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The crucial metric you're not tracking

Published: October 28, 2008

The crucial metric you're not tracking

By Chad Little

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It's one of the more important statistics in marketing, and it speaks volumes about your brand awareness and product offering. Yet most marketers don't even know what it is.

Ask an online marketer what their return conversion rate is. The common response is, "My what?"

So I'll ask: What is your return conversion rate? Forty percent? Ten percent?

This metric, when tracked and truly understood, has the potential to shift the culture of a company. It's a simple measurement that tells about your customer service and speaks volumes about brand awareness and product offering. It's one of the more important statistics in online marketing. Yet most marketers aren't aware of what it is.

A return conversion occurs when a prospect visits your site, leaves without converting and ultimately returns to the site to convert. Return conversions include new prospects who leave and return, as well as existing customers who return to purchase again. (For marketers who use Google Analytics, you can easily pull this data as "new vs. returning" under the visitors tab.)

Let's look at a hypothetical example: Jane visits your online pet supply store in September and purchases a new bed for Bruno, her chihuahua. In October she returns and buys Bruno his Halloween costume. This is a return conversion.

Bob also visits your site in September. As he browses your training products, his mutt Daisy (appropriately enough) eats through his computer's power cord. In October, with his computer fixed, Bob returns to your website and buys the lot of your pet training inventory. This is also a return conversion.

So why is your return conversion rate important and how can it shift a company's culture? Let's first examine how most companies function in today's market:

1.   Plug money into Google
2:   Convert 2.15 percent of the traffic referred from Google
3.   Rinse and repeat: Back to Google! Go get another new customer!

Most of the energy in online marketing today is spent driving new customers. Converting a customer on the first visit is the most expensive -- and rare -- event in ecommerce. If it wasn't, the average site conversion rate wouldn't hover around 2 percent, would it? The more likely scenario is that customers come to your site, look around, leave your site, check their email, comparison shop, update their fantasy sports teams, mull the purchase over a little more and then convert. It's with these customers that your greatest opportunity lies.

The discussion about return conversions goes beyond tactics, tools and data. At the heart is a fundamental shift in thinking; a shift that takes an organization from focusing on the "new" to focusing on existing customers and prospects. This isn't to say it's not important to have marketing programs that drive traffic. I agree it's necessary; however, I argue that the majority of the market is fixated on this "new, new, new" mentality -- we've lost sight of the impact return customers have.

Take a look at Zappos. (I know, everyone's writing about them, but their success is directly tied to this.) MarketingSherpa published a study on why Zappos is one of the biggest successes online. When the company started, it spent a massive amount on advertisements, including sports stadium signage! Today, it's hard to fathom seeing a Zappos ad while watching Monday Night Football, and in the end the blitz didn't create enough conversions or positive metrics to justify the campaign. Now what marketer hasn't spent big bucks on a campaign only to see no lift in sales or metrics? Obviously Zappos needed to make a change, and what the company did next went beyond simply revising its marketing strategy.

Zappos chose to make customer retention one of its most important initiatives. It became part of the culture! The retailer provided free overnight shipping, free return shipping, changed its inventory systems and locations -- all to ensure that once it acquired a new customer, it wouldn't lose that customer.

Every day, 75 percent of purchases on Zappos.com come from returning customers. That doesn't take into account first time conversions from customers who may have previously visited Zappos. If we had access to that information, I would say it's safe to assume the company's return conversion rate is more than 80 percent. Add that to new prospects who visit the website daily, and it makes perfect sense that Zappos grew sales by $798 million in seven years. It's food for thought, at a minimum.

So where do you start?

The most important thing you can do is start tracking your return conversions! You can't improve what you aren't tracking and before long, everyone will be talking about you, rather than Zappos.

Chad Little is CEO of Fetchback.

Creative Crunch

As Featured on iMediaConnection.com

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You need captivating display ads, and you need them in bulk. Here's are some guidelines for preparing your creative to scale.

Question: Where does an 800-pound gorilla sit?

Answer: Anywhere it wants to!

Bada-bum-ching.

Some of you may or may not be aware that there an 800-pound gorilla that has chosen to sit right next to you. Why is he there, and what does he represent?

If you're a provider of media, an advertiser or even an agency, you know firsthand that it is getting more and more difficult to get the proper creative elements produced for the various advertising vehicles you might be using. Specifically, I'm referring to display ads. The gorilla represents the so-called creative crunch that marketers are facing today. Are you addressing this crunch, or are you pushing the issue to the side and muddling through the best you can?

Display advertising is a different animal than paid search. It's substantially easier to produce a multitude of text ads than it is a multitude of display ads. Why is this when both are essentially creative processes? Is it because as soon as you add the visual element, everyone becomes a designer? Does the CEO's wife love pink while your designers prefer blue, so you can't ever get ads approved? Is it because it's so hard to find a good resource to properly produce what you need? All of the above?

Whatever the reason, the fact of the matter is that this crunch is only going to be compounded as we move into the next phases of display advertising. As behavioral advertising gains in popularity, so does the size of the market that can take advantage of it. Behavioral advertising, by definition, means that you focus on advertising to the person, rather than worry about where you advertise. More advertisers are starting to take advantage of new forms of advertising (such as retargeting), and new approaches create a need for solid display creative, in volume, for every site visitor.

Why not produce a standard set of ads, and simply run them in rotation? For the exact same reason you wouldn't run the same text ad on a paid search campaign for 100 different keywords. You could... but the results would show why you shouldn't. Display advertising is no different than text advertising, and yet the majority of the market does not create specific messages tailored to their different audiences. It's hard enough to produce high-level creative elements, let alone a large variation that suits your various customers.

Here are some ideas and suggestions for tackling the creative crunch:

• Most importantly, make sure the creative you're producing is appropriate for the form of advertising you're purchasing. For example, when retargeting, speak to this set of prospects in a voice fitting for them, as they have already visited your website. They're familiar with the colors on your site, as well as your overall brand. Your ad should mirror what they have already seen.
  
  
• Your brand should be one of the most important elements of your ads. Make it stand out and be easily identifiable as being yours.
  
  
• Produce creative elements to address prospects who have visited specific sections of your website. For example, if you sell computers, you would advertise differently to those who viewed laptops versus those who viewed desktops. Be sure to produce ads that speak to prospects visually. Create strong recall by using elements of your site that people will recognize.
  
  
• Create your ads in a format that gives you the ability to change both the graphical and text elements easily. If you use an outside resource, ask them to produce several templates for you to use so that you can switch out elements as needed. For advertisers who don't use an agency to handle creative development, explore some of the resource boards out there, such as Elance, SoloGig, and oDesk. Many talented designers are looking for part-time or freelance work, and most can turn around projects fairly quickly.
  
  
• If you are a smaller company with limited resources and you would like to incorporate Flash into creative elements produced in-house, there are a number of solutions for you. Sites like FlashBannerNow.com let you upload your images and integrate Flash into them. If you don't have your own images to use, iStockPhoto has a vast database of pre-made Flash images that you can purchase for your ads.
  
  
• If you're purchasing behavioral or contextual ad space, work with vendors that provide additional value in terms of tools or resources to assist in creative production. Such resources could include their internal graphic design teams or technologies that enable you to easily create your own advertisements (such as tools found on AdReady.com). As the need for creative volume continues to grow, the industry will need to produce tools that assist marketers with that need.
  
  
•  Lastly, keep it simple. If your ads are too busy or difficult to read, your prospects aren't going to take the time to read them. Consider how Google changed the paid search market. Before Google, when Overture owned the online search market, paid search links were quite long. When Google launched, it drastically shortened the text found in links, and the market followed suit. Google found that simplifying what customers looked at caused more customers to use their service and click. I don't know about you, but the main thing I pay attention to in a Google ad is the URL, not the marketing text.

Please don't be lazy. Producing a single set of display ads and not revising them on a regular basis doesn't benefit your campaign. Your customers and prospects will get used to seeing the same ads over and over again, and will most likely tune you out.

The creative crunch has been affecting the offline world for quite some time and is just now hitting the online marketplace. Think of the number of commercials you see for McDonald's in a given week. Although, at their core, they are all promoting the same idea, you see different variations of the same message. It takes a lot of work to do this; however, the payoff is a successful, effective campaign.

The sooner you start to tackle your creative crunch, the better. Don't ignore the 800-pound gorilla sitting next to you. It's best to acknowledge it and find a solution that works for you. It can be overwhelming to start the process, but implementing some of the ideas mentioned above will be helpful. So take a deep breath, and take it one ad at a time.

Chad Little is CEO of FetchBack.