February 20, 2014
In online marketing, and in conversion rate optimization in particular, there’s a relatively large danger of missing the forest for the trees. Some marketers are so obsessed with conversion rates that they forget to look at conversions with respect to the bottom line.
Frankly, that misses the entire point of conversion rate optimization. Sure, you can easily jack up your conversion rate but at the risk of tremendous damage to your business. As my friend Amy Africa is fond of saying, you can easily quadruple your conversions just by blocking all non-converting traffic.
For most retailers (and sometimes even B2B marketers), however, the favored way is slashing prices to attract more buyers, which inevitably creates a race to the bottom. That’s just insane. So here are four ways to make sure you’re not increasing conversions at the expense of your brand and profitability:
1. Control your coupon and “sale” addiction
Pricing is important, and it’s one of the things your users will think about as they browse your site. But competing solely on price has its disadvantages.
By being overly reliant on coupons, for instance, you can start training your visitors not to use anything BUT coupons to purchase on your site. The better strategy for coupons is to selectively use them for targeted sales. The ecommerce behemoth Amazon.com rarely sends its customers coupons. When it does, it’s for a very specific segment of products where they want faster inventory turnover.
The same goes for having a “sale” category on your primary navigation—you might increase conversions for the product group within the section, but inadvertently tank everything else on your web site. Flat out, you should not display “sale” or “offers” as a category. Visitors may find that you have a sale for shoes, clothing, or handbags once they dig deeper into those categories, but those main categories shouldn’t have to compete with a sale section. Pricing tactics can be the garnish, but unless you have a significant cost-of-production advantage in the market, deep discounts can’t be the main course.
2. Don’t give excessive price reductions for retargeting abandoned carts
Retargeting is another one of those tactics that can be incredible when used sparingly, correctly, and tactfully. Unfortunately, because retargeting works, it’s very tempting to broaden its reach, lessening not just the impact of retargeting but of the rest of the web site as well.
Say you have a way to capture emails for carts that are abandoned. You can use the email you already have to start retargeting the visitor—you can nudge the visitor immediately after the cart is abandoned. If that does not work, you can send them a reminder with testimonials or reviews the day after. A week later, if the transaction still has not occurred, you can send your “last ditch” email with a discount to try and get the visitor to convert.
No one will fault you for improving conversions this way—as long as you don’t do it every time. The danger is in some of your prospects never transacting normally with you. The more often you do this, the more likely you are to train a subset of users whose sole interaction with you is through retargeted discounts.
Make sure you have a mechanism to keep track of the users who have received discounts, and only use it once per user. Your customer retention strategy should be loyalty rewards and lead nurturing, not exploited discounts via retargeting.
3. Increase value by providing alternative incentives
Instead of inundating customers with coupons, try other offers that enhance value from the perspective of your customers. For instance, Nordstrom.com and Zappos.com attract customers with their free shipping and hassle-free return policies:
And don’t be discouraged by the thought of shipping costs cutting deeper into your profit margins. A Monetate infographic shows that a free shipping offer is more enticing than discounts and encourages customers to spend more.
Another alternative is offering freebies that are of little to no cost to you but are highly valued by your customers. Beauty products retailer Sephora.com offers freebies such as product samplers when orders reach a certain pricing threshold. Trial packs of beauty products may seem cheap or worthless compared to a $5 coupon, but not for Sephora’s target market of beauty-conscious and fashion-forward women (and men, too) who delight in trying and testing the newest products out there.
4. Do reward your loyal customers
Last but not the least: focus on building long-term relationships with your customers. It’s here that you stand to gain the most from coupons and discounts. You can use exclusive coupons to reward your most loyal customers. Or you can implement a cash-back system similar to the Drugstore.com and Sears.com loyalty programs, where registered members are allowed to earn and accumulate points which they can later redeem as a discount:
Then again, you can also try imitating Sephora’s offers for its Beauty Insider community, which lets members purchase exclusive product bundles and enjoy access to free limited edition samplers.
It’s easy to miss out on the broader strategy when you’re caught up with daily, monthly, or quarterly targets, ultimately forcing you to depend heavily on tactics to pull in the numbers. But you have to remember that raising your conversion rate shouldn’t be about creating a race to the bottom. Quite the opposite, CRO is about creating websites and online experiences that inspire trust and confidence. Truth is, your online visitors will act without the coupons if they’re highly motivated and transacting with you is easy enough. Treat coupons, massive price reductions and sales either as an ultimatum or a gift for loyalty, but never as a necessity.
Online shopping image courtesy of Shutterstock.