Companies that survive these lean times will be the ones with strong bases of loyal customers. Here's why you should rethink the way you address returning visitors in your marketing strategy.
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. [Author's 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 1:
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.
Figure 2:
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.
Chad Little is CEO of Fetchback.