Ken Seiff, the CEO of Bluefly.com, has a simple mathematical formula for obtaining new customers: More site traffic = more business. With that guiding principle, the New York-based upscale apparel and home goods discounter relies on broad, well-placed search-engine links aimed at capturing consumers seeking off-price wares from Donna Karan, Prada, Polo, and dozens of others.
But that’s only one part of the equation. Bluefly, which generated revenue of $23 million in 2001, also runs weekly contests in which visitors can win a $1,000 Bluefly shopping spree or a much-sought-after Hermès Birkin bag (as seen on HBO’s Sex and the City) valued at up to $20,000. There’s just one catch: To be eligible, visitors must supply their e-mail address.
And that’s where the process of converting them into buyers begins. “As a retailer, the first thing you want to do is give visitors a chance to learn about what your company stands for, and this promotion does that,” Seiff says.
If he doesn’t get their order the first time, no worries. Web surfers are allowed to enter the sweepstakes daily to improve their odds, a policy that encourages follow-up site visits. “The idea is to get people to come back,” says Seiff. “The more times they visit, the more likely they are to become consumers one day.”
Then come the weekly e-mails highlighting specials and exclusive deals for those who have registered. Eventually, Seiff figures, visitors will break down and navigate the site. In so doing, he believes, they will see the deep discounts (Gucci ties for $59, or 60% off retail), experience the myriad shopping conveniences (such as an option to view all dresses available in a specific size), and be transformed from browsers into buyers.
It’s hard to argue with Seiff’s strategy: This past fall and holiday season, the Hermès promotion added more than 100,000 names to the more than 1 million names that were already in Bluefly’s database. Just as important, the company’s average customer acquisition cost of $23.07 is modest compared with its average order of $154.
While attractive giveaways have proved a winner for Bluefly, they are hardly the only means i.merchants use for obtaining new customers — nor are they necessarily the best. After all, not every marketer can afford to give away $20,000 in prizes every week.
The good news is that there are effective (and cost-effective) alternatives for improving your conversion rates. One-time discounts, follow-up e-mails and e-newsletters, personalization software, and simplifying a Website’s design and checkout process are among the conversion techniques online marketers have used successfully.
“Conversion is a reflection of how good an experience a visitor has, of seasonality, of the quality of customer, and of promo activity,” says Patricia Graca, director of customer experience for HP Home & Home Office Store, a Hewlett-Packard subsidiary based in Palo Alto, CA, that sells HP and Compaq computer products. “You can’t just focus on one aspect. A coordinated effort is necessary.”
With that in mind, here are four fundamental approaches being used today to attract and convert online visitors.
Prequalification via search engine
Although print catalogs and word-of-mouth can bring potential customers to a site, they don’t always reach enough prospects. So online marketers pay for keyword listings with numerous search engines, including Yahoo!, MSN, AltaVista, and Google. Shoppers who use a search engine are actively seeking out the products you offer, in a sense prequalifying themselves. And prequalified, proactive browsers are much more likely to convert to buyers.
But while most catalogers who pay for keyword listings say the better placement is generally worthwhile, they add a caveat: Track the clickstream behavior closely.
Joe Palko, vice president of Neeps, the Wilkes-Barre, PA-based parent company of TheFerretStore.com, works with 15 search engines and discerns which of the 700-1,000 terms that he pays for are translating into sales. The word “pet,” for instance, is far too general for his site, which specializes in supplies for small, less-common pets; “hedgehog,” however, has shown a substantial payoff.
For a niche retailer that does $5.5 million annually in business (half online, half by its biannual catalog), zeroing in as much as possible helps maximize efficiency: TheFerretStore.com converts 2.7% of all its traffic into sales, far above the 1% industry average.
“I can break down where the sales are coming from,” Palko says. “It’s a lot of work, but it’s worth analyzing so that you know what sources and terms are worth the investment.” The costs of the listings vary from a few cents to a dollar per click, depending on the search engine and the specificity of the term; the more specific a term is, the less it costs. On average Palko pays $0.17 a click.
John Fischer, founder of Sticker Giant, a Longmont, CO-based mom-and-pop site that sells 4,000 SKUs of stickers — from cartoon characters to political statements — has also profited from getting specific. “Any advertising I do must be targeted and relevant,” he says. “I won’t buy a listing for ‘Puerto Rican flag,’ but I will for ‘Puerto Rican flag stickers.’”
The e-mail advantage
Speed is often of the essence when it comes to converting a visitor into a buyer. Generally speaking, once a visitor registers on your Website, you should e-mail him as soon as possible.
The first step, of course, is convincing visitors to register. They’ll be far more willing to supply their name and e-mail if you offer an incentive. It could be a chance to win a digital camera, as at HP Home & Home Office Store. It could be an offer to save 10% on a first purchase. Or it could simply be the opportunity to receive a free catalog or e-newsletter.
Once HP Home & Home Office Store acquires a name and e-mail address from a visitor, it sends a welcome letter. “It helps establish a relationship,” says Catherine Paschkewitz, director of marketing programs, “and you’d be surprised how many people click back to the site and buy something immediately.”
Daniel Reardon, a direct marketing consultant in San Francisco, saw a similar response several years ago when he was e-commerce director for TravelSmith, a Novato, CA-based cataloger of luggage and travelwear. In early 2001 TravelSmith conducted a split test in which half of the Website visitors who requested a catalog were sent a follow-up e-mail, while the other half weren’t. Those contacted by e-mail generated, on average, 15% more profit.
That introductory note is only the beginning. Many online catalogers send new names e-mails with exclusive offers of discounts. Sticker Giant, for instance, typically e-mails 10%-off coupons to newcomers. At TravelSmith, promotions that waived shipping charges were even more effective than discounts, Reardon says.
Discounts and other promotions have their drawbacks, however. Reardon warns that heavy discounting may attract a “false customer,” one who will never pay full price for your products. Along the same lines, offering free shipping one month may cannibalize sales in a future month.
Reaching out to a Web visitor who doesn’t choose to identify himself is difficult, notes Lara Evans, the managing director of Ten/Resource, an interactive online and retail marketing company in Columbus, OH. Yet it can be done, thanks to cookie software that takes data from the back end and seeds the information into the Web database.
Cookie-supported personalization can pay great dividends. Just ask HP Home & Home Office Store’s Graca. Last year the site implemented software that automatically calls up an unknown visitor’s previously browsed product — instead of the home page — when he reenters the site, thus refreshing his memory of the tantalizing item that brought him to the Website in the first place. The conversion impact has been astounding: “We got 19 times as many orders from these visitors as we had 30 days earlier using the default option,” Graca says.
Such success has spurred further personalization initiatives. HP printer owners interested in buying supplies can now sign up for My Printing Supplies: Registrants can click on a specific link on the home page to call up a customized list of supplies for easier ordering. The conversion rate for those using the service is six times as high as through regular navigation.
Site design and checkout overhaul
Even the best promotions and marketing programs won’t yield new customers unless you mind the proverbial cyberstore. A good site design, with a straightforward path to purchase, can go a long way toward improving your conversion rate.
“You can have 10,000 new visitors a day, but they’re not doing you any good if they’re not purchasing anything,” says Sue McCarthy, director of marketing and client services for Par Avance, an e-commerce software provider in Boulder, CO. “I’ve been on a lot of sites where you click around like crazy and can’t seem to find a buy button.” She recommends placing merchandise front and center — on the home page, if possible.
Internet marketers can add several other features to make the shopping process as simple and individualized as possible. Ten/Resource’s Evans points out two buyer-friendly features on the Website of one of her clients, women’s apparel marketer Victoria’s Secret: a gift guide that lists presents by either price or popularity, and a “catalogue quick order” that allows customers to enter a product number from the print catalog and head straight for checkout. Evans also compliments apparel cataloger/retailer J. Crew’s “how to measure” charts, which encourage new sales by removing much of the doubt as to whether the apparel will fit.
Checkout is a critical hurdle for new buyers. As McCarthy observes, people don’t enjoy spending 10 minutes filling out a profile. Recognizing this, numerous Internet retailers have streamlined the process by reducing the number of screens (in some cases to as few as three) and eliminating requests for unnecessary information.
To reassure the hesitant online consumer, some marketers have also made sure that features such as secure online ordering and a satisfaction-guaranteed return policy are displayed prominently — along with a toll-free number for questions, concerns, or complaints.
Just as important as making a site readily navigable is forming a bond with potential customers. Online merchants, particularly smaller ones, have made this a central focus of their conversion efforts.
Sticker Giant, for one, encourages visitors, regardless of whether they’ve made a purchase, to send e-mail versions of stickers to a friend (or in the case of the run on “Racist” stickers that went out to Trent Lott’s e-box during December’s political controversy, to a foe). The company builds good will among possible future customers and acquires e-mail addresses — of the senders and the recipients — for its database.
Fischer is also determined not to turn away a would-be buyer. If Sticker Giant is out of an item, the site’s software automatically notifies the user once it’s back in stock. Although Fischer won’t specify the cost of the software, “that piece of functionality paid for itself the first day,” he says.
TheFerretStore.com has a similar emphasis on establishing credibility with users who aren’t yet buyers. The marketer offers a forum for people to talk about their pets, a care-giving guide called “A Ferret’s Perspective,” and free e-mail on a separate domain. Palko also believes that it’s vital for a Website to provide fresh content daily, so that people will have a reason to keep coming back — and, eventually, to buy.
“The key to converting visitors is to come up with different ways to retain them,” Palko says. “The bottom line is that if people don’t buy from us the first time, we have to keep them coming back, so maybe they will the second time or the third.”
The conversion process, after all, is neverending.
New York-based freelance writer David Sparrow has written for The New York Times, Popular Science, and Parents, among other publications.