Most web analytics programs give you the option to run a funnel report; a powerful tool, particularly for e-commerce sites, that shows where people are exiting the site’s sales process.

By analyzing the exit rate data in a funnel report, you can focus on optimizing the pages that need it most. First, look for areas with high exit rates. Then, once you have test pages selected, target specific elements to find improvements.

Ideally, your tests will boost conversion. But what if they fail?

If at first you don’t succeed, test, test again…

Here’s an analogy: If a visitor moves through your house (page-to-page) and reaches a locked door (a conversion barrier) for which they don’t have a key, they have no choice but to exit. You can test making changes to the door, but if you haven’t given them the key, your exit rate will remain high.

What’s the key? Confidence. If you haven’t given the visitor the information they need, you haven’t given them the confidence to move forward with the transaction. When the exit rate is high for a given page or step, chances are that you haven’t told the visitor something they were hoping to find out earlier in the buying process. So, it looks like they’re taking a step forward only to take a step back, when really they just didn’t have enough information to feel comfortable moving forward.

Elastic Path Software shows some examples of how funnel reports can be used effectively. Here are two more:

• The funnel report shows that the payment page, which follows a “Shipping Information” step in the checkout process, has a high exit rate. We test showing the visitor when they’ll receive the product before they hit the payment page. This lowers the exit rate for the payment page and boosts conversion.
• A funnel report shows that the shopping cart page has a high exit rate. We look at the previous step and find the product page isn’t telling customers whether their item is out of stock. Since visitors have to “add to cart” to get this information, we now have reason to believe that showing items as “in stock” or “out of stock” on the product page will lower exit rate, so we test it.

Since each site has its own unique characteristics, it’s best to think of our web analytics reports in terms of how they can help us empathize with visitors. What’s holding them back from converting? A funnel report can help you create a hypothesis and test to see what your visitors prefer. That’s how to optimize.Remember, it’s important to look beyond the page with the high exit rate. See what’s happening in previous steps. And if you’re still stumped, get an outside-the-funnel perspective.

That may or may not be true. At the moment, this statement is merely a guess, an assumption — but it’s testable. It’s a hypothesis.

People love to insist that your website is made of magical ones and zeros. “It’s HTML,” they’ll say. “It lives on triple-redundant co-located servers,” they’ll argue. Yet the truth is much simpler, and scarier, than that.

Your website is a tower of assumptions. Everyone’s is. Perhaps yours was built according to a specific blueprint. Maybe it was built from a template. Either way, if it’s not properly maintained, the structure will collapse. But before you demolish the current structure and start over from the ground up, you should test the existing site.

If you want to improve your website, testing provides the scaffolding to fix it. And just as you wouldn’t hire a renovation crew that uses scaffolding made of toothpicks, your optimization tests require strong hypotheses. Of course, you can always test a bunch of random variables and see which configuration works best with your visitors, but that generally takes too long, adds noise to the data, and makes it difficult to gain any real insight.

The better thing to do is to start with a hypothesis.

Dropping Science

In my last post, I showed how testing allows you to optimize by letting visitors design your site for you. By giving them new versions of navigation and content elements and closely monitoring to see which ones work best, your visitors can vote with their clicks, and you can more easily adjust your site to fit their needs.

Be careful, though. If you don’t have a solid hypothesis, improvements can take longer — and be more incremental — than they should be. Recycling random variations of a page just to see what works often yields a much smaller return on investment than hiring a website optimization firm.

It’s the most common problem we see among companies that don’t outsource their testing: They don’t really know what to test.

Regardless of who tests your website, the scientific method [define] must drive the process. Your venture into testing must begin with curiosity. Curiosity is fundamental to humanity, and the basis for our achievements. To have success online, you must be curious as to why things happen and what is influencing them.

• Observation: “Why do so few people add an item to their cart from the product page?”

• Observation: “Why do my blog posts with short titles seem to get more comments?”

Curiosity is the initial spark to start a learning experience, but ideas and explanations must be conjured to satisfy that curiosity. This is where the hypothesis comes from.

Don’t Believe the Hypothesis

Again, a hypothesis is just an assumption. The ideas and explanations you base this assumption on can come from real world examples or basic intuition. To write a hypothesis, simply take the action you’re considering and state the result — a benefit, we hope — that you expect it to have.

• Hypothesis: “Making the ‘add to cart’ button larger will increase our conversion rate.”

• Hypothesis: “Using blog post titles with six words or less will increase the amount of comments.”

The one and only purpose of running a website optimization test is to prove (or disprove) your hypothesis by exposing it to real world conditions. As such, you’ll need to create variations of the elements you wish to test in a way that properly reflects your hypothesis, so you can test them against the original version to see which one works best.

Let’s start with “Making the add to cart buttons larger will increase our conversion rate.” To test this hypothesis, you’ll need to create a version of the page with a larger add to cart button. To be sure, you may also want to test more than one size. If a large button isn’t ideal, maybe a medium-sized one is.

Wash, Rinse, Repeat… TEST

Lets say the test proves our hypothesis to be valid and you decide to make the “add to cart” button larger. Wonderful, but you might want to hold off on the champagne.

Now it’s time to create another hypothesis about the best color for the “add to cart” button. For instance, “A green ‘add to cart’ button will yield a higher conversion rate than similar red or blue buttons.”

The point is to learn something — anything — about what is and isn’t working on your site. Approach testing in a systematic way and record what you learn to guide you through future tests. You may also want to revisit certain tests to see if they still hold true, especially if you’ve changed other elements on the page.

It’s very important not to get discouraged. Even if your hypothesis is disproved, you’ve learned something valuable; that what you have is working well enough for you to focus on another area of your site that needs attention.

On the other hand, if your hypothesis is strong — and the test results prove it — you’ve begun remodeling your “tower built on assumptions” into a high-rise casino, where the odds are stacked neatly in your favor.

. . .

[Editor's Note: Blinded by science? Need a renovation? Future Now can help you test it.]

Even people with no sense of aesthetics are brilliant designers. It’s true.

How do you turn every visitor into a Web designer without training them, paying them, or even letting them know what you’re up to? (It’s not as bad as it sounds. Really.)

By conducting A/B and multivariate tests, you empower customers to collectively decide what works best for them. Supply them with different variations on your site and run the tests and they will tell you how they want your site to look and behave through their actions — which, as the cliché goes, speak louder than words.

Should you just test random changes in headlines, calls to action, and navigation? No way. Start fresh with a new hypothesis.

Test it

Now that the Web is truly interactive, it’s all about the customer’s voice. That’s why it’s an absolute must to test your site; because without doing so, you’re forcing an environment upon your visitors without bothering to adjust to their needs. And that attitude is truly a thing of the past.

Are professional web designers still important? Of course! But design choices are merely assumptions, and they’re often no better than your own. A web design exists to enable and entice visitor actions — and that’s worth optimizing for.

What works best for your customers works best for you. When you test, everyone wins. Even if you get a bad result, you still win; you’ve confirmed that what you have is working better than the new assumptions you’ve made in the alternate variation. So, not only is testing far cheaper than doing an entire redesign, it’s often more effective to roll out a redesign by testing new sections and bits of content individually, rather than just dropping it on customers all at once. (Amozon just launched a redesign this way. Did you notice?)

Wrong assumptions will be made. No big deal. Get a new hypothesis. Test it.

Your visitors are trying to give you valuable information, but unless you’re testing, they have no voice.

In a recent study, 76.7% of online retailers said they don’t test. Are you?

If every designer (and the marketers who hire them) read Web Design for ROI, the new book by Lance Loveday & Sandra Niehaus, the Web would be a better and more profitable place.

Sure, the book will show you design techniques that help generate positive ROI, but the best of all is that it’s easy to follow. The authors dissect a website into six common sections — homepage, detail or landing pages, category pages, product pages, forms, and checkout — found on commerce sites, and they walk the reader through various optimization tactics for each. The book is a pragmatist’s dream, full of examples and “best practices” (or is that “best principles”?) that make it easy to take leaps and bounds in understanding how to use your website to make more money by reducing friction in the customer experience.

If you manage an e-commerce site, or design them, and haven’t read this book or Call to Action by Bryan & Jeffrey Eisenberg and Lisa T. Davis, there’s probably a lot of low-hanging fruit left to grab on your site by modifying simple design changes and testing the results. These types of fixes don’t take a lot of effort but they yeild nice results in terms of boosting conversion rates and average order value.

While Web Design for ROI doesn’t venture as deep into the principles of conversion as Call to Action, its solid approach, combined with the authors’ personality, make it a worthwhile read for anyone fixing the money-leaking holes on their website. This book is about making your e-commerce site a strategic extension of the company’s business model while building it around the customer experience.

This is definitely not your typical design book, and thats why we’re giving it the thumbs-up here at Future Now.

For more info, check out WD4ROI.com before you checkout at Amazon.

The concept isn’t new, but it’s one of the hottest buzzwords in online retail for a reason.

“Cause marketing” is the term being used to describe all manner of cross-promotional efforts between for-profit businesses and non-governmental/non-profit organizations. Typically, it involves a portion of for-profit sales going toward a given cause. Today, more than 1 of every 4 retailers are promoting charities at some level — and the Web seems to be speeding that growth. In 2006, IEG reported that cause marketing sponsorship in the U.S. totaled $1.34 billion. (In 1990, that figure was only $120 million.) This year, cause marketing is expected to reach $1.44 billion in the U.S.

Is Cause Marketing Worth It?

• 64% say they have purchased from a brand because it supported a cause they believe in.
• A 2001 survey suggested that 81% would choose one brand over another if a cause were involved, assuming price and quality were similar.
• 96% of women say it’s important, and 87% of both men and women say its important.
• It enables highly effective market positioning and branding by connecting the company with the values of their customers. For instance, Target has been effective with its 5% donation policy.
• MissionFish, the organization that powers eBay’s Giving Works program, reports that auctions that donate to charity can sell for much higher than similar auctions that don’t donate.
• Cause marketing often builds customer and community loyalty while increasing employee pride and productivity.
• Innovations from the likes of Google Checkout and Maatiam are bridging the gap between online retailers, consumers, and non-profit in ways that help everyone account for campaign performance and tax concerns.
• Companies like Working Assets built donations as the main element of their business model.
• In addition to the feel-good benefits, cause marketing tends to generate publicity, which can lower business costs, particularly in terms of customer acquisition. (Just make sure you’re doing it for the right reasons.)

Potential Pitfalls

• As Holly explains, “Consumers are too savvy. They want to know who the charity is, what their exact involvement is, and how it fits in with your core brand.” In other words, people want to know their money isn’t going to a George Costanza-esque “Human Fund.”
• 70% of people want to see the company’s leaders participating in the cause.
• The company’s motives may be called into question, particularly if it’s experienced years of negative press (e.g., Wal-Mart).
• It must be accountable. Although there are often tax benefits for businesses engaged in cause marketing, it has to be a good deal for the non-profit as well. Not only must non-profits protect their own brands, they have tax concerns, too. As always, it’s important to look before you leap.
• ROI is a must. It could appear disingenuous when a company is spending, say, 7 figures promoting a particular cause when the campaign is only netting a 5-6 figure return. That type of situation begs the question as to whether the company really cares, or if it’s just a branding or PR stunt. Otherwise, why wouldn’t they just donate the money they’re spending directly to the cause instead of spending it on promotion? (The Microsoft Small Business Center has some great tips on how to avoid these types of missteps.)

It looks like this trend is here to stay, particularly in the U.S., where the government continues to cut social spending and the gap between rich and poor grows each day. Consumers will continue to expect a greater involvement from the private sector to put money toward public causes and will reward the businesses that do so. As long as cause marketing is conducted in a transparent manner, it can benefit to both business and non-profits.

For content providers, the question remains whether additional short-term bursts of ad revenue will be justified against the potential decrease in brand affinity. Since the ads work under the guise of a regular-old hyperlink, some visitors are completely turned off after clicking on them.

From a usability standpoint, they’re a real pain. Text becomes a pop-up minefield with any slight mouse movement touching one of these ads triggering pop-up advertisements. This creates friction for the visitor, who’s simply trying to do what they came to a site for:  to read the content.

The content’s credibility is also put at stake. Writers, and journalists in particular, are expected to be objective. These in-text advertisement pop-ups are further muddying the lines between editorial integrity and the sales team’s agenda, while posing as unbiased writing.

Speaking of “fair and balanced,” FoxNews.com adopted this measure and claims that they think its great. According to The Wall Street Journal, “FoxNews.com says it doesn´t consider in-text ads to be advertising, because they help provide information about the topic.”

Of course, many bloggers and other writers strive to make money for their work. When the content becomes the ad, visitors may not want to come back. Who in their right mind wants to actively read an infomercial in disguise when they can passively watch one on TV?

The bottom line is that these ads may present a good opportunity to monetize your content, but you risk losing credibility — and once that’s damaged, it’s not easily repaired.

But this confusion among smart people makes sense when you think about it. When was the last time you had a face-to-face conversation with someone, only to realize they weren’t listening? How can we expect to measure engagement with metrics, when we often can’t tell if the person right in front of us is truly engaged? In fact, the only people who can reliably tell when you’re tuning out are your friends, family, and significant others. There’s a reason for that. They’ve seen your behavior before, analyzed it, and suddenly, in their minds, you’re easier to predict than Paris Hilton.

Likewise, engagement means different things to different websites. Since each site has its own unique characteristics and purpose, engagement must be defined by your site’s goals — not by Amazon’s, eBay’s, or Ms. Hilton’s.

The first step is to define how an engaged visitor behaves in terms of your site’s goals.

• What is the ultimate purpose of your site?
  • Content site example: Get people to read my cooking blog.
  • Commerce site example: Get people to buy hats from me.
• What actions do visitors exhibit when they’re interacting with the site and moving toward its ultimate purpose?
  • Content site examples: Reading articles, signing up for newsletter, subscribing to RSS.
  • Commerce site examples: Viewing products, reading reviews, viewing about us page, adding items to cart.

So, what exactly does an “engaged” visitor do on your site? What are some of the clues that engaged visitors leave behind in your analytics?

• Do they stay long?
• Do they click a lot?
• Do they visit the site many times?
• Are their repeat visits days apart? Weeks apart?
• Do they penetrate deep into the site or bounce off of it?
• Do they view lots of pages?
• Do they take a given action like sign-up for a newsletter, refer a friend, or download a file?
• Do they leave comments on your blog?
• Do they link, Digg, Stumble, or otherwise find you del.icio.us?
• Do they purchase?
• Do they purchase repeatedly?

Some sites will have an even harder time than others at capturing the elusive engagement in their analytics and may instead need to combine the quantitative data with qualitative analysis, like surveys. (Here are three great survey questions.) But proceed with caution. While many sites could benefit from using surveys on their quest to find missing pieces of the engagement puzzle, it’s easy to be mislead by what customers tell you in a survey. Ever take an online survey where the questions were fundamentally flawed? Do you prefer the taste of New Coke to CocaCola Classic? (The folks who were surveyed did.)

What’s even more dangerous is that only certain personality types bother to participate in surveys in the first place. (And good luck getting a Spontaneous customer to fill out a survey unless they’re either angry or bribed.)

A common approach to getting an initial handle on engagement is to take certain metrics that relate directly to your visitor’s main goals: those that measure if visitors are taking the actions you want them to. Monitor them closely, and see how these metrics play off each other when certain changes happen — e.g., changes in season, updates to a checkout process, special promotions, inactivity on a blog, industry trends — affect the site.

When Metrics Lie

When selecting which metrics to use, keep in mind that it’s easy to be deceived by your own numbers. Proceed with caution by giving an in-depth look into the stories these metrics can tell you before placing your trust in them. In order to be sure that your metrics are an accurate reflection of engagement, you shouldn’t take one-off metrics at face value.

“Page Views” are a great example of a metric not worth trusting on its own. In this case, it may very well be that a visitor isn’t finding what they’re looking for. Perhaps they’re “pogo-sticking” from page-to-page in search of what they need. Now you’re keeping them on the site longer, thus increasing “Time Spent,” which, again, can be deceiving by itself. Although wasting the customer’s time — so long as they don’t leave the site — will increase the page views and time spent, it may not mean you’re actually engaging visitors. (Not in the way we’d hope, anyway.)

Engagement Metrics + Toolkit

With your site’s goals in mind, and a rough understanding of how an engaged visitor behaves, here’s a sample of some metrics that may be useful relative to your site’s purpose:

• Visitor Engagement Index = (Visits) / (Visitors)
• Take Rate = (# of Visits Taking Part in Desired Activity) / (Visits)
• Repeat Visitor Share = (Repeat Visitors) / (Visitors)
• Heavy User Share = (# of Visits with X or More Pages Viewed) / (Visits)
• Committed Visitor Share = (# of Visits Lasting Longer Than X Minutes) / (Visits)
• Committed Visitor Index = (# of Page Views in Visits Lasting Longer Than X Minutes) / (# of Visits Lasting Longer Than X Minutes)
• Committed Visitor Volume = (# of Page Views in Visits Lasting Longer Than X Minutes) / (Page Views)
• Bounce Rate = (# of One Page Visits) / (Visits)
• Scanning Visitor Share = (# of One Minute Visits) / (Visits)
• Scanning Visitor Index = (# of Page Views in One Minute Visits) / (# of One Minute Visits)
• Scanning Visitor Volume = (# of Page Views in One Minute Visits) / (Page Views)
• Average Order Amount = (Total Sales) / (Total Orders)
• Sales Per Visit = (Total Sales) /(Visits)
• Repeat Order Rate = (# of Orders From Existing Customers) / (Total Orders)
• Order Acquisition Ratio = (Marketing Expense/Number of Orders) / (Marketing Expense/Visits)
• Conversion Rate = (Number of Sales) / (Visitors)
• Page Views per Visitor = (# of Page Views) / (Visitors)
• Average Time on Site

(Eric Peterson even offers his own complex engagement calculation, and discusses the web analytics community’s challenges to it.)

Once a set of metrics is selected that directly relates to potential engagement on your site, constructing a weighted average of the set might help. This needn’t be some painfully complicated multivariate regression model, needing someone with rocket science experience like our buddy John to make sense of it; just some metrics that can serve as a collective vital sign to measure how well your site is engaging people while carrying out its core mission.

Jim Novo makes a potent case for using visitor recency to measure engagement and how to leverage it. If you can collect information relative to the history of each specific user, and the recency of their visits, his approach can send your ROI skyrocketing.

Novo’s approach shows how recency can explain a visitor’s potential value, given their propensity to return to your site frequently, as represented by the horizontal axis below. The vertical axis, meanwhile, shows how often the visitor has taken the action being measured.

Although fuzzy and directionally correct at best, engagement is vitally important to measure because it’s a predictive metric. If your current visitors are exhibiting behaviors indicating that they’re engaged, they’re likely to return soon — and often. If you see signs that visitors are becoming less engaged with the site, it’s safe to suspect that recent changes to your site or the flow of its traffic may be working against you. Either that or your competition’s finally outdone you. Regardless, it’s always good to know when to hang it up and try something new.

Engagement can also be a useful measure of the effectiveness of your branding. If visitors are showing signs that they’re engaged with your site, they’re generally showing affinity for your brand.

While engagement has become a heated buzzword, and arguably an excuse, it’s important not to be mislead. Since it’s a state of mind for your visitors, and therefore not easily quantifiable, there’s no simple way to measure engagement. But attempting to measure will help you to keep your site from proposing on the first date.

Do you have any unique approaches for measuring engagement? Let us know. We’d love to get a conversation going in the comments.

Here’s the “Cliffs Notes” version, in case you couldn’t make it:

A/B Test — Allows you to test different versions of the same page. Let’s say you want to test the homepage. To indicate which version of the homepage is performing better, a Goal Page is selected, e.g., an order confirmation “thank you” page. So, once a visitor comes to the test page — in this case, the homepage — they’re presented with one version (’A') that you created to test against another version (’B') of your homepage. Google Website Optimizer will then record the visit as a success or failure by crediting either version ‘A’ or version ‘B’ — whichever one ultimately led them to the Goal Page. Once sufficient data is collected, a winning page variation will be selected.

Multivariate Test — Very similar to the A/B test in that it allows you test different variations of the same page. The main difference is that in an A/B test, you’re creating and uploading different files and they’re presented as different URLs (”www.homepage.com/A; www.homepage.com/B”), so Google Website Optimizer splits the traffic to different version and tracks the performance of each. Mulitvariate tests allow you to select different sections on your page and create different versions for each section or content element. So, if you want to test different headlines while testing different “add to cart” buttons, a multivariate test can save time when coding. Google Website Optimizer will create different versions of the page, using every possible combination and variation for each page and content element you’re testing.

If we’re testing three headlines and two “add to cart” buttons, GWO will create six unique pages by combing every possible variation. The winning variation is then selected.

Split-Path Test — This test will split your traffic among different linear paths containing multiple pages for each path. This is different in that you’re testing the performance of grouped pages against other grouped pages. For example, you could test a checkout process by splitting it into two variations; one with four steps (or pages), and another with only three steps. Each variation of grouped pages will have the same Goal Page (e.g., order confirmation page). Once the data is collected, the winning checkout process will be the one that converted a higher percentage of visitors.

Multi-Path Multivariate Test — This will test different sections on multiple pages at the same time, all within one experiment. This test is best used after a winning combination from a split-path test is selected. For example, you could test images, testimonials, and contact information on the pages throughout a checkout to find out which combination of the elements across the group of pages is working the best.

“Do Anything” Test — This is a useful testing functionality that allows a test to have multiple Goal Pages, as opposed to only having one Goal Page. For example, let’s say you’re testing the headline and name of a category page. Now, to determine whether the headline is a success, simply test how many click-throughs you’re getting from the category page to any of product pages that it links out to.

Clock — This will register an experiment as a success after the visitor has spent a specific amount of time on the page. For example, let’s say you wanted to test variations on the title of a blog post. You can consider a visit from someone who stays on the page, reading the post for at least 30 seconds, a success. So, if you’re still reading this, hopefully that means we’re successful Google Website Optimizer will collect data on which headline is engaging the most readers to stay on the page for at least 30 seconds and show us a winning title.

Click — This functionality allows you to set the goal for an experiment as not just a page on a site, but a specific event, or click, on a page. An example would be to test which copy is getting the most people to click on your link to an external checkout source, like Google Checkout or PayPal. Since a click on any link brings the visitor to an outside page, you cannot send them to a Goal Page, but you can measure success by defining a specific click.

If you missed the webinar, don’t worry. There’s a wealth of information on the GWO Help, Forum, Case Study, and Demo pages. Google also said they will soon be posting abbreviated versions of the webinars. Besides, we have more free Google Website Optimizer resources to get you going. And if you decide you’d like expert guidance with your tests, we can help.

The Conversion Rate (CR) tracks how well your website is achieving its main objective. This goal will vary depending on the type of site. An e-commerce site’s main objective, of course, is to get people to buy product. Here’s how a commerce site would calculate conversion:

CR = Number of Sales / Visitors (A metric often related to CR, especially with content-driven sites, is Take Rate.)

The higher the CR, the better the ROI (Return on Investment). Improving conversion increases the amount of money you can make with the same amount of traffic. To determine exactly how conversion affects ROI, calculate your Order Acquisition Ratio.

Understanding what affects conversion requires an in-depth look at the entire online marketing strategy. To begin, break down the steps involved in the site’s sales process. For instance, a retail site would look like: Homepage -> Category Page -> Subcategory Page -> Product Page -> Cart -> Checkout.

Along with these steps, the Exit Rate for each must be calculated. Exit Rate shows how many people are not converting by leaving the site at various stages in the sales process — often thought of as a funnel, although it’s slightly more complicated in reality. Still, the funnel gives us a visual representation of where to find the biggest leaks, so we can fix them and optimize the experience to recapture money that would otherwise be left on the table (if you don’t mind me further mixing metaphors).

Each stage in the process is a micro-action that will lead the visitor closer to the macro-action of converting (e.g., purchasing). The best way to diagnose why various steps, or micro-conversions, aren’t performing as well as they should is to ask three simple questions:

1. Who is the audience at this step?

2. What action would we like them to take?

3. What information do they need to feel confident enough to be compelled to take that action?

When asking these questions, it’s important to recognize that a website is not one size fits all; it should be many sizes fit all. Multiple scenarios, or pathways through a site, need to be planned ahead of time in order to suit different personality types and how they prefer to behave online. It’s also important to take into account how close a person is to making a decision. Are they early on in their buying process and just researching, or do they know exactly what product they want? (Bryan’s recent screencast shows how to appeal to different buying modes and temperments.)

To help understand why visitors may not be taking the necessary micro-actions to move closer to converting, the Hierarchy of Optimization provides a useful guide in addressing potential problems. This hierarchy forms a pyramid and starts with basic requirements, then moving higher up toward the top, where persuading visitors to take the action is the highest aspiration.

Let’s look at them in reverse order…

• Functional. Does the site offer something that the visitor needs?
• Accessible. Is the visitor able to access whatever it is that the site offers?
• Usable. Are there unnecessary difficulties or roadblocks that cause friction for the visitor?
• Intuitive. How well is the site’s sales process structured? Is it compatible with how the visitor likes to buy?
• Persuasive. Does the visitor truly want and understand the problem by clearly knowing that it will solve their needs? Do scent trails carry through to the more funnel-like, conversion point on the site (e.g., the checkout process)?

If your CR is less than 10%, you should focus on optimization — but there’s always room for improvement. Along with taking steps to remove obstacles that impair the visitor’s buying process, causing them to waste their time thinking instead of doing, the most potent tool is empathy. Anticipating your visitors’ motivations will help you to answer their questions at each step — and that requires a good deal of planning.

Remember, a website exists to help its visitors achieve their goals. Give people visiting your site all of that, and the ROI will be well worth the effort you put into it.

1.) Visits to your site

2.) Number of orders placed

3.) Total marketing expenditures (which can include fixed costs associated with maintaining the site, but let’s focus primarily on marketing expenses)*

With these variables in mind, we will get two contributing metrics with which to calculate order acquisition ratio.

Cost per Visit (CPV) = Marketing Expense / Visits

CPV measures how much you’re paying to attract each single visit to your site.

Cost per Order (CPO) = Marketing Expense / Number of Orders.

CPO tells you how much you’re paying in terms of marketing budget to get a visitor to your site who converts and becomes a customer. This is directly related to your Conversion Rate.

Order acquisition ratio is then calculated by taking the CPO and dividing it by the CPV.

Order Acquisition Ratio = (Marketing Expense/Number of Orders) / (Marketing Expense/Visits)

It should be a positive number (if not, you’re in trouble). The lower the ratio, the better your marketing budget is being used. Some of the best ways to lower OAR include:

• Boosting conversion! Increasing conversion lowers your CPO. Since conversion is the website’s primary goal, there are literally thousands of factors that affect conversion. (Conversion is so important to online health and wellness that improving is integral to everything we do for clients.)

• Improving organic search rankings with relevant content. When you spend the time and money to create relevant content, the CPV and CPO should both drop — and you’ll further lower CPO by converting more visitors.

• Targeting quality traffic sources. In your analytics, segment your site’s incoming traffic by source in order to identify where to put those marketing dollars. (Bounce Rate is a great starting point for this.)

• Optimizing PPC campaigns. With an effective PPC campaign, you’ll be able to convert more visitors. While this will increase your CPV, but when done correctly, it will yield a larger decrease in CPO by converting a higher percentage of traffic.**

Order Acquisition Ratio is based on more traditional bored boardroom metrics because it has a close relation to traditional financial statements. It has nothing to do with “Web 2.0,” “Web 1.0,” or Facebook. So, it’s great for sharing with your boss since it’s directly tied to the bottom line. There’s even a cousin to this metric; a non-ratio, cold-hard-cash version of the Order Acquisition Ratio known as the Order Acquisition Gap. To calculate it, simply subtract the CPO from the CPV to get a negative number. This number shows how much money you waste in marketing dollars on visitors that don’t convert.

Order Acquisition Gap = CPV – CPO

There are other close relatives in this family of metrics, all of which focus on costs associated with generating new customers. To calculate these similar metrics, you’ll need to be able to track the same figures discussed above — except they need to be further segmented. Track the following numbers, and you’ll also benefit from a few additional metrics (listed in the bullet points below):

1. New visitors to the site.
2. Number of orders placed by new customers.
3. Total new customer marketing expenditures.

With these figures you can see the effectiveness of your new customer acquisition efforts:

• Customer Acquisition Cost = (New Customer Marketing Expense) / (Total New Customer Orders)
• New Customer Cost per Visit = (New Customer Marketing Expense) / (New Customer Visits)
• Customer Acquisition Gap = (New Customer Marketing Expense/New Customer Visits) - (New Customer Marketing Expense/Total New Customer Orders)
• Customer Acquisition Ratio = (New Customer Marketing Expense/Total New Customer Orders) / (New Customer Marketing Expense/New Customer Visits)

[*Regardless of the expenses you include, it's crucial to set a standard and stick with it in order to accurately measure and account for the specific impact of such changes.]

[**When monitering your order acquisition ration, never tolerate any increase in the cost per visitor without an accompanying decrease in cost per order.]

To qualify as a bounce, analytics tools will typically take all visitors who only see one page and leave. Time may also be used to qualify a bounce (e.g., any visit under 10 seconds as a bounce).*

To calculate bounce rate, take the number of bounces and divide it by the number of visits. You can measure bounce rate for your entire site and measure the bounce rate for specific landing pages.

Example: 10,000 bounced visitors / 30,000 total visitors = 33% bounce rate.

There are many elements that will effect the bounce rate. The main idea is that people coming to your site are following a scent. If they arrive on your site and have no trace of the scent they were following, they will immediately leave. Some of the main elements to investigate when looking into your bounce include:

• Traffic source. Are certain traffic sources consistently delivering visitors that are more likely to bounce?
• Inbound links to your site. Look at the link and surrounding text that links to your site. Do the links give the visitor an accurate idea of what to expect on your site, and does your site contain what the link leads them to believe they will find on the page?
• Keywords. If you are measuring the traffic coming from search engines, are the keywords the visitor searches for visibly present on your landing page?
• Stating your unique value. Do you have a unique value proposition? Is it present across the site and particularly on your landing pages?
• Page title. Do you have a relevant page title that is telling of what your page contains.
• Headings and headlines. Are there relevant headings and headlines that tell a visitor where they are and what to expect.
• Global Navigation. Is your navigation intuitive? Does it use words and naming conventions that your visitor understands? If your sitewide bounce rate is high, this sitewide feature may be contributing.
• Load Time. Are your pages loading too slow for people to even give them a chance?
• Page descriptions. Are the page descriptions you created relevant to the page?
• Perceived length. If your pages are very long, they may be perceived as a waste of time, thus causing people to bounce. This also relates to forms. Are there any intimidating forms present?
• Look and feel. Does your site’s aesthetic match what a site in your industry typically looks like? Is your site cluttered and lacking in white space?
• Server. Are you testing to see if your server is up to par?
• Browser compatibility. Are different browsers viewing your pages correctly?

Bounce rate is a great starting point when analyzing important aspects of your site. Here are some of the important elements you can measure with bounce rate:

• Where should your marketing spend go? By getting information about which traffic sources are delivering lower quality traffic, you can optimize these campaigns by analyzing the elements listed above and in the meantime divert your money into campaigns that are outperforming them.
• Which keywords should you be paying for? Use bounce rate a starting point for analyzing your keyword performance.
• Are your optimization efforts successful? If you are making changes to a page or sitewide feature, has the bounce rate gone up or down?
• How effective are your landing pages? If your landing pages are bouncing more than one out of three people visiting your site, you may want to investigate why this may be happening.

Avinash Kaushik has even called bounce rate the “Sexiest Metric Ever” — and I agree. As far as web metrics go, bounce rate is sexy. Don’t ignore the other metrics in light of bounce rate’s beauty.

So, get testing, and be sure to check out the next installment, where we cover “Order Acquisition Ratio.”

. . .

*It’s important to check what your analytics program considers a ‘bounce’ before analyzing any data.

[Editor's Note: Want to get less bounce to the ounce? Future Now can help.]

Key Performance Indicators or KPI’s (define) are the critical Web metrics you should be monitoring to evaluate the effectiveness of your site. Key performance indicators may differ depending on the business topology (ecommerce/retail, lead generation, content or self-service/support), but understanding them broadly is critical to any organization’s online success.

In this first installment of Unlocking KPI’s, we’ll discuss the “take rate”; the amount of people taking you up on a given offer on your site. It’s not necessarily your “conversion rate,” because that term is generally reserved for the site’s primary goal, or macro-conversion (e.g., acquiring a new lead, processing an e-commerce order). Take rate is used to measure micro-conversions. These can include:

• Newsletter subscriptions
• Downloadable materials such as ebooks
• Case studies
• White papers
• RSS subscriptions
• “Add to Friend” links for social networking sites
• Up-sell and cross-sell offers added to shopping cart

To calculate take rate, simply find the number of successes for the action being measured and divide it by the number of people exposed to the action.

Example: Lets say I write an ebook about where to find the best pizza in Brooklyn. 8,000 hungry people downloaded this ebook from my site last month. And during that month, my site received 80,000 visits. Of those visits, there were 40,000 unique visitors.

Take rate = 8,000/80,000 = 10%

This can also be done with unique visitors.

Take rate per unique visitor = 8,000/40,000 = 5% 20%

So now that we have the calculation behind take rate, lets look at what influences the take rate. Ultimately, the presentation of the material you want visitors to take has to be perceived as relevant and valuable. The specific elements that will influence how a visitor perceives your presentation need to be tested and optimized to find out what is working best. You will know you are moving in the right direction when your take rate increases.

Here’s a list of some main elements to test on your site that will influence its take rate:

• Call to Action. Does it consist of an imperative verb and an implied benefit? Is it clearly noticeable?
• Title. Is the title of the section containing your offer relevant and noticeable?
• Point of Action assurances. Are you easing the visitor’s concerns about taking the action? For instance, two commonly overlooked assurances regarding newsletters are privacy policy (i.e., that their email address will not be shared with third parties) and telling the visitor they can cancel anytime.
• Benefits associated with the offer. Are you speaking in terms of benefits that the people who accept your offer enjoy? Are you picking the most persuasive benefits relative to the segment of traffic you see the page attracting?
• Tell the visitor what to expect. If the material is downloadable, tell the visitor how large of a download is required. If it’s a newsletter, tell them how often its sent.
• Location of the call to action. Are you presenting the call to action (e.g., text link to white paper download, newsletter sign-up) above the fold? Is it in an area where the visitor can expect to find what your offering?
• Targeted keywords. What are the keywords you targeted to attract people to the page the offer is presented on? Are they relevant to your offer?
• Look and feel. Does the offer look like a banner ad? Is it contrasted against the rest of the page enough to stand out and be noticed?

Now that you have a framework of understanding what a take rate measures, and elements of its presentation to test to optimize, lets have a final look at why take rate is important to your site.

In planned scenarios, the take rate can be viewed as a leading indicator for the short-term performance of your site. Viewing a take rate as a micro-conversion point to indicate interest in your macro-conversion goals will tell you if people are moving forward in their buying decision process. If your take rate increases, you’ll qualify more people to move to your macro-conversion goal — like plugging holes in a leaky bucket.

For the next installment of Unlocking KPI’s, we’ll cover the ever-important “bounce rate.” Until then, if you have any questions, we’d love to hear from you in the comments.

According to ClickTale, total page length is not a strong factor in terms of how many people will scroll below the fold or reach the bottom of page.

• The average location for the fold is between 430 and 860 pixels down on the page.
• 76% of people will scroll below the fold.
• 15-22% of people will reach the bottom of the page.
• 64-68% of people will reach the halfway point of a page.
• 91% of pages are long enough to require scrolling.

This makes me wonder whether the same groups of people make it to the bottom of the page, regardless of where their web surfing takes them. This appears to relate to how different personality types interact with the web. Each type prefers to navigate in their own way, and particular groups, like Methodicals and Humanistics, are more deliberate in their information gathering and decision-making. These types make it to the bottom of the page far more often than their Spontaneous and Competitive cohorts, who demand instant relevance or they’re gone.

As the ClickTale article suggests, people are scanning and skimming a page’s content regardless of its size. Web developers should back away from trying to squeeze content toward the top of a page in order to supposedly make it easy to scan. Using proper amounts of white space, headers and sub-headers, along with bolded text and bullet points increases a page’s scannability for all personality types.

But keep in mind, shorter pages did perform slightly better. “Almost identical percentages of page views (15%-20%) reach the page bottom regardless of page height.” While the data was fairly similar regardless of the page length, shorter pages were closer to the 20% range.*

When it comes to critical elements, like calls to action, you don’t want 5% of visitors not seeing it. Pages have more power when they stick to one main idea per page. And remember, copy should be long enough to cover the essentials but short enough to be interesting. A site will generally get better search rankings by having highly relevant links from page-to-page. So, there are advantages to leaning toward shorter pages, but don’t sacrifice clear page design and layout to squeeze a few pixels off of a page’s length.

Bottom line: If you have good, well-formated web copy, they will scroll.

[*Note to Direct Marketers: Your ridiculously long, heavy-handed sales pages might be overkill.]

Target had 10 months since the beginning of the court case, and, so far, has refused to make minor changes to their site. The main complaints with Target’s site are as follows:

• No alt tags on its images for screen readers to tell what an image contains
• Visitors cannot complete their checkout process without the use of a mouse
• Lack of descriptive headings to mark separations in a page
• No explanations for visual maps on the site.

These are simple changes that are fundamentals to web design. In fact, a list of guidelines for creating blind-accessible pages makes recommendations that are very similar to what we at Future Now advocate to increase conversion for all visitors — visually-impaired or not.

• Use descriptive alt tags
• Speak in the active voice
• Be clear and concise
• Write copy at a 5th grade reading level
• Avoid jargon
• Use bulleted lists to break apart key points
• Use white space effectively
• Use clear and accurate links that tell the visitor where she is going
• Use descriptive titles, headings, and headlines
• Make one key point per page
• Use the simplest words you can to get your point across (think “Occam’s Razor“)

In his ClickZ column, Bryan Eisenberg places accessibility as the second level in the “Heirarchy of Optimization“.

Want to know if your site is accessible? Here’s a list of elements you can use to check if your website is accessible to the blind and visually impaired, and to make sure you’re not the Federal Government’s next Target:

• Can you enlarge the text on your site and still read it? (press ctrl +)
• Can you change the color scheme of your browser and still read everything clearly? (This is for people who are dyslexic or colorblind.)
• Test your web copy for readability (i.e., grade level), as well as the percentage of active-voice sentences.
• Is it possible to navigate your site without a mouse? If so, can you successfully complete all necessary tasks?
• Do you have descriptive titles, headings, and headlines?
• Does your site rely heavily on vague links, like “click here“.
• Do you describe any image maps (define)?
• Do you use descriptive alt tags?
• If you have PDF files, do you have a link to Adobe Access? Most screen readers cannot read PDF files.
• If you have pages that rely on Flash, Java, or other plug-ins, are there alternate links to plain HTML pages?
• Run your pages through this tool: webxact.watchfire.com

The Internet has empowered many people to overcome visual limitations. But the Target ruling case raises some great questions. For instance, do you think the Americans With Disabilities Act, which created building accessibility standards, should force websites to do the same?

What do you think? If it’s not already, will you make your site accessible to the blind?

Capitalizing on Competitors’ Conversion Challenges

Meanwhile, Blockbuster missed a huge opportunity. Netflix’s coupon box mess was a huge opportunity for Blockbuster — if they were sharp enough to notice this competitive advantage — to woo customers, and likely keep them for years.

One possibility for Blockbuster would’ve been to use its “employee discount” leek as mentioned at HackingNetflix.com. To capitalize on its competitor’s conversion problems, they only needed to purchase PPC ads for “Netflix coupon,” where they could’ve offered Netflix customers a Blockbuster coupon on a customized landing page. As of today, only five ads currently appear on Google for that search term.

Moral of the story: Follow your competitors. Look for their conversion mishaps, and capitalize on them.

Reading Future Now’s GrokDotCom won’t hurt, either

Before:

After:

P.S. — Blockbuster (BBI), are you paying attention?

P.P.S. — Got a coupon code for me, Netflix?

If only they’d do a bit of testing…

The first problem appears with what seems to be a search bar near their top navigation. This is actually a Coupon Code box.

I’d like to know how many people use this box to search for movies, then violently click the “Back” button once they realize it’s a coupon box. From that number, it’s reasonable to assume that a portion of those searchers are going to a search engine and typing in movie rental coupons — and possibly being wooed to other sites like Blockbuster, where they might stay a customer for years. The lifetime value of this test cannot be taken for granted.

For my first would-be test, the coupon box would be replaced with a movie search box. This is a huge opportunity to let first-time visitor feel the power of searching through some 85,000 DVD’s. This is their unique value proposition; they have just about every DVD imaginable. The coupon box would then be moved below the fold (read: you’d have to scroll down to see it). That way, people who didn’t have a coupon would be less distracted by the possibility of not getting the best deal. Meanwhile, the visitors who do have a coupon would be compelled to find it below the fold.

Next, I would test the content just below the navigation; what we call the “active window” (example). The active window should invite the visitor to imagine themselves as an empowered member of the Netflix community. By not conveying this feeling, Netflix ignores its main benefit: their mind boggling selection of DVD’s and the spot-on relevance of Netflix-recommended movies.

Their rating system is in a league of its own. By segmenting reviews to show what people similar to you had to say about a movie, they give you trusted recommendations and opinions about each selection.

For a third test, Netflix could benefit by changing two words on this page. The “Start Now” Call to Action would be far more persuasive if it included a benefit. The cold, uninspired command to “Start Now” sounds much better when you say something like “Try it out for free”.

Finally, Netflix should test using language to attract busy people like myself; those who rarely watch-and-return the movies they rent. We save them tons of money on postage.

*Please Note: The screenshots pictured here show the homepage as seen by Netflix members. Non-members see a sign-up form instead.

What’s Google doing that makes more people convert in their checkout than sites with only in-house checkout? Here’s a list of five features that are aiding its success and can be integrated into all checkouts.

1. They stripped unnecessary steps from the checkout process, making it very easy for the customer: there are no additional steps to sign up; the customer simply enters his information and they have an account; there’s only one field for an address displayed in their form; following the form is a button to open another section of the form to enter a different shipping address only if necessary.  There are also no optional fields in their forms; no fax numbers, no entering in your email address twice.  They don’t worry about where you heard about the site. Just the bare minimum of what is needed to allow the customer to pay for the product and get it shipped.

2. Its only two pages and very fast! Customers barely have to time to second-guess their purchase.

3. Google gives assurances near each Call to Action, telling the customer what to expect in their checkout, and delivers. On the first page of checkout it says, “You can still make changes to your order on the next page.” They do something similar on the first page in the product review. By telling the customer that their shipping and tax will be calculated on the next page.

4. A brief synopsis of the company’s return policy on the second page with a link to read the entire policy.

5. Google shows customers which products they’re ordering before they’re required to enter any credit card information.

There are many more reasons to the success of Google Checkout. There is also room for improvement.  For instance:

• What is Google going to do with my credit card information? There is not a clear explanation of this and digging through a legal contract is never fun.
• Some sites have not properly implemented Google Checkout and leave out options that customers may value. CDUniverse.com doesn’t allow the selection of any gift options before entering Google Checkout or during, but they have it on their own checkout.
• They could display the return policies in a more noticeable area than the very bottom of the last page.
• Some questions are unanswered regarding how Google Checkout works, such as, Do you need a Gmail account?
• There isn’t clear information about when the customer will receive the item at their house.

Do you have any experience with Google Checkout? Have you noticed any impact on your conversion rate in checkout with Google Checkout as opposed to your sites checkout? Any other observations or concerns? Google Checkout looks like it’s set to take the lead as the main third party provider for customers and merchants beating out Yahoo and PayPal’s combined effort (which Marketing Pilgrim likes to call “Payhoo”).

The V&S Group’s site is a corporate; the overall goal being to educate visitors as to who V&S is, what they do, and to open channels of communication for potential suppliers, employees, shareholders, press, and distributors. Given these goals, the lack of relevant information is leaving money on the table, not allowing the site to live up to its potential.

Studies indicate that climate affects our color preferences more than we’d care to admit*. Color choice is sparse and the design is unnecessarily gray throughout. They even put half of the pictures on their About Us page in black and white. The fact that they’re a company with global reach warrants a website designed with more global appeal. One solution would be to have the site vary for each language selected. Keep the monochrome site for the Scandinavian languages and a more colorful layout for versions in other languages.

The overly gray design also has a negative impact on usability. I would recommend they put more contrast in their top navigation by making the background a different color, or a at least a different shade of gray. The text will stand out clearer on the tabs by making black.

Absolut Vodka is their most well known brand and should be displayed more on the site. Adding pictures which clearly show the Absolute name would allow the site to communicate much more effectively just who this company is.

Adding more resources about Absolut is a necessity for the site. They should create an area for anyone interested only in corporate information on Absolut — or, at the very least, link to Absolut.com. Providing a rich collection of links to info on their world-famous brand will make the site deliver more value to anyone whose interest in V&S is secondary to that of its brands.

Aside from the top navigation, there are only five main links in the active window (read: front, center) of the homepage. More links will make for increased usability and open the way for a more persuasive experience. The site’s main purpose is to share information, and making better use of the active window on the homepage will open up more of the site’s content. Currently, there’s too much digging required on behalf of the visitor.

The homepage would also benefit from removing — or drastically shrinking — the Flash animation, and building more content into the four sections appearing below it.

The site requires the visitor to enter their country and year of birth, which — although necessary on Absolut.com — may be unnecessary for V&S Group. Regardless, a simple field that asks if the visitor is of legal drinking age would be much friendlier than a drop-down menu full of countries and a field in which to type your birth year. They may be asking this to collect information about the sites visitors, but the gain in customer information is likely not worth the loss of momentum created by this step.

The page labeled “Join Us” is a key conversion point. It doesn’t do nearly enough to explain why one should join V&S. There’s a great opportunity to expand on the benefits of working with V&S and provide links to further information. The title of the page should really be “Careers” or “Employment Opportunities”. “Join Us” could be confusing as it may be speaking to wholesalers or suppliers.

Finally, their “Contact Us” page, perhaps anothermain conversion point, should include links on the map they’ve created. It currently shows the map with what appears to be clickable links, then forces us to use a pull-down menu. (Time to hire an AJAX programmer, guys!)

P.S. — I never found out what V&S stands for.

*(See “Color: The Secret Influence” by Kenneth and Cherie Fehrmen)

“Who is it?”

It’s your order.

“My order, who? I don’t remember you! Your checkout didn’t give me a chance to review, and now you want my credit card info!??”

Remember the first time you made a purchase online? Recall the uncertainty surrounding the whole process? Feel those reservations about pulling out the plastic and whispering your credit card number into the megaphone of this new “World Wide Web.”

Scary stuff! Most of us have come a long way and buried those creepy feelings beneath receipts of airline tickets and impulsive eBay purchases, unless you’re like my colleague Anthony Garcia who’s a guru of online shopping yet hates doing it.

Lets bring the beginner’s anxiety of buying online back to the surface. Not knowing exactly what you’re going to get, when you’ll get it, how or even if you’ll get it is a ridiculous buying proposition. Yet while analyzing websites with Future Now, it’s painfully obvious that anxiety hasn’t dissipated thanks to any improvement in checkout processes. Only our acceptance of uncertainty can help us type our credit card numbers without cold, sweaty hands.

Let’s consider the standard online checkout process: Shipping -> Billing -> Review -> Confirmation.

Why should anybody have to enter billing information before they get another peek at the order without going back to the shopping cart? It’s unconscionable, yet somehow it’s common.

Sure, the indicator (if there is one) says “Review,” but conventional credit card wisdom says that when you hand over your card, you get charged. So, the online practice of entering info, then reviewing, then proceeding to purchase (if you’re lucky) totally conflicts with everyone’s experience in the physical world.

Instead of asking us to “submit,” e-commerce checkouts should submit to common sense; never ask for any credit info without an explicit order review.