conversion optimization basics: how to extract more value online

How to extract more value online using conversion optimization

A/B testing, multivariate testing, segmentation and targeting

Agenda Intro: why bother about conversion

optimization? Testing

A/B testing Multivariate testing

Segmentation and targeting Conclusion

Created by Alexander Levashov, 21 Nov 20132

Intro


Value Ways to extract it Conversion How conversion can be improved Sample results

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Meet Daniel


E-commerce manager in ASX200 business (retail)

Responsible for online business

His duty is to improve both top and bottom lines of the online business

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Value


For commercial organizations value means money

Fundamentally there are 2 ways to get more value Sell more units

To more customers More units per customer

Get better margin Sell for higher prices Have lower expenses (cost per unit)

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What Daniel can do?


Bring more new customers to online store

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What Daniel can do?


Increase prices

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What Daniel can do?


Extract more value from existing flow of prospects and customers and current prices

Conversionoptimization – getmore sales (or other target actions) per100 visitors

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How can we increase conversion?


Give more value to customers Discounts/specials Better customer service Longer warranty Unique product range Etc

Make a purchase easier for them Faster website load Support of multiple devices Better content and UX More relevant offers

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Sample calculation


Baseline OptimizedConversion 2% 2.25%

Visits per day 100,000 100,000

Sales per day, number 2,000 2,250

Average sale, $ $100 $100

Revenue per day, $ $200,000 $225,000

Revenue per month $6,000,000 $6,750,000

Change, $ per month + $750,000

Not bad, especially if the cost associated with that increase is several thousand $$$ - good ROI

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Daniel is happy as well as his boss


Testing


Why test? A/B testing Multivariate testing

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Why test?


HIPPO

WITHOUT TESTING, OPINIONS ARE JUST THAT—OPINIONS. ONLY WITH TESTING CAN YOU REALLY KNOW WHAT DRIVES RESULTS.

“Testing your content is like a license to print money.”13

Testing process


Select what to test

Review control

Make hypothesis

Prepare challenging

versionsTest

Review results

Select the winner

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A/B testing


In A/B test we change one element of the page

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A/B testing example


Sample of A/B test – we change branding graphic only

Original (control) version New, challenger version

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A/B testing example: implementation


We send a share of traffic to challenger version, keep rest with original version and compare conversion (in our example case it can be click-through rate)

Original (control) version (A) New, challenger version (B)

All traffic

50%

50%

Next step

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Multivariate testing


We change more than one element simultaneously

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Multivariate testing example


2 variations of header/logo 3 variations of headline 2 variations of branding graphic 5 variations of text copy 2 variations of form 2 variations of main call-to-action button

In this example the total number of combinations will be 2x3x3x5x2x2 = 360

Hardly possible to do multivariate testing manually, a special software is requiredNote: good MVT tool does not need to run every possible combination

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Sample report

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Sample report

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Testing do’s and don’ts


Make sure that you have enough traffic and time

Choose number of combinations wisely Preview combinations Keep control variation in testing Measure right things Test again

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It's fine to celebrate success but it is more important to heed the lessons of failure.

Bill Gates

Segmentation and targeting


What is segmentation Segmentation as a part of conversion

optimization Approach to segmentation

Definition of Market Segmentation


Segmentation is a marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will respond similarly to a marketing action.

Segmentation criteria:1) Homogeneity (common needs within

segment)2) Distinction (unique from other groups)3) Reaction (similar response to market)

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Definition of Market Segmentation


Webtrends’ definition: Segmentation is an ability to identify high-

opportunity customer groups within your marketplace.

Why use segmentation?To increase sales, uncover new opportunities

and improve customer retention.

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Types of segmentation


Geographical location Demographic Psychographic (lifestyle) Behavioral Time ...

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Segmentation in conversion optimization


General marketing

segmentation

“Digital” segmentation

Digital segmen

t

Digital segme

ntDigital

segment

Digital segme

nt

Digital segmen

t

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Digital segmentation is specific: you can target more segments than with traditional marketing. Example: people who spent 10 minutes on product description page in motobikes categoryPeople who abandoned shopping cart, but returned to your online store

Approach to segmentation and targeting as a part of conversion optimization


Conclusion


Conversion optimization is a good way to extract additional value for your business and provides good ROI if done in right way.

Where to start? Try landing page A/B testing, it is the easiest way to test the water and build a case for your organization stakeholders.

That is it!


Thank you for your attention!

Contacts:Alexander LevashovEmail: [email protected] Phone: +61 (0) 401 744597Skype: altima-interactiveLinkedIn - http://au.linkedin.com/in/alevashov/

mailto:[email protected]

conversion optimization basics: how to extract more value online

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