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Why customer retention trumps new business

This past October, I challenged marketers to measure and track their sites' return conversion rates in an article titled "The crucial metric you're not tracking." Now some marketers are asking, "I'm tracking them... but what does the data mean? How do I know if my efforts to increase them are making a difference?"

There are many things a company can do to increase its website's return conversion rate. At the heart of this effort is the need for a shift in both company and industry culture. I've been in the online marketplace since the early '90s (ancient times, really) and the standard, repeated mantra is "drive new traffic" -- shove customers through the front door, convert at the best possible rate, and then go get more new customers.

If you're in business to build a sustainable, prosperous entity, the key isn't a math game of converting run of network impressions into sales. You must create customers who are so loyal that they become your No. 1 source for attracting new clients. Don't think of customer service as a cost center; it's not only your most valuable source of long-term sustainable growth, but it will also have the largest impact in reducing your dependency on the Google machine.

Let's take a look at data and analytics from a client we've worked with to show how focusing on return conversions can affect your bottom line. This client chose to increase its return conversions primarily through online retargeting, but conversions can also be increased through loyalty programs, by implementing continuity programs, and, most importantly, through customer service. I've said before that customer service is not a cost center. It's where the most important connections with your customers are made. If you become a true partner to your customers, they are more likely to come back to your site and purchase again.

Through the following screenshots, I'm going to walk you through how to measure your return conversion rates, and what these measurements mean.

In Figure 1 below, you are looking at a screenshot from Google Analytics. It compares new prospect conversion rates over a two-month period; February and March (green line) compared to April and May (blue line). The average conversion rate for new prospects for both time periods hovers around 1 percent, with a slight improvement from 0.69 percent in February and March to 0.87 percent in April and May. [Note: In both Figure 1 and Figure 2 below, the blue line representing conversions in April and May falls to zero for two days during the campaign. This is due to the analytics pixel not recording conversions on those two days, and not a lack of conversions.]

 

Figure 2 compares the return conversion rate over the same two-month time periods as Figure 1. The average return conversion rate for February and March (green line) is 2.4 percent. Compare that to the 0.69 percent new-prospect conversion rate for the same time period, and that means that return prospects are converting three times as often as new prospects! The return conversion rate for April and May (blue line) jumps to 3.42 percent, just shy of four times the 0.87 percent rate for new prospects.

 

Return prospects are converting at almost quadruple the rate of new prospects. This company has the analytics to support the fact that return prospects have a high propensity to convert. The company can now focus more of its marketing attention toward its return prospects and will in turn increase overall site conversions.

Here is a recap of the results:

February and March:

• The average value of a new prospect conversion was $41.
• The average value of a return prospect conversion was $43 (5 percent higher compared to new prospects).
• The average conversion rate for return prospects was 2.4 percent.

Return prospects convert at almost 3.5 times the rate of new prospects, and their average order value was $2 higher!

April and May:

• The average value of a new prospect conversion was $43.
• The average value of a return prospect conversion was $53 (23 percent higher compared to new prospects).
• The average conversion rate for new prospects increased to 0.87 percent, from 0.69 percent the previous month.
• The average conversion rate for return prospects increased dramatically from 2.4 percent to 3.42 percent due to the retargeting campaigns this client was running.

The conversion value for a return conversion was 23 percent higher than a new prospect conversion.

Overall effect on return conversion rates

The advertiser spent less money driving new customers in April and May. Instead, it focused dollars on increasing return conversions, and sales increased by 11 percent.

Half of this company's web sales are attributed to return conversions, and that number continues to grow each month thanks to an advertising initiative that uses retargeting. Companies like this understand the importance of focusing on return prospects. Let me reiterate that this does not mean these marketers are abandoning efforts to drive new sales; rather, they have made it a secondary focus. I encourage you to keep using analytics to measure your return conversions, and keep pushing for efforts within your organization to increase them.

Finding value beyond the click

Ask any online marketer -- they've mostly likely had a conversation along these lines:

Marketer: "Our latest online campaign resulted in a high ROI, and revenue of $15,700."

Marketer's boss: "That's great! What was the click-through rate of the campaign?"

Marketer: "Well, it's below our average, but when you look at site visits and sales, this campaign was overall more successful than normal."

Marketer's boss: "We were running three offline campaigns and two other online campaigns at the same time. You are probably just seeing a lift due to those, since it had a low click-through rate, right? If people didn't click, they probably only came to our site due to the exposure the other campaigns created."

This conversation is incredibly frustrating for online marketers. You think you have a successful campaign, but your typical CTR metric doesn't support that assumption. This isn't to say that measuring clicks is never appropriate. Click tracking is still the easiest way to measure the success of paid search because the ad is what customers are looking for when they search, and clicking on it is the easiest way to get where they want to go online.

Display advertising is fundamentally different than paid search. It's interruptive by nature! Web customers happen upon your display ads while browsing the web. The hope is that they will stop what they are doing and click on your ads. That's the hope, but that isn't what occurs most of the time.

A recent study by comScore revealed that 85 percent of all display clicks are driven by only one-third of online users -- referred to as heavy clickers. This means that the majority of your audience is not going to click on your display ads. The majority of the prospects that want to visit your site after viewing one of your ads will generally choose to open a separate browser tab and navigate directly to your site, or use a search engine as a navigational tool to find you.

We're at a crossroads. Clicks are safe and measureable, so it makes sense to measure clicks. At the same time, less people are clicking on ads, so then it doesn't make sense to measure clicks. How do you measure campaign success when you can't track a click? This is a major issue that hits the entire industry.

Let me introduce you to the view-through conversion (VTC). A VTC takes place when an ad is viewed, and though the web user does not click on the ad, they come back to your site later and convert. VTCs are not a new metric, but they are gaining in importance as clicks decline. In fact, Google announced in August that it will begin measuring VTCs in coming months, as it is seeing clicks decline overall online, but Google understands that there is value without a click, and they want a piece of that pie. The challenge for marketers is proving that when a person sees and ad and doesn't click, that you should give the ad they viewed credit for the conversion.

I'll be the first to admit that no innovative, scalable solution to measuring VTCs has been proposed. You can work with vendors to measure VTCs, but that is a one-off solution for each of your vendors that will require a lot of work that some vendors may not be able to support.

Here is a list of what to do when dealing with VTCs:

Control groups
Identify or create a control group, and do not show them display ads as they surf the web. See if individuals who view your display ads convert at the same rate or higher than those who do not. If they consistently convert more often, it is safe to say that viewing ads, even without clicking on them, is increasing your conversion rates. If you measure the rate at which they are converting, then you can confidently say that VTCs increase your conversions by X percent.

Analytics are key
Vendors that tell you they will be charging you based on VTCs should offer detailed analytics to support their validity and importance. If you are working with a vendor who doesn't, I would challenge them to begin doing so. Providing the analytics to support the effectiveness of VTCs will not only help clients understand the importance of VTCs, but will also help others in the industry to measure and embrace them. All too often I hear conversations around VTCs that include statements like "I'll give you credit for 25 percent of VTCs because I'm not really sure if the VTC metric is accurate." It's dangerous to use assumptions when dealing with success metrics. Look for the truth (read: data and analytics) in understanding how a prospect responds when viewing the ad versus those who don't.

Focusing only on CTRs is outdated
If you find yourself measuring only CTRs, it's time to expand your horizons. If you are working with a vendor who only attributes success to clicks, it's time to challenge them to look deeper. If you want to grow in the industry and stay competitive, you have to learn how to measure, report and find value in beyond the click. The easiest way to increase your confidence is through data and analytics, and as online display advertising grows, service providers will have to create those solutions for marketers. Until then, the best thing you can do is to press the importance of gaining additional data that confirms or disproves the value of the media in respect to VTCs.

Watch for improvements in other campaigns
Most marketers realize that when you measure VTCs, it is hard to comfortably give credit to the viewed ad as what caused the conversion. If a customer views three ads, the most common thought would be to credit the last ad viewed as the one responsible for their conversion. That method of thinking is not always correct. Think of it like this: a customer visits your website after they read about your products. They leave without purchasing, but later use Google to navigate back to your site to purchase. Google shouldn't receive 100 percent credit for that conversion. The customer used Google as a navigation tool to find their way back to your site; yet these types of conversions happen every day and Google is given full credit for them. So what a marketer will see is an increase in conversions in their Google paid search campaign. You may also see more direct traffic coming to your website as customers will remember that they saw your ad, and navigate back directly to purchase. The last ad viewed by a customer deserves some weight but not full responsibility. Atlas has started to address this issue in its engagement mapping. I predict in the future, as VTCs become more common place, that measurement tools will become available for marketers to better measure where to give credit for conversions. In the meantime, pay attention to the overall conversion rate of your site, conversion rates on existing campaigns, and don't add too many new marketing variables into the mix at once so you can keep track of these increases.

The market is due for new solutions that help marketers track conversions by looking beyond the click. There's a lot of value in highly-targeted display ads that increase your conversion rates that can't be tracked via click. This is an exciting time where we have the analytics to help us make informed marketing decisions. Be innovative by using some of the ideas I've mentioned, but I also believe that marketers and service providers need to push traditional boundaries of how campaign success has been measured.

10 ways to turn angry customers into brand evangelists

I think we can all agree that customer service is important. The better your customer service, the more repeat customers you'll have -- and a repeat customer is one of, if not the most, important assets you can have. Repeat customers easily turn into brand evangelists, which refer new clients and vouch for you in a time when word of mouth and reviews are king.

Most companies lump customer service into operations or list it as its own entity. Customer service's impact is so critical to a company's success that it should be considered an extension of marketing and managed so that it represents the voice and brand of the company it represents. This isn't a new way of thinking, and most professionals know this. But why then is customer service still so difficult for companies to wrap their arms around?

I hate to jump on the "during these hard economic times" bandwagon, but during these hard economic times, there is a lot of pressure to spend time and energy on activities that will produce immediate results. Is it this pressure that causes companies to push customer service to the back burner? We've all felt the frustration of dealing with horrible customer service. Our expectations now are so low that even getting a live person to answer a question without spending an hour of our day is, well... good?

The following recommendations are simple, but can make a difference to improve your customer service. Sadly, most of these came to mind based on real world experiences, but on a more positive note, they are all easily remedied.

1. Make it easy for someone to contact you
You may not be in business to create life-long customers. If that's the case, then I assume you're in business to burn and churn customers. You probably don't care a lick about stats on how your company creates repeat business, and you really only focus on paid search conversion rates. If that doesn't apply to you, then you are in business to keep and retain customers... so make sure you put your phone number, email, chat information, or other contact information in a place where it's easy to find. If you think you're being sly by burying it on your site to keep your customer service costs down, you're not. The only thing you're doing is frustrating visitors who either have a question or find your lack of contact information as a sign that you will be difficult to work with.

2. Bring customer service in-house
As long as you consider customer service a "cost center," you're thinking is ass backwards. Customer service is part of marketing! You have to have proper control over the messages that are being put out into the market, as well as how your company solves problems. Your image is more than your website, more than your logo, and more than your product. The single biggest thing people will remember from an experience is how they were treated. Can you imagine what it would be like to talk to an airline representative who really cared when your flight is canceled and you're stranded? How many times have you been on the phone with a customer service representative and thought, "I am going to hang up on this representative and call back. Maybe I'll get someone who can actually help."  Bringing customer service in-house enables you to have greater control over messaging, as well as have your customer service department more infused into the culture of the company.

3. Hidden recurring fees are not a clever way to make additional revenue
There is no faster way to lose customers than to mess with their money. Jason Baer of Convince and Convert tells a story of signing up for a "free" vase program from an online florist only to discover that he had opted into a reoccurring fee from a third party for the service. Technically it was free from the florist, but technicalities mean nothing when you have an upset customer on your hands. This is shortsighted thinking that has a company focused on driving immediate conversions and not keeping a customer for the long-term. Keep all charges up front and make it very clear what your customers are signing up for. Rule of thumb: If part of your promotional planning includes how to deal with the complaints you'll receive, it's probably time to reassess the program and make some adjustments.

4 Don't treat customers like hot potatoes
Don't you love it when you call a customer service line and each representative you speak with asks for your account number? By the time you get transferred for the fourth time, and person No. 4 nicely asks for your account number, you are about to hit the roof! Whoever answers the call should see it through until the issue is resolved. Stop sending your customers up the food chain so they can repeat their problem or question over and over again. If that is impossible, make sure that customers are warmly transferred so they don't have to repeat themselves. Consider implementing a bonus program for customer service employees in which they're paid for positive reviews and closing customer complaints successfully. That is an easy way to get your employees motivated to make sure they take good care of your customers, and in turn have happier customers -- a win-win.

5. Review your various messaging systems
This is something that I'm guilty of -- it's important to listen to your phone tree. It's one of those things that just gets lost as you're not using it every day -- but your potential clients and customers are. Make sure that your culture shows through messaging. Consider removing automated messages if you can and inserting a live human into the mix. It's a simple yet effective way to enhance the customer experience. Most customers are used to automated responses, and most are happy to get a live person who is willing to help.

6. Create relationships
Think about how great it would be to have a relationship with someone at your favorite airline. Someone you could call and chat with when problems arise with your flight schedule. One can dream, right? My wife has been using Borsheims (a Berkshire Hathaway company), out of Omaha, Neb., of all places, for more than 20 years and has been dealing with the same representative all 20 of those years. This representative not only knows my wife's taste and purchase history, but they also have a great relationship. That relationship is why my wife has only purchased jewelry from that representative for the last two decades (and most likely will for the rest of her life). Relationships ensure repeat business. Zappos is another great example of a company that fosters a relationship between the customer service reps and the clients. People don't establish relationships with a product or a price; they have relationships with people. Without that crucial relationship, your chance of increasing repeat business is tenuous at best.

7. Show who you are
Let customers know who you are as a company. This allows customers to get a sense for what your company is about. This is especially important for companies that don't have any brick-and-motor stores and are only found online. When you are only online, it's easy to blend into the hundreds of other sites out there. Connect with your customers by giving some insight into the inner workings of the company. Blogs are great for doing this. They can take time to set up and manage, but once you get a process down, you'll find it easier to maintain, and customers feel more connected when they can read about the goings-on of a company. Any way you can build a more personal connection with customers is a good use of time and resources.

8. Make your site easily shop-able
I can't tell you how many websites I come across that I can't navigate at all. A site that doesn't have a clear call to action or easy navigation through categories, product pages, and shopping carts is destined to fail. The online marketplace is highly competitive, and it's much easier for a person to go to another site than to try to figure out how to purchase from yours. Simple changes, like adding larger and more colorful buttons that direct users to add items to their cart or to check out, help make sites more efficient. Set up a simple test with help from some of your colleagues. Ask them to go to your site, find product X, and then check out. Ask them to report back to you any problems they had during the process, and then make changes as necessary. The smallest changes can increase your conversion rates and make the customer experience that much better. 

9. Respond to emails
How many times have you filled out web-based forms knowing that nobody will read it -- let alone respond to it? Jason Hesse of Abacus24-7 tells a story of sending an email to a customer service department for a shirt he bought online.The shirt did not come as described (see No. 10 below), so he read the T-shirt company's return policy and sent an email letting them know of the issue and asking for an exchange. In the end, it took three emails over the course of a week (with an escalating tone) from Jason to get a response. Of course the response was the canned "Thank you for contacting our customer service department. What seems to be your issue?" email. It didn't address any of the information Jason had included in any of his previous messages. That was more infuriating than getting no response at all.

Jason finally sent the shirt back and asked for a full refund, not an exchange. A little inconvenience is understandable, but if your customers take the time to contact you, it's probably a good idea to read what they have written to you and respond accordingly. You're going to absorb the return either way, so why not make it prompt and increase the chances you'll make it up on the next sale? Jason's site, Abacus24-7.com, promotes that they man their customer service phone lines 24 hours a day and respond to a customer within two hours of receiving an inquiry. Simple and straightforward: Respond and respond promptly!

10. Make sure your customers know what they are getting
Scenario: You are selling a hip, new T-shirt. Your biggest competitor is selling the same shirt, for the same price. Since most customers comparison shop, chances are they are aware you both carry the same shirt. Your website has a picture of the shirt, size options, and a "buy now" button at the bottom of the page. Imagine that your competitor's website has the same photo, same size options, but they also include a descriptive paragraph about the fabric the shirt is made of and a few testimonials from customers. A customer is more at ease with an online purchase if they have a good understanding of what they are purchasing. Take the time to get descriptive about your products so that there aren't any surprises when they get their order. The worst feeling for a customer is opening a box and realizing it wasn't at all what they thought they had purchased.

When evaluating your customer service, your prevailing thought should be, "How would I feel if I had this customer experience?" Don't be afraid to challenge processes that have been in place for years; what worked in the past won't necessarily work now. Fresh competition is popping up daily, and it is most likely willing to do whatever it takes to convert customers. Optimize customer service, keep more repeat customers, and you'll end up not only surviving these tough times, but thriving in them.

-Published on iMediaConnection.com 3/13/09 - http://www.imediaconnection.com/content/22295.asp

How Did This Ad Get Here? Responding To The FTC's Privacy Principles

From MediaPost

I can't say that I'm surprised by the current stance the Federal Trade Commission is taking by allowing the behavioral targeting industry to continue down a self-regulatory path (for the time being, at least).

Currently the government has a few other more pressing issues to deal with. Overall, I'm impressed how the industry has responded to date, but there is no room for complacency. The industry should be prepared for regulation unless we get our act together (anyone out there looking forward to a "do not behaviorally target" list?)

I'm speaking specifically to the companies that still withhold how they gather data and what they do with it. We are marketers in a time where consumers expect experiences customized for them, but don't assume that you have access to their information. Finding a balance between providing a more customized web experience with customers feeling comfortable with how that experience is created is key.

I suggest an advancement that we should make given the challenge that the FTC has posed. Transparency is imperative! We have to make it as easy as possible for consumers to identify when their information is being leveraged and most importantly how they can stop it.

One of the easiest and most visible moves we can make is to include identifiers in each behaviorally targeted ad. With a simple click, a consumer could be taken to a landing page and learn who delivered the ad, learn why they were shown the ad (answers can vary between "you visited this Web site before" to "we thought you find this information interesting") and most importantly, opt-out if they don't want to take part in that form of advertising. (Side note, all behavioral targeters should have an opt-out mechanism easily available to consumers. If you don't, that should be a top priority for you!)

On this landing page, there should be language discussing the benefits of getting a targeted ad vs. the generic ads they would normally see -- which typically consist of a dancing alien or a "guess who this celebrity is!" advertisement. (It's usually Tom Hanks from high school -- though personally I prefer the version with Angelina Jolie, I'm just saying.) Be descriptive when explaining what you do and why you do it -- the point is to give consumers enough information to make an informed decision if they want to be behaviorally targeted or not.

In my experience, once you take away any questions people have about how and WHY they were targeted, they are more apt to accept it. We are not only marketers and service providers; we are also providing a service to consumers by giving them a more personalized experience online. If they don't want to take part in targeted advertising, they don't have to.

We have nothing to hide, so why haven't we been more transparent? The FTC is giving us time to get it right, and I suggest we do just that.