The Basics of Website

Visitor Conversion

A Whitepaper from Topica

January 2007
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The Basics of Website Visitor Conversion

Table of Contents

A. Introduction.................................................................................3

B. The Conversion Equation..............................................................4

C. The Components of Website Visitor Conversion............................5

C.1. Acquire
C.1.1. Capturing the Lead...................................................5
C.1.2. Qualification Data.....................................................6
C.1.3. An Automated and Effective Welcome.........................7
C.2. Convert
C.2.1. Buyer’s Decision-Making Process................................8
C.2.2. Work with Available Information.................................9
C.2.3. Keep the Conversation 2-Way....................................9
C.2.4. Targeted and Relevant Conversion Campaigns............11
C.3. Grow
C.3.1. After Purchase Up-sell Opportunities.........................11
C.3.2. Increase Customer Lifetime Value.............................12

D. Summary....................................................................................14

E. The Topica Solution.....................................................................14

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Editorial Update:
The Basics of Website Conversion Whitepaper was initially launched on May 2006. Due to its success,
Topica is releasing an updated version to guide small and medium sized businesses with their online
marketing plans for the holiday season.

Due to the dynamic nature of the e-commerce industry, statistics were also updated.

A. Introduction

E-commerce has been a powerful marketing channel over the past few years. eMarketer estimates that
retail e-commerce
sales will increase an
average 18.6% per
year between 2005
and 2009. As more
consumers utilize the
internet to purchase
goods and services,
small and mid-sized
businesses are
finding it appealing
to do businesses on
the Internet. In fact,
according to the
Yankee Group, over
2 million small and
mid-sized businesses
do business online
today.

This is all very good

news to those selling
advertising and paid search, or operating affiliate networks and other traffic-generating services. With
more businesses moving onto the Web and actively marketing online, there is also increasing competition
for available advertising inventory. This trend is particularly affecting small and mid-sized companies, as
their budgets are more constrained and, therefore, their options for purchasing online advertising are
generally limited. As a result, demand for popular advertising inventory is on the rise, and so are prices.
According to eMarketer advertisers spent an average of $71.51 per user, which eMarketer projects will
increase to $88.28 in (2006) and will inch close to the $100 per user mark in 2007.*
.

But price increases are not the only trend negatively affecting the online marketer’s success. Not
surprisingly, Forester Research has found that with more ads, performance of online programs is
decreasing and resulting in fewer conversions of first time visitors and higher shopping cart abandonment
rates. Consequently, marketers have to spend more to drive traffic to their Web sites and, at the same
time, are faced with lower conversion rates, all leading to an ever increasing cost per customer.**

*Source: eMarketer US Online Ad Spending: Peak or Plateau, October 29, 2006

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**It is recognized that not all businesses are interested in strictly transacting sales online. For simplicity, this
report uses the term “customer;” however, these concepts can be applied to donors, sponsors, clients, members,
or any other relationship a site might be striving to create.

B. The Conversion Equation

Currently only 1% - 3% of all website visitors convert into customers. How does that affect a site’s
bottom line? 97% of the traffic driven to a website will leave without ever taking action, if the only
option to engage is to complete a purchase. For example, assume a company is spending $4500 on an
advertising campaign and is generating 3000 additional site visits, the campaign results might look like
this:
Marketing budget: $4,500
Visitors (clicks) generated: 3000
Cost per website visitor: $1.50

Visitor conversion rate: 3%

Customers generated: 90
Cost per customer: $50

* Each new customer must spend $50 just for the campaign to break-even.

There are three areas where this model can be influenced.

 Increase the marketing budget. Spending more to generate more traffic is what many companies
are doing. It is simple thinking: more visitors will equal more leads, which will create more
customers. However, while just throwing money at the problem is often the easiest solution, it
does nothing to solve the inefficiencies of the model. It won’t lower the cost per click, lead, or
customer.
 Lower the cost per visitor. This can be done through renegotiating advertising costs for
advertising placements or optimizing advertising campaigns to achieve higher click rates. This is
more strategic in thinking, as it can reduce costs throughout the model. Yet with the increased
competition for advertising online, only those companies with large online budgets or strong
advertising agency ties have enough leverage to really negotiate for lower costs. For those
companies competing for paid search terms and targeted, niche display advertising, there will be
little success in this area. On the other hand, tweaking the creative/copy can be done by any size
company – and should be done as the company learns more about its target customers – but will
not make dramatic change in the cost per customer.

 Improve visitor conversion rates: In the model above, if the conversion rate could be improved
by only 1%, the number of customers would be increased to 120 (33% increase) and the cost per
customer would decrease to $37.50 (33% decrease).

By focusing on improving conversion rates, a company can affect the overall success of online marketing
channels, make more money from current advertising and traffic-generation, and increase the flow of new
customers – to which it can continue to market and encourage repeat business.

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C. The Components of Website Visitor Conversion

C.1. Acquire

C.1.1. Capturing the Lead

Companies operating on the Web are driving traffic to their site in myriad ways: paid-search, display
advertising, sponsoring industry newsletters and blogs, organic search, and more. The goal of all this
effort to get traffic to the company website or store is to create new customers, but only a small
percentage of these visitors are ready to convert in their
first visit. So, the first step to a solid conversion plan is to More Leads: There are ways to add online
acquire leads – to capture those visitors not quite ready leads to the company’s prospect database
to commit, yet that could be convinced to purchase in the and email campaigns that are not from traffic
long term. A Lead is “the identity of a person or entity on the company website. One of the most
potentially interested in purchasing a product of service,” effective ways is through co-registration.
Co-reg is the placing of a sign-up form for
according to Wikipedia.
your email newsletters on a network of sites
across the Internet. When a subscriber
While these visitors are not ready to convert during their requests information from one of these sites,
visit, their interest level is high enough to request further he is offered some marketing explanation of
information. This interest can be leveraged by offering a your offering and the option to sign-up for
“value exchange.” This is the offer of a newsletter, special your communications as well. This can be a
offers, or other incentives that might be valuable to the very effective way of augmenting your own
site visitors in exchange for information that’s valuable to site’s lead acquisition plan.
the business – namely, information about the visitor.

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These efforts should be maximized by placing lead capture forms on the targeted landing pages where
traffic arrives, as well as strategically throughout the company website. The most effective of these lead
capture forms ask for email addresses and get permission to email on a regular basis. “Subscriber opt-in”
forms can offer regular email updates on relevant industry tips and advice (e.g. a ski shop might offer free
snow reports), sneak peeks at latest merchandise, or email-only promotional offers.

C.1.2. Qualification Data

In addition, these forms should be used to capture useful
demographic information about the lead. Deciding what
information to request in the forms may seem like a simple
task, but careful, thoughtful planning will reap future
rewards. As a company grows its list of leads, it will
inevitably want to segment that list and target potential
customers with specific email offers or information. But in
order to segment out a certain audience, a business must
have the data on the subscribers to do so. If, for example, it
is important for a clothing retailer to segment promotions to
men and women, then gender information should be
collected when the subscriber signs-up. Efforts made early
on to collect useful information will pay off later with
higher open rates of more relevant email campaigns and
increased sales. A few other demographic to be considered:
 Physical address – especially if direct mail is part of
the marketing mix
 Purchase timeframe
 Product interest
 Phone number – very hard to capture real data
unless potential customer is ready to buy
 Industry – particularly for business leads
Value Privacy: Make visitors comfortable
with providing their information by assuring
them that their information will not be
shared, rented or sold. Place a link to the
company privacy policy next to any lead
capture form. Most importantly, adhere to
that policy to protect the company’s
reputation and sales.
Recipe for Success: Consider the wild
popularity of grocery store membership/club
cards and music fan clubs and create a
“members only” program. Provide these
benefits to those that submit a lead form.
Allow only these members to receive email
pre-announcements of sales or new
products, or create a “membership number”
that allows them to receive a perk like free
shipping on a certain order size. To
encourage return business, incorporate an
offer of membership as a follow-up email to
any purchasers not in the program.

How much of this information should be “required” in the

form? There are a couple schools-of-thought on this subject. For some, it’s better to require just the
absolutely necessary; perhaps that’s email address and product interest. On this side is the argument that
more information can be gathered later, and it’s more important to get subscribers into the database and
begin marketing to them. On the other side is the position that marketing should be done only to those
willing to engage – to put some informational skin in the game. The answer, therefore, is to test and see
what kinds of lead acquisition rates can be achieved. If the numbers aren’t matching the goals set, then
the forms can be made less or more restrictive.

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C.1.3. An Automated and Effective Welcome

In addition to collecting the right information, a lead acquisition plan should include a process for
providing an immediate response to the potential customer who subscribes.

This “welcome” message should reinforce the company’s marketing message, set expectations for the
type and frequency of communications, remind them that they have opted to allow the company to send
informational emails, and provide them a chance to confirm that email subscription. This will lay the
groundwork for successful conversion marketing campaigns to come.

Tips for creating an effective lead acquisition process:

 Make the most of paid traffic being driven to the company site or targeted landing pages
 Plan ahead and ensure that the correct information is being gathered
 Create relevant and compelling offers
 Respond immediately to each person that provides contact information

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C.2. Convert

C.2.1. Buyer’s Decision-Making Process

Once the lead acquisition plan is in place, similar thought must be given to the initial conversion process
– the systematic nurturing of these leads so that they can be convinced to make the first purchase.

Creating an intentional system of conversion requires an understanding of the buyer’s decision-making

process. The process of deciding to make a purchase follows five key steps: Needs Recognition/Problem
Awareness, Information Gathering, Evaluation of Alternatives, Purchase, and Post-Purchase Evaluation.

On smaller purchases the decision maker will often skip
steps in this model – from needs recognition to
evaluation of alternatives or even straight to the
purchase. But in larger or more meaningful purchases,
and particularly with merchants that he has not done
business with before, a prospective customer may spend
quite some time and/or effort in the information
collecting and evaluation steps. This decision process
applies to all types of purchases – products, service,
information, entertainment, or even causes.
Online advertising seeks to elevate the value
proposition of a particular brand to those people in the
Needs Recognition/Problem Awareness and
Information Gathering phases. And, it is during the
Information Gathering and Evaluation of Alternatives
steps of the process that the online marketer can make
the most impact on conversion of traffic into customers.
Not coincidentally, prospective customers are likely to
Stay CAN-SPAM Compliant:
The CAN-SPAM Act of 2003 took email
marketing a big step forward. The
legislation cracked down on unsolicited
email and provided rules to ensure
businesses are sending only legitimate,
compliant email messages:
 Don’t send false or misleading
information
 Don’t email after a recipient opts out or
objects to the emails
 Don’t harvest email addresses from the
Internet or generate them randomly
 Don’t send commercial email from a
computer you are not allowed to access
 Include a valid postal address and an
opt-out process with every email
 Include a warning label for explicit
content in the Subject line

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request information through an online form while they are in this phase. So, here’s the opportunity:

- Provide relevant information,

- Create rapport,
- Present compelling and relevant product or service options

so that the lead can be moved through the purchase decision-making process from information gathering,
to evaluation, to purchase. Throughout this process, the more that can be learned about the prospect, the
better the communications can be targeted to close the sale and the more likely that a promotion is offered
that fits the desires of that prospect. The goal should be to actively manage the purchase decision process
by providing relevant information to prospective customers.

C.2.2. Work with Available Information

If the lead acquisition efforts were done well, a company may be able to send targeted email campaigns
right from the start. For example, a music retailer may be able to segment its list based on genre of
musical interest, if that was part of the lead capture form. Otherwise, the conversion efforts may have to
begin with generic newsletters, but even these, if written and designed well, can create trust, impart
knowledge, and present options for purchase.

C.2.3. Keep the Conversation 2-Way

Through the addition of polls and surveys into regular email campaigns, online marketers can increase
their knowledge about prospective customers. The purpose of these polls should focus on specific
demographic information, not market research – that can be achieved elsewhere – such as, “what new
piece of equipment are you likely to buy this windsurfing season?” or “when do you expect to take your
next international vacation?” This information should be captured and added as a demographic in the
database. This can not only help with ongoing targeting of these prospects, but can also allow marketers
to create automated promotional campaigns based on that new information.

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Example of Behavioral Targeted Autoresponder:

1. Newsletter is sent to
subscriber containing
links to numerous audio
samples.

2. When subscriber
clicks to listen to a song,
genre preference data is
immediately sent back to
the database.

3. Selection triggers
Autoresponder, offering
more selections from the
same musical genre.

4. Subscriber makes
purchase.

Other ways to gather additional information about prospects include analyzing click-behavior, driving
subscribers to forms with further qualifying questions, and capturing shopping-cart abandonment data.
 Behavioral targeting is a powerful segmentation tool. It allows marketers to target prospects
based on the links they have clicked or pages they have visited and non-openers of email. For
example, an investment online publisher may promote different analyst reports to those who
clicked a link titled “risk-averse money management” differently than those that clicked “hot
stock picks.” Or, if a particular Subject line didn’t garner the opens that were expected for a
campaign, re-working the Subject line and re-sending to non-openers may increase the statistics
from the campaign dramatically.

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 Driving subscribers to provide more information in forms like “update your profile” can also be
helpful in continually learning more about prospective customers. Pre-populating the form with
the information you already have will make it easier on the prospective customer to simply add
entries for qualifying questions. Promotional offers can be offered as an incentive to completing
this form.
 Shopping-cart abandonment data can be captured when a user leaves a purchase mid-transaction.
Email follow-ups can relay that the information has been stored for the subscriber’s convenience
and can offer contact information for customer support in case there are any additional questions.
Discounts can also be offered to encourage the sale.

C.2.4. Targeted and Relevant Conversion Campaigns

With a strong and flexible database supporting online marketing efforts, marketers can make the most of
these data through a wide-variety of targeted campaigns. Ultimately, this is the goal – to understand the
prospective customer, his interests, purchase intent and timeframe so that the right offer can be presented
to the right customer at the right time.

Tips for creating an effective lead conversion process:

 The more data that you collect about your prospects, the better you’ll be able to offer them
relevant promotions or information.
 Visit the Topica Resource Center at www.topica.com/resources to download “Elements of
Successful Email Messages” for tips on creating effective email campaigns.
 Keep it simple – it might be tempting to create automatic responses to trigger on every event on
the website and actions to the email, but keep in mind that subscribers can get fatigued by too
much quality communications. Prospects will definitely respond to over-emailing through
unsubscribes and complaints.

One Huge Marketing Vehicle: eMarketer estimates that 147 million people in the U.S. use
email, almost every day.

C.3. Grow

Recent research conducted by Bain & Company suggests that increasing a customer retention rate by only
5% can increase the average customer lifetime value by 35% to 95%. As the old marketing axiom goes,
it’s easier to keep a customer than to get a new one. With a strategic lead acquisition and conversion
marketing plan in place, customer retention should be the final communications piece to help a company
really grow.

C.3.1. Post-Purchase Up-Sell Opportunities

The best time to start marketing to customers is immediately after their purchase. Once a person has
completed a purchase, he enters the final stage of the buying decision process: post-purchase evaluation.
In this phase, customers may react in a variety of ways. Some customers will be reconsidering their
purchase and may, in some cases, even be suffering from “buyer’s remorse.” On the other end of the
spectrum, others might be feeling a “buyer’s high.”

It is the job of the online marketer to help the customer feel confident he has chosen both the product and
merchant wisely. This can be done through diligent follow up to the sale. Communications should at a

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minimum include a sincere “thank you,” any pertinent information on shipping or accessing the
purchased information, and contact information for assistance, if needed.

In addition, effective post-transaction communications will not only show that the merchant understands
the customer’s desires and needs, but are also a great up-sell opportunity. They can promote compatible
or similar products that might also suit the customer, at a time when the customer is in the buying mood.
Automating these communications can promote add-on sales that can also greatly affect the bottom line.

C.3.2. Increase Customer Lifetime Value

As mentioned, it is more expensive to gain a new customer than to keep a current customer. The
knowledge gained during the lead acquisition and conversion marketing phases can help drive long term
customer retention programs. Because the database contains all the demographic information gathered
throughout the process, in addition to purchase information, customer promotions and communications
can be targeted even more effectively. The goal is to provide relevant and targeted content that addresses
the customer’s interests and encourages future purchases both by being a trusted-source and by providing

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incentives to purchase. For example, customer campaigns could be targeted to customers who have
purchased a particular product only once, or customers that haven’t purchased for 6-months, or frequent
purchasers – in addition to demographic targeting that allows for product-type targeting. A targeted
customer promotion might look like this:

Tips for effectively converting customers into repeat buyers:

 Know thy customer – use data gathered both prior to the sale and the purchase information to
target add-on, complementary or repeat purchases.
 Continue to work on rapport and building trust.
 Don’t let too much time lapse between purchases; provide incentives to draw customers back
onto the site.
 If the purchase is of a service or membership and there is an expiration date, be sure to automate
email reminders close to the expiration date that prompt and sell renewals.

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D. Summary

With increasing competition for popular advertising and lower conversion rates on the rise, marketers
sensitive to controlling and reducing their cost per customer need to focus on optimizing conversion.
To increase conversion, it is important to isolate the share of the traffic that is not ready to convert yet, but
has developed a high interest level to request further information while moving towards a purchase at a
later time. This can be accomplished through data collection on various pages of the website or on
special landing pages, in combination with instantaneous messaging leveraging the provided data.

By providing relevant information to interested site visitors, online marketers have the chance to achieve
dramatic improvements of their conversion rate, cost per customer, and marketing ROI. Further, by using
the information gathered during the lead acquisition and conversion processes, businesses can grow
ongoing revenue by creating both add-on sales and repeat business.

E. The Topica Solution

Topica helps small and medium sized businesses acquire, manage and convert online leads into
customers. Over 4000 businesses in over 20 countries have chosen Topica including Donor Digital,
Vitamins.com, WebTickets.com, and divisions of leading organizations, such as International Data Group
(IDG), IBM, Corp. and Hachette Publications.

Interested in implementing any of the suggestions in this report? Let a Topica representative
explain how to create similar initiatives for your company. Please call (415) 344-3878 or visit
www.topica.com.

Topica’s team of experts continually produces industry-leading webinars, articles and best practices
trends to help companies build and manage their own successful conversion marketing programs. To
receive the latest updates on email and conversion marketing visit Topica’s Resource Center at
www.topica.com/resources.

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