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Marketing executives and managers have certainly been taking it on the chin over the last three years. The hangover of the late '90s spending party and the sobering effect of a drawn-out market downturn have left marketers, and the companies they work, for reeling.

Not to worry, all signs point to a strong and steady recovery. It won't be long now before budgets start to loosen up and we can return to the business of marketing for opportunity versus marketing for survival. The question is, What have we learned this time, and what can we take with us to avoid some of the hazards we will no doubt encounter again in the future?

What can we do to protect the integrity of our marketing campaigns, and maintain a strong and consistent presence in the market, while minimizing the effects of budget fluctuations? One CEO believes that tying management pay to marketing and sales performance is, at the least, part of the answer. This issue's dilemma asks, Should the compensation of executives and middle management be tied to the success of marketing and sales efforts?

Not one to discuss the issue of compensation in public? Let us know what keeps you up at night. What dilemma do you take with you when you leave the office? Your peers would love to help. Write to us and ask our SWOT Team about your dilemma. Tap into the collective strength, wisdom and experience of this group. It works, and you could win a free copy of our book, A Marketer's Guide to e-Newsletter Publishing.

Revisit our previous dilemma—read below for your peers' best advice on managing the many variables of Web site conversion rates.

Unite and make a difference!

This Issue's Dilemma

SWOT Category: Internal Strength

When considering compensation, should results matter?

Our small, international software company has suffered declining or stagnant revenues over the last ten quarters. I'm sure many companies can relate. We are forecasted to see an increase in sales this quarter and a slow, but steady climb over the next three quarters. Having just come through this slow period, our executive board is considering implementing a new remuneration plan that ties compensation to results.

Our marketing and sales management teams would feel the greatest effect of any changes made in this area.

Can SWOT Team members shed some light on the advantages and pitfalls of implementing such a program? Experiences from both sides of the line would be helpful.

—CEO, International Software Company

Previous Dilemma

SWOT Category: Internal Weakness

Confused about calculating conversion rates

We are a micro-business that sells information products entirely online. We rely on both search engine optimization and search engine marketing to attract visitors to our site. I originally began tracking and calculating conversion rates based on the total number of visitors to our site who made a purchase on the first visit.

After three months, I realize that many of our site visitors convert on a second or third visit, and seem to be interested in two or three other pages on our site that provide free information but do not require a specific action. There seems to be so many variables to consider, and I want to have a clear measure of effectiveness before making changes to my budget or the overall campaign.

Can the SWOT Team provide tips on what to track in order to measure the effectiveness of my current site?

—Anonymous Business Owner

Summary of Advice Received

Anonymous, your dilemma is increasingly important and complex. Bearing in mind that what you measure defines your success, SWOT Team members offer insight into the process of considering and managing the many variables inherent in Internet marketing.

Online sales follow an incremental process or cycle, much the way traditional sales do. The challenge is to clearly define a sales path through your site that keeps visitors on a fairly narrow click pathway. Monitoring how visitors use the site now will help. With a sufficient amount of site visitors and activity data about them, you'll be able to identify and hone in on the actions, pages, incentives and campaigns that most often lead to successful conversions, and how many visits it takes. With this insight, you can better define your sales path to increase conversion rates.

Your peers offered the following wisdom:

1. Track all of the activity.

2. Tie activity results back to the source.

3. Capitalize on your expertise.

4. Test, test, test.

1. Track all of the activity

It's important to track all activity until you have enough data on site visits to determine what works consistently and which areas of your site/campaigns may need fixing.

An anonymous SWOT Team member makes a point for the importance of casting a wide tracking net:

Measure both—purchases on first visit and purchases after x days, using cookies. The value of x days depends on the product you are selling and how long you think a potential buyer needs to research and think about your product before purchase.

For instance, if you sell cruise packages, you would expect that a potential customer would research packages for at least three months, possibly longer, before purchasing. If you track both (first visit and return-visit purchases), then you can also determine which campaigns work better for impulse buyers and which are better for those who like to research, then buy. Keep in mind that cookies will not reveal visitors who may return to your site from a different computer.

Jeff Clark, a Marketing Assistant at Oklahama State University Student Union, offers this advice:

Tracking not only where visitors are coming from, but also where they go when they leave your site, can provide you with valuable information. Stats may indicate that a significant number of people leave your site and go to a similar store. You can then search competing sites to assess what is drawing customers in.

Using a reasonably priced tracking software package can simplify tracking and allow you to create campaign links and monitor progress. An anonymous SWOT Team member provides this helpful advice on how to utilize tracking software and what to look for:

Most Web sites have a specific purpose, as in they're created to generate a specific action. They may be designed to generate sales, e-newsletter sign-ups, obtain quote requests, etc. In your case, you sell products, so the most important factors for you to measure are your Web site sales, where the sales are coming from and whether your advertising is producing a good return on your investment. The type of software that allows you to measure these important factors is called “conversion tracker” software. It allows you to track all “desired actions” on your Web site.

Conversion trackers measure your Web site sales from all sources. For example, reports can reveal all sales generated from search engines, pay-per-click ads, e-newsletters, affiliate programs, banner ads and other Web sites. (Note: It is important to use a conversion tracker that measures sales from all sources, not just from pay-per-click ads or from one search engine).

The conversion tracker can also group all site visits by each customer. (If a customer purchases on his fifth visit to your site, you will know how he originally found your site and which pages he viewed on each subsequent visit). These programs, therefore, allow you to see where your sales are coming from and calculate your return on advertising investment. By knowing which ads produce results, you can focus your advertising funds accordingly.

2. Tie activity results back to the source

Even with plenty of data, if you don't know what influences your visitors it will be difficult to improve your site's effectiveness. Tying activity back to the source gives you a better understanding of visitor behavior. This lets you take advantage of your site's strengths, and eliminate its weaknesses, as you improve your sales pathway.

Jesper Bram Nielson, Managing Director of TraceWorks, notes the importance of linking visitor activity back to the original source:

We regard the initial visit as extremely important, because this is where the visitor becomes aware of your existence, which of course is one of your major goals for marketing. We make a note of the source of the initial visit, whether from an advertising campaign, a search engine, a reciprocal link, etc.

We measure the effectiveness of our advertising campaigns by the number of conversions they produce on our Web site. When a conversion occurs, we check to see if the customer is a returning visitor. If so, we connect the conversion to his or her initial visit, regardless of how he or she reached our Web site on return visits. And of course, if a conversion occurs on the first visit, it is connected to the source of the visit right away. This method gives us a clear picture of our marketing campaign's effectiveness. And ultimately, when comparing advertising costs to our earnings from site conversions, we know how and where to optimize and where to invest our marketing budget.

3. Capitalize on your expertise

One of the advantages of tracking visitor behavior is that you can pinpoint what visitors are interested in. You can capitalize on the fact that site visitors seem to be attracted to a few specific pages by increasing the value of the information and adding an opt-in device for receiving this information to increase sales.

Liz Micik, owner of The Ordinary Marketer, leads us down the path of one of the most compelling and powerful marketing vehicles of the Internet—expertise:

Use the information you've already mined from your data to replicate the success you're already enjoying. It's something you should look at very closely that might help you convert more visitors after just two or three visits (many sites average five to seven visits to conversion). It just might lead to that elusive increase in conversion and bottom line gain. You mentioned there is a lot of interest in two or three pages of free information on your site that do not require a specific action. Look at these pages again with fresh eyes. What are they? I say they're an untapped gold mine. These could be your “free” articles or resources, your customer service pages, FAQs, or something you would never relate to sales. I would bet my last dollar that they deal with some of the more pressing or frequent questions your visitors are trying to get answered. Here's how you could do a little alchemy and turn them in to sales:

  1. If the information on these pages is not in the form of articles, use the subject matter to write articles. Then write more of them. Make each one concise, to the point with no sales speak, covering a slightly different angle or speaking to a slightly different group (these would correlate to your search engine marketing keyword results).

  2. Send them out to be published elsewhere on the Web. There are other Web sites like yours that need articles. There are directories, e-zines, portals, etc. in need of fresh information. Become an expert.

  3. Take it offline, as well. Use these same articles as the basis for press releases, etc. that could result in your company earning the stamp as industry expert. These can also be posted in your site's “news” area.

  4. Above all else, there is one thing you must do with those three pages—add a call to action. Link them back to one or more of your information products. If your stats are telling you that a visitor buys product “A” then goes to page “B,” make sure there's something on page “B” that either leads him or her to a sales page for product “C” or gives them the option to forward the information to a friend, etc.

The bottom line of all data collection and metrics interpretation is this: a prospect will not take action until and unless you tell him to take action. And you can't get what you don't ask for! Use the numbers you have to tell you what to ask him or her to do.

4. Test, test, test

Testing has always been an important part of marketing. The Internet makes it easier and more cost-efficient. After you've determined your new plan of action—whether adding more value to existing content or better defining your site's sales pathway—spend time testing each variable and measuring results. The higher your site traffic, the more valuable your testing will be and the less time it will take you to gather meaningful results.

President of Witan Intelligence Strategies John Bourget notes that it's important to “Test at least two different approaches simultaneously, and measure results.”

Stuart Morley, a partner with Morley & Associates Inc., shares the following example of how one of his clients managed the variables and tested results:

One of my clients, an electronics product company, tested and measured several variables over the last 12 months in order to increase conversion rates. They found most customers purchased after the fifth or sixth visit. They found changes impacted the conversion within one month of the change. Other stats that may interest you are:

  1. They increased their product offering and conversions increased.

  2. They increased prices and conversions increased.

  3. They changed their Canadian pricing to US pricing and conversions increased.

  4. The more targeted their advertising to industry publications the higher their conversion rates.

  5. The more widely they advertised and drove traffic to their site, the lower the conversions, but the higher the overall sales.

  6. The change in season had a small impact on conversion.

  7. Changes in copywriting, based on consumer feedback from emails and message boards, had NO impact on conversion.

  8. Changes in the site's usability had NO impact on conversion.

  9. Changes to the site's design had NO impact on conversion.

  10. Changes to the site's navigation had NO impact on conversion.

  11. Changes to the policies (e.g., stopped paying return shipping) reduced conversions.

  12. Changes to page layouts did improve conversion.

  13. Competitor actions (online and offline) had NO impact on conversion.

While these statistics provide valuable insight, they also reveal how much science and art is really involved in effective Internet marketing. Anonymous, there are no hard fast answers, let your results be your guide.

Way to convert this dilemma, SWOT Team—thanks again!

We did our best to provide a thorough overview of your responses to this timely topic. All of the advice we received was insightful. Thanks for your participation. We appreciate it!

Continue reading "SWOT Team on Compensation—Should Results Matter?" ... Read the full article

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ABOUT THE AUTHOR

Hank Stroll (Hank@InternetVIZ.com) is publisher at InternetVIZ, a custom publisher of 24 B2B e-newsletters reaching 490,000 business executives.

Yvonne is a “customer engagement coach” and President of EVE Consulting, helping companies achieve sustainable market leadership through the power of customer engagement.