conversion expectations- a metrices for sales growth
TRANSCRIPT
Introducing Conversion Expectation
What it is and why you need to be using itSerge Milbank
Who are Stream:20?
CLIENT SNAPSHOT
1. A digital marketing consultancy, bridging the gap between agencies, technology providers and clients to optimise online marketing performance
2. Work at both ground-level execution and senior-level strategy and planning – onsite and on demand
3. Clients work with us in a number of ways, including:• Traditional strategy and planning retainer across
loyalty & retention and acquisition• Interim resource at both mid and senior level• Short term pilot campaign management• Audit and technology/agency selection projects
ABOUT US OUR CORE SERVICES
Digital Sales Organisation
Optimising your business structure for
success
Digital Sales Toolkit
Ensuring the correct toolkits are
implemented for success
Digital Sales Planning
Providing the toolkits and resource for sales
delivery
Digital Sales Delivery
Driving incremental revenue on Desktop/
Mobile/Tablet
The Innovation lifecycle and chasing salesIn the initial stage of innovation lifecycle of an organisation, to drive sales firms tend to
do:• For first 6-12 months-setting up multiple channels of marketing, getting them up
and running.• Next 12-36 months-Layering best practices of decision making, best budgeting
practises, analysing and getting in to recent industry channels.• 3 years+- Trying out new channels, coming up with variations and versions, in short
doing new things that could drive sales. when everything is in place, well layered and still the management is looking for growth
a question arises what to explore/exploit?
The Innovation lifecycle and chasing sales
LOW
HAN
GIN
G
FRU
IT
Getting good things done
BEST
PRA
CTIC
E
PUSH
ING
LIM
ITS
Doing current industry
initiatives better
Doing new things that
drive incremental
sales
6 -12 months 12 – 36 months 3 years +
We have been forced to look for ways to drive incremental
growth, beyond where you would normally go
Ironically one of the best metrics seems to be
Conversion Rate
or
Conversion Rate Expectation
Conversion Expectation- what is it?• Conversion expectation is what conversion rate you would expect at any given
point in time, assuming your marketing activities are, what you would normally do.
• Conversion rate – as you would expect this is the ratio of people visiting your site or a section of your site compared to sales (or upgrades or leads, or requests
• Any given point in time – Conversion rates are seasonal, and highly correlated with demand levels. More people have a propensity to convert in peak periods and less in lower periods. This means that conversion rates vary based on a point on the seasonal curve.
• Your marketing activities – your marketing actually has a large impact on conversion. Key factors are (but not limited to): • Traffic levels – the more traffic you receive, the lower the conversion rate• Offers – the better the offer, the higher the conversion rate• Product changes – if your product improves, so does your conversion rate
• Media mix – different media channels deliver different quality of inbound traffic and hence conversion rate
• Conversion rate is used for planning. • Creating an expected conversion rate (Conversion expectation) is not
about looking at last year’s conversion rate and upping it a bit to account for improvement in usability.
• It is a metric that opens multi-channel sales analysis up to new areas of investigation and importantly reveals approaches to drive incremental sales online.
• It is a robust method to establish what the consistency looks like, factoring out all of the influences. If you can accurately explain any movement away from expectation you have a very powerful digital sales planning tool.
We have started using Conversion ExpectationWhat we would expect conversion to be if you did what
you would normally do• If you used the same
offers
• If you had the same products
• You had the same media mix
• You had the same volume of traffic
It is such an important indicator – because it is the most consistent
It is not as complex as trade analysis
….but there is a lot of work on the curve to standardise conversion independent
of influencing factors
This then becomes a normalised, standardised means to predict the impact of sales
Conversion Expectation – key leversWhat we would expect conversion to be if you did
something different
• More traffic you pump in, the lower it goes
Conversion Expectation – key leversWhat we would expect conversion to be if you did
something different
• Depending on the offer you give it goes up
Conversion Expectation – key leversWhat we would expect conversion to be if you did
something different
• If your product improves, it goes up
Conversion Expectation – key leversWhat we would expect conversion to be if you did
something different
• Improve the usability, it goes up (marginally)
Once you have factored everything out….
Conversion Expectation is standardisedVariation from conversion expectation is a standardised measure, precise and independent of influencing factors
• You observe change from seasonal expectation in one point
• …..and it behaves consistently at other points
Conversion Expectation is standardised
• You observe change from seasonal expectation in one point
• …..And it behaves consistently at other points
• You can predict anywhere on the curve
Variation from conversion expectation is a standardised measure, precise and independent of influencing factors
New Approaches to Planning Incremental sales
Offer effectiveness & predictionOnce you have predicted an offer impact, you can layer in
traffic – which allows you to estimate sales
Creative Effectiveness testing
High performing creative in peak periods
Maybe it was performing within or below
expectations
Large campaigns with low performing creative
Traffic weight so high that conversion expectations
actually have to be lowered
OBSERVATION CHALLENGE REMEDY
High performing creative in line with great offer
Is the offer having the impact and not the
creative?
Measure against Conversion expectation curve to assess success
A predictor of cross channel success - SearchM
ISSE
D O
PPO
RTU
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YPL
ANN
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FO
R KN
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DEM
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Evaluation of quality of traffic
Channel Channel Share
Conversion Expectation
Growth Potential
Predicted Conversion
30% 2% 2.2%
10% 1% 0.5%
5% 1% 1%
20% 1.5% 0.75%
10% 2% 2.25%
5% 4% 4%
Affiliates
SEO
PPC
Display
Social Media
Sales Forecasting
• Your base line with low traffic
Residual Demand
• What it looks like in higher traffic scenarios
• Cros s Channel impacts
Traffic Growth
• W h at i t l o o ks l i ke wi th o ff ers
Offer Driven Growth
• Strategic growth projects
Other Factors
Conclusions
• Conversion expectation as a metric allows you to accurately estimate the impact of your initiatives
• It provides rigour to your teams and a method to judge performance – taking out external factors
• It opens up your ability to plan and take more measured risks