Last week, we discussed using search metrics that really matter: conversion to sales. This week, let’s dive deeper into conversions and which factors to consider when determining the value of each conversion.
Realize that not all conversions (and sales) are equal
You don’t just sell one product or service. Chances are, you don’t sell to a single type of customer either. So why would you want to value each sale the same way?
Often, the easy way to assign value is to assign the revenue associated with the product or service. Although that’s better than assigning the same value to all sales, you’ll do better by considering your different audiences in combination with the product or service.
An example: Look at the length of time your customer has been with you. If you were to assign a higher value to new customer conversions and a lower value to existing customer conversions, you might be able to optimize your search program to drive in more new customers rather than subsidize existing customers. This strategy assumes that you can see the difference between new and existing customer conversions. If you can’t tie conversions directly to customer longevity or different market segments, you can still make some pretty valid assumptions by looking at data after purchase and using that data to help guide your decisions.
If you still can’t connect your paid search efforts directly to sales, you can approximate by differentiating the value assigned to your online conversions. Instead of only using the generic “funnel approach” to assign different values to various actions taken on your website (e.g., if one out of every ten online conversions leads to a sale, each conversion is worth 1/10 of a sale), mix in other variables to more accurately reflect the conversion value. For example, you might want to consider segmenting your customers, if you’re not doing so already.
Your segments might include:
- Whether the customer is new or existing
- The type of device they’re using (mobile/tablet/desktop)
- The mix of keywords that brought them to you in the first place – i.e., branded terms, nonbranded terms, competitive terms
The more you can segment your audience, the more information you will have and the more you can use that information to optimize spend. For instance, you may see that customers using mobile devices spend less in your stores, so you might not want to spend as much to get them to visit you. Or, you might find that new customers spend more in your stores, so you would want to optimize your search program to deliver more new customers. Segmenting customers effectively can dramatically improve your search optimization programs.
Next week, we’ll take a look at the importance of testing and show you how to structure meaningful search tests that ensure your paid search programs are running as efficiently as possible.
Dan Beca | Director of Marketing Technology
Dan develops digital and web strategies. His areas of expertise include business analysis, requirements gathering, business process development, web development, application development, database design, data analysis, digital marketing, email marketing, search engine marketing/optimization, and mobile marketing.