conversion rate than we typically see with other offers. It absolutely crushed a previous offer of 5% off, and the 2% offer was presented during our slowest month of the year.

So why the success with a measly 2 percent?

High Perceived Value. There comes a point where you devalue your product, not only in your eyes, but in the eyes of the consumer.  If you’re selling a high quality product and offering huge discounts, the customer is going to think one of two things: 1, you jacked up the original retail price so you could offer a larger-than-normal reduction; 2, your product isn’t as good as advertised.

Customers Are Regular People Too. Everyone loves a deal.  But most consumers aren’t unreasonable.  They know you need to make a profit to keep your business alive.  Sure, there is always a small segment of consumers (think serial comparison shopping engine folks) who won’t touch your items until it’s at or near clearance prices.  But do you really want that consumer?  That person is loyal to no one but the discount, and more often than not, is more high maintenance than your average customer.

Extra Toppings. To many customers, a Smart Offer—even at 2%–is like getting a cherry on top of your ice cream for free.  It’s a gift, and they’re going to take it.  And they’re going to appreciate it too.  A customer coming to your store had no expectation of an additional gift, so 2% off is, well, awesome.

Always remember that typical customers want three things:

  1. They want to buy—but not be sold
  2. They want to feel like they got a quality product at a good price
  3. They want to enjoy the experience

Do those three things, and you don’t have to sell the farm with discounts.

4 Methods for Understanding Your E-Commerce Users

This post was co-written by Spring Metrics and UserTesting.com

If you’re an e-commerce site, increasing your conversion rate is key to running your business. But making blind changes to your site or marketing campaigns can be counterproductive. You first need to understand your users:

  • Why are they coming to your site?
  • What are they doing on your site?
  • Why are the buyers buying?
  • Why are the non-buyers not buying?

In this post, I’ll discuss four methods you can use to better understand your users: Session Analysis, Aggregate Analytics, User Studies, and Surveys. Each method has different strengths and weaknesses, so you will likely want to try a few of these in concert to best understand your site and your users.

 

1) Session Analysis

What is session analysis?
Session analysis is when you analyze site data (i.e. “time on a page” and “navigation flow”) for a select number of users.

Session Analysis, at a Glance:

Pros: Quick and easy. Let’s you see actual user data.
Cons: Can’t ask users “why.” You’re only looking at a small sample size.
Example: You look at a dozen buyers and a dozen non-buyers. Buyers usually land on your home page; use the “most popular products” list to find a product, and then purchase. Non-buyers usually land on your home page; use the on-site search – sometimes multiple times, and then leave. One possible conclusion: search results do not seem to be matching the users’ expectations – there is work to be done here.

What’s a good tool to use for session analysis?
Spring Metrics, other analytics tools, or your server logs.

Why should I use session analysis?
This is a quick and easy first step that will get you started within just a few minutes. While you should be able to target individual user data, you won’t be able to ask “why” to your user. You’re also limited on how many users you can realistically analyze.

2) Aggregate Analytics

What is aggregate analytics?
Aggregate analytics is simply reviewing all of your site data and metrics to help identify user trends.

Aggregate Analytics, at a Glance
Pros: Can see trends to understand different segments of users; data view is 100% comprehensive rather than just a sampling.
Cons: Can’t ask users “why.” Your web visitors become statistics rather than actual people.
Example:  You look at your data and notice that first time visitors rarely buy, but second and third time visitors seem to convert at a higher rate. You might take two actions at this point; you may create offers for only first time visitors to try to get them to buy sooner, or you may try to capture other information such as email address on the first visit, so you can get them to come back for a second visit when they are more likely to buy.

What are good tools to use for aggregate analytics?
Google Analytics and Spring Metrics.

Why should I use aggregate analytics?
Analyzing your global, overall web data can help you determine high-level user trends. For example, you should be able to pinpoint where most of your visitors come from, and which of your marketing efforts are most effective.

3) User Studies

What are user studies?
User studies are when you observe an actual person using your site. In most cases, the user is speaking out loud as they browse your site so you gain insight into their thought process.

User Studies, at a Glance

Pros: Can understand users’ intent and hear users’ why instead of just tracking their actions.

Cons:  Cannot realistically test every user.

Example: You run a user study with five participants. Three of them get frustrated because they don’t see the shipping cost early enough in the checkout process. You can make that change immediately or possibly run an A/B test with potential changes. If you had studied just the website data, you would have seen them stopping the process, but you wouldn’t have known why they were leaving the process early.

What’s a good tool to use for user studies?
UserTesting.com is an affordable web-based solution where you can get results back in an hour.

Why should I use user studies?
Hearing users’ uncertainty and confusion when they hit one of your pages is invaluable. In addition, having them tell you what they don’t like, what they would prefer, and what they expected (compared to what they saw) is an eye-opening experience.

Pro tip: if you are showing results to your boss, show them the actual video footage (or if it’s an in-person user test, have them come and observe at least one session). Watching users struggle with the site is always more persuasive than a written report or PowerPoint deck.

4) Surveys

What are surveys?
Surveys are generally a collection of responses tied to specific questions or tasks that are asked to a large audience.

Surveys, at a glance

Pros: Can sample a large pool of users; receive non-site specific data such as general buying habits

Cons: What users say they want may not reflect actual behavior; sometimes difficult to quantify where users are getting confused or stuck on the site.

Example: You survey 1,000 people to understand what sites they shop on and what influences their buying behavior. You find that users dislike getting charged large amounts for shipping and handling, so you create offers for Free Shipping for some or all of your customers.

What’s a good tool to use for surveys?
SurveyMonkey and Zoomerang are both very popular solutions.

Why should I use surveys?
In some situations, a survey can be helpful because it can address topics that may not be directly site-related. Sometimes—the problem might be more product or policy related.

Conclusion

Each method of analysis helps you to better understand nuances related to user trends and behavior—and each brings additional feedback that helps you figure out how to serve your customers best. Generally, you will want to choose several methods to get a well-rounded perspective before you dive into changing your site and campaigns. If you do the analysis work ahead-of-time, you can save time in the long run and gain more satisfied customers.

Holiday Conversion Tips: Get More Conversions from your Email Campaigns

The sixth in a continuing series on Holiday Conversion Tips

We’re on the road to Cyber Monday, when projections are for well over $1B in online sales.  As email marketing campaigns ramp up, web businesses are looking for quick ways to ensure a higher conversion rate from emails to purchases.  You can maximize your email conversions this season with this “quick holiday win” by Spring Metrics, perfect for easy implementation in November.

Smart Offers are a sure way to increase your on-site conversions. If you’re already sending email campaigns to your list, take it a step further: reward visitors who click through to your site from your emails, and reinforce your email message through Smart Offers.

Smart Offers helps create consistency between your email and website messaging, without having to make major content changes on your site. For example, if your email displays holiday promotional items for kid’s toys, you can offer 10% off the specific items that match those in your email, or free shipping with the purchase of one of those items, to visitors who have clicked through from that email campaign. You can also combine a special offer with a message that says, “Thanks for reading our email!  Here’s a special offer for you.”

Mastergardening.com showed a Smart Offer to those who clicked to the website through an email that repeated the offer from that email campaign. This increased conversation rates from 2.2% to 2.34%. Their Average Order Value went from $23.95 to $87.45 for this Smart Offer through Spring Metrics.

Email campaigns are a useful way to increase conversions, but don’t stop there. Make this holiday season your most successful through Smart Offers. Find out more by downloading our Holiday Conversion Guide.

Holiday Conversion Tips: Using A/B Testing of Smart Offers

The fifth in a continuing series on Holiday Conversion Tips

Get ready to put away the pumpkins and break out the holiday lights! It’s time to prepare for your traffic to grow now that holiday shopping is moving into full swing. This is the perfect time to use Smart Offers to maximize holiday shopping revenue, and A/B split testing will tell you the most enticing offers to drive conversions this season.

A/B split tests of Smart Offers will help you learn which offers have the best response and conversion rates in advance of the holiday traffic. For example, you can test two different incentives: free shipping and 10 percent off. Use visitor information, such as the location associated with their IP address, to make offers to certain visitors—perhaps free shipping to those in New York and 10 percent off to those in Ohio—and evaluate their response. You may find that the response rate is twice as high for free shipping vs 10 percent off.

You can run this test offer for a week, then try another test offer—pit free shipping against 20 percent off, or a free gift. Once you’ve identified a relative hierarchy of offer results, you can decide to activate the optimal offers across your entire website traffic, or a larger segment—just in time for Cyber Monday.

Replayphotos.com used Spring Metrics to discover that visitors from Arizona responded particularly well to a certain offer. This drove a 2.46 percent conversation rate, which happens to be 3x higher than the sitewide rate for the same time period.

Additionally, customer response may vary greatly depending on location, age, gender, etc., and different offers appeal to some customers, but not others. You can also use split testing to identify different offers to show to different visitor segments.

Knowing your customers will increase conversions and profits. Use A/B split testing now to discover how to best convert holiday visits into sales.  For more useful tips on how to get your company ready for the season, download our free holiday guide!

Holiday Conversion Tips: Active Upselling at Checkout

The fourth in a continuing series on Holiday Conversion Tips.

Did you know that 40 percent of consumers will begin online holiday shopping before Halloween?

Increasing average order value (AOV) is a great method to increase revenue, even during traffic fluctuations.  You can actively upsell at checkout without adding expensive product recommendation solutions that are complicated to implement and maintain.

One option is to show select visitors a special offer to motivate add-on purchases based on their on-site behavior. By providing a simple nudge on your checkout page, you can entice shoppers to increase their cart size.

There are many ways to connect free shipping or discounts to order value. You can offer shoppers free shipping or a discount if they purchase a bundle of products or for orders above a certain amount.

Retailers can target offers at shoppers looking at specific products, such as a free warranty, a special add-on gift, or a discount.  Free gift offers can be linked to cart-size.  Use simple offers like “Spend just $15 more and get a free gift!” to motivate shoppers to spend a certain amount.

Cross Selling involves suggesting complementary products, like earrings to go with a necklace.  Upselling involves motivating shoppers to select a more expensive item or version of a product, or an additional feature, to increase AOV.

Volume pricing is another effective way to motivate higher AOV.  You can show customers who have put one item in their cart an offer to get a third item free if they buy two, or show them special pricing on quantities of three or more.

You can take advantage of these AOV-based offers during and after the holiday shopping season. Spring Metrics customer Mr. Snuff has enjoyed a 47% increase in AOV using this strategy.  Start planning your upsell offers now so you can capitalize when the holiday shopping frenzy begins. You can accomplish all of these using Smart Offers from Spring Metrics.

If you’d like to learn more about this and other holiday conversion strategies, download our 2012 Holiday Conversions Guide. The guide features 10 powerful “Quick Wins”— practical tips backed by real customer success stories—to help you drive increased revenue and conversions.

Holiday Conversions: Converting First-Time Visitors

The third in a continuing series on Holiday Conversion Tips.

Don’t let first-time visitors simply walk away—make sure window shoppers move forward on the path to purchase as the holiday shopping season approaches.

Learning from and Converting First-Time Visitors

Most likely, a decent portion of traffic to your site is from first-time visitors. This portion will likely increase during the holiday season as window shoppers are searching for gifts, which is why it is the perfect time to maximize your use of Smart Offers.

Smart Offers can help you get to know your visitors better, increasing your chances of converting them into customers. And before the holiday season goes into full-gear, you can use Smart Offers to test different messages or incentives on your first time visitors.

For example, if your brand is known for competitive prices, you can use Smart Offers to test both different incentives and emotional ads on your first-time visitors. Do this before the holidays to optimize the offers and messages you use.

You can also optimize offers based on traffic source, geography, or time of day.  For example, for search engine traffic, you can show offers re-iterating the key-words a first-time visitor typed in a Google search; for first-time clicks from a new email list, thank them for checking you out and offer them a reward for taking the next step. Your first-time visitors are not a uniform group, and you can use Smart Offers to segment and personalize on-site content and promotions.

Find out why a visitor is initially drawn to your site, and then communicate with them accordingly. Are they driven by price, selection, brand, value, sentiment? Finding out why a visitor first came to your site is the key to figuring out how to keep them there.

It is much more difficult to convert a first-time visitor into a buyer than a first-time buyer into a repeat buyer.The number of first-time visitors will greatly increase as the holiday season approaches, so now is the time to take advantage and hook a first-time visitor using Smart Offers.

Spring Metrics’ Holiday Conversations Guide will show you how to turn visitors into subscribers and increase cart check-outs.  Find out more by downloading our Holiday Conversion Guide.

Smart Conversions: An Outsider’s Perspective

This is a guest post from Kyle Sanders, an eCommerce entrepreneur and co-founder of Complete Web Resources.

There is a ton of information available on the web about what you should test on your website. Conversion optimization experts have a litany of conflicting opinions regarding which elements are the most testworthy, as well as which ones you should continually be testing.

Like most business owners with an online store, I had little to no experience optimizing for conversion and started testing random elements based on suggestions from blog owners and experts I didn’t know. Button colors, trust symbols, and guarantees were on heavy rotation for several months but only yielded minor increases in sitewide conversion rate. Building out great product pages helped somewhat, but the increases were less than satisfying. Disappointed, my business partner and I began searching for other options. There were a few tools that streamlined the process and made it easier, but in the end, we were making design changes in a market with mature competition and a large number of brands with heavily enforced MAPs (minimum advertised price).

After much discussion, we knew we needed a way to test promotional pricing and other offers while maintaining the integrity of our website. There were free options and a few fly-out coupons and menus, but most offered minimal design control and provided no data other than number of times a coupon was used (which was already available via our cart software). Sure, it was data, but the time to process it and evaluate made it tedious. We needed a better overall solution.

Enter Spring Metrics

My partner found and suggested Smart Conversions from Spring Metrics. There was a 14-day trial, so we got started right away. What initially impressed me the most was how easy and useful the conversion data was; we didn’t need to be analysts to understand any of the data or reports. Everything was clean, understandable and allowed for quick decisions and iterative testing.

Using Smart Offers for Solid Conversion Lifts

In addition to the effortless conversion tracking, we implemented several different smart offers based on visitor data and time-on-site that doubled our conversion rate almost overnight.

Our most impressive Smart Offer is for visitors that have been browsing our store for more than 5 minutes; it converts at a whopping 22.63 percent. The offer is displayed in a completely controllable fly-out that you can customize to match the look and feel of your website (you can also use bold colors, if desired, to draw more attention to the offer). The beauty of Smart Offers is that they look and feel organic and can be easily dismissed if the visitor isn’t interested. View the offer below.

In addition to the above, we also offered “10 percent off” for orders over $50 for individuals who have either:

a) never visited our website before (this one converts at 2.59 percent)

Google Shopping Offer

or

b) who visited before and didn’t purchase anything (this one converts at a stronger 5.69 percent)

For the eCommerce space, all three offers outperform industry-standard conversion rates and have increased our average order value substantially. In addition to that, I’m confident Smart Offers will be the most effective way to deliver and test offers during the upcoming holiday season. For the cost, it’s an unbelievable value for any online business. I’m also confident that Smart Offers will prove the most efficient means of delivering and testing offers during the upcoming holiday season.

The Unexpected SEO Benefit

Through using Smart Offers in conjunction with Spring Metrics conversion tracking, we are able to get a quick, real-time breakdown of exactly how our customers were searching before arriving at our site—and more importantly, which search terms most frequently results in conversions on our site. The recent algorithmic updates rolled out by Google (namely Penguin) makes it increasingly important to maintain a highly diverse link profile.

After checking our incoming keywords and real-time conversions several times per week, our SEO strategy was revamped completely. Rather than optimize primarily for brand-related terms, we were able to create a highly diverse link profile based on the data from Spring Metrics, which has directly resulted in stable organic placements through the most recent Penguin data refresh (10/6/2012).

There are several ways to optimize for and track conversions, and everyone has an opinion about which works best. We chose Spring Metrics. It worked for us and we wouldn’t recommend anything else.

Holiday Conversions: Turning Visitors into Subscribers

The second in a continuing series on Holiday Conversion Tips.

A key step to increasing purchases this holiday season and beyond is to email your past visitors when the shopping season is hot. But first you need their email addresses. You can convert more site visitors into subscribers and increase your pool of potential shoppers with Smart Offers. Start now to increase your holiday marketing opportunities.

Spring Metrics’ 2012 Holiday Conversions Guide features 10 powerful “Quick Wins”— practical tips backed by real customer success stories—to help you drive increased revenue and conversions.  Check out one of the quick wins below:

Converting more Visitors into Subscribers

If you can get a visitor to become a subscriber, you have already won half the battle. A visitor may not be ready to make a purchase their first time on your site, but the ability to have future communication with a visitor highly increases the chance that they will become customers.

One great way to build your email list is by using Smart Offers, especially to first-time visitors.  What is the average time on site for someone who has never visited your site before? If it averages 45 seconds, present them a Smart Offer after 30 seconds on the site—before most first-time visitors are expected to leave.

The offer can simply invite them to sign up for your special email newsletter, or offer them a special coupon code if they give you their email address.  You can also motivate visitors to become subscribers by offering to email them a link to a guide, ebook, or whitepaper.  These kind of offers will increase your chances of converting a visitor into a subscriber, and eventually, a paying customer.

Conversation is key to converting visitors into customers and first-time buyers into repeat buyers. Having an email address allows you to keep in contact with customers and present offers based on their specific needs. The amount of time to reach potential holiday shoppers is dwindling fast, so start collecting email addresses today.

Learn more about this strategy and many others by downloading our Holiday Conversion Guide.

Special Holiday Promotion
Now you can get Smart Conversions from Spring Metrics in time for the holiday season and save up to 32% in the process.  Sign up for a demo, test drive the solution on your site, and judge for yourself how quickly and easily you can get more customers, subscribers and followers in time for the biggest consumer buying spree of the year.

Holiday Conversions: Preventing Cart Abandonment

This is the first in a continuing series on Holiday Conversion Tips.

Up to 40 percent of annual retail revenue is dependent on the holiday shopping season. At this pivotal time of the year, it’s essential that merchants convert as many visitors into paying customers as possible.

To help retailers get the most out of the upcoming holiday shopping season, Spring Metrics is unveiling our new 2012 Holiday Conversions Guide, which features 10 simple, yet powerful “Quick Wins”—tips and suggestions, complete with real customer stories—to help you drive more conversions.

The guide outlines steps you can take immediately to prepare for the holiday shopping season, as well as things you can do throughout the season to optimize conversions and maximize revenue. Let’s explore one of the Quick Wins below:

Quick Win: Prevent Cart Abandonment
Your visitor came, loaded their cart, arrived at the checkout, and is now just sitting there … longer than usual. Something is wrong. Chances are, this visitor is about to abandon their cart. But with real-time dynamic offers, you can get a message in front of that almost-customer to remind them on the spot of the value of making the purchase. Give them that extra nudge with free shipping, fast delivery, product scarcity, or a special discount if they purchase. Get them over the finish line!

Preventing abandoned carts with dynamic, smart offers is not just a holiday strategy, you can do this year-round. But for retailers who see a larger portion of their traffic—and revenue—during the holiday shopping season, it is particularly important to reduce cart abandonment during this critical time. We recommend testing a few different smart offers before the holidays, so that by the time the season is in full swing, you’ve already determined the smart offer that can reduce abandonment rates.

How does it work? You can set up a smart offer with Spring Metrics that automatically displays a rectangular “coupon” on their screen when a certain condition occurs: in this case, when a visitor has let their cart, full of one or more items, sit for a certain period of time without checking out, as measured by our software.

Download the Holiday Conversions Guide to learn more. It’s chock full of holiday retailing pointers!

3 Out of 2 People Have Trouble With Fractions

One of our awesome team members forwarded a Time Moneyland article, which itself was a take off from an article in The Economist, which in turn was based on a study published in the Journal of Marketing.The gist is that consumers routinely fail to do the math correctly on discounts. 33% more product for the same price is a decidedly worse deal than 33% off, but according to the study buyers reach for more product in most cases.

Math is your Friend - Discount Offer Psychology

Statistically speaking, your site visitors are subject to this rule

As an online merchant, this information is highly valuable. In politics, they call it framing, and it’s critical to success. In retail, they’re calling is discount psychology. How you word your offers can make all the difference to the performance of your offer, and its impact on the bottom line. Spring Metrics Smart Conversions allows you to split-test your offers – just set up multiple offers to the same target segment and we’ll automatically divide the traffic and tell you which is performing better.

For instance, you may wish to encourage repeat customers to place larger orders. If you know they have a historical cart size of $50 but you’d like to get them up to $75, you can entice them to the higher level with a 10 percent discount offer and still pocket a $17.50 revenue increase.

This effect speaks to why Sam’s Club and Costco are so successful. Increased cart sizes for the same money. You may even hear your friends joking that they can’t get out of those stores without spending way more than they intended to spend. “I got two bazillion pot stickers for like $50!”

A more complicated example: your visitor/prospect is looking at a product page for a $40 item. You know that you’ve got a $60 item that is similar to what they’re looking at. So you make an offer to “buy this other [$60] item and we’ll give you an accessory for free” where your cost on accessory is less than the increased margin on the upsell. Your revenue went up, the overall cart margin went up, and you’ve got a customer now with a higher baseline purchase price at your store that you can re-market too in the future.