´I was just expecting sales yet I only received a ton of non-converting traffic´.
Thought this before?
I heard this just last week from a very capable and skilled marketer after discovering that his sizable investment with a reputable outsourced Pay-per-Click service provider simply failed to meet his goal.
Well, let me clarify the term, ´failed´. The outsourced service provider didn´t fail they met THEIR goal of ´delivering relevant pay-per-click traffic to the client´s website.´ The marketer didn´t necessarily fail either; he defined his goal as ´receiving pay-per-c
lick search engine traffic to his website.´
So where was the breakdown?
It was in following the conventional thinking that ´if I generate traffic, I will correspondingly generate sales´.
Each traffic generation channel (like pay-per-click or organic search engines) and the visitors arriving through it will produce varying outcomes for the same website. Therefore, even if your website produces a favorable sales conversion from organic search engine visitors, there is no basis for assuming that another traffic generation channel like pay-per-click will deliver similar or better sales conversion results. ´All traffic is NOT created equal´.
So how do you define the RIGHT goal?
Easily ´ by following these three steps:
1) Define your Most Important Action
All businesses have a ´most important action´ which their marketing efforts seek to solicit from their website visitors such as sales, leads, content or membership subscriptions or any other ´value-oriented´ action that pursues an increase to their financial condition. You must define your ´most important action´ and use it as a guide for all of your market strategy decisions. This is your general ´goal´.
2. Consider Your Entire Value Chain
All website value chains have at least two essential and interdependent components that must be addressed to maximize your financial results from achieving your ´most important action´. The first is ´generating visitor traffic´ and the second is ´converting the visitor traffic´.
TRAFFIC + CONVERSION = POSITIVE FINANCIAL RESULTS
If you consider only one component instead of both (as in the case of my opening example) then you´ll increase your chances of failing to meet your goal. Because all traffic is not equal, each new traffic generation strategy will need to be tested, tracked and maximized to produce a conversion rate that achieves your goal.
I have spoken with many companies that were awfully disappointed with their pay-per-click search engine results yet they never considered enhancing the conversion strategies used to convert pay-per-click visitors to sales. Because traffic generation channels perform differently, your website´s conversion strategies must be optimized to attract, interest, evoke desire and persuade action from visitors.
mponent to a third party, the responsibility for the other component falls on you. Ideally, if you are considering outsourcing your pay-per-click campaign, hire a company that effectively manages both components - traffic generation and conversion enhancement.
3) Add Measurable Performance Metrics (Fill in the Details)
But establishing a goal (i.e. most important action) and addressing ´both value chain components´ is not yet good enough. As the saying goes, ´the Devil is in the Details´.
If you set your goal to ´achieve sales´ then you need to define what that means as a measurable performance metric. There are many types of performance metrics which measure the effectiveness of traffic generation or conversion separately, like ´cost per visitor´ or ´conversion rate´, but mainly one that considers both interdependently.
Successful marketers use a performance metric that considers both traffic generation and conversion in measuring goal achievement. This metric is called, ´cost per action´. It is calculated as follows:
Total Cost of Campaign / Total number of actions generated by the Campaign
The ´total cost´ figure should include the cost for traffic and the cost for the outsourced third party or in-house labor. The ´total number of actions´ figure includes the sales conversion rate:
(Visitors x Conversion rate = Number of Actions).
A target ´cost per action´ should be a specific dollar figure below your net profit (defined as, ´Revenue ´ Product Costs´) and your profit margin objective.
For instance, let´s assume that your product sells for $97, your product costs $20 to develop, carry or deliver and your net profit objective is $25 - your ideal ´cost per action´ should fall below $52.
By following these three steps you will be able to:
- Establish measurable performance metrics to determine success or failure of a marketing strategy and determine your return on investment from it.
- Communicate to an outsourced service provider the ´detailed goal´ you expect to achieve through your engagement with them. For a pay-per-click campaign, this enables a service provider to calculate bid prices, ad positioning, and bid management strategies to help meet your performance metrics.
- Set priorities for selecting an effective outsourced service provider or to direct in-house efforts.
- Ensures that your marketing strategies are focused on your goal and that you´re heading in the right direction.
Establishing your DETAILED goal BEFORE you make any outsourced or in-house decisions is essential. As the old joke goes, ´I´m making progress climbing the ladder of success--I just don´t know if it´s leaning against the right wall.´
Today´s Lesson: Define your ´most important action´, allocate efforts for traffic generation AND conversion and establish the correct performance metrics to determine success. If you follow these steps you won ´t end up ´just expecting´.
Author: Kevin Gold, Co-Founder - Enhanced Concepts
Kevin Gold is co-founder of Enhanced Concepts, Inc., a traffic generation and conversion enhancement strategy company that enables businesses to achieve positive financial results online. Kevin is also author of FroogleMaximizer™, the first Quick Start Guide to Google’s free product search engine.