Forget about PPC advertising, Offermatica's Jamie Roche explains why you should be testing to optimize your conversion rate.

The best companies spend lots of time and energy getting people to their sites. But, even as the rest of the world rushes to adopt best practices for pay per click advertising or scrambles to increase free search rankings, the vanguard is moving on. Conversion rate and revenue per visitor have become the keys to online profitability.

But what does this mean? Conversion or conversion rate is a flexible term. It can be the ratio of visitors to buyers, the percent of visitors who sign up for a newsletter, complete an application or reach a desired level of understanding of your product.

Conversion is most useful when it applies to a specific advertising or marketing campaign where it is the ratio of visitors to the subset who complete a desired action. 

For many, the conversion rate story is not pretty. Here is an example: A company buys traffic from Google Adwords at an average of $1 per prospect. One percent of the prospects convert to customers for a cost per acquisition of $100. The average sale has $50 in gross profit resulting in a 50 percent ROI. And, the cost for a top listing on Google is increasing as large companies divert an increasing percentage of their advertising budget to online, so the ROI story will likely get worse. 

So what can you do? Here are three ways to win this battle:

1. Buy Smarter: Lower the number of prospects purchased and try to identify and only pay for those that are likely to buy. This is called keyword optimization.
2. Convert Better: Increase the conversion rate of the traffic sent to the site from this Adword campaign by a significant amount.
3. Both

There are a variety of tools and services available to optimize keywords. With some time and/or financial investment you can stop paying for prospects who are not really prospects. But the volume of traffic seeing your site will likely go down. 

The only way to maximize both traffic and advertising ROI is through conversion optimization. Conversion can be improved by addressing three categories of change:

1. Usability
2. Relevance
3. Persuasiveness

There are excellent online sources of information on usability. Take a look at Jakob Nielsen’s top ten list, Creative Good’s “Good Experience” newsletter and Bryan Eisenberg’s Grockdotcom for great usability tips.

Relevance is harder for most sites to improve. Relevance requires that you select or create a great many different landing pages for the different prospect types, or that you have the ability to vary content on the landing page to match the expectations of different visitor segments.

A person who searches for “Downtown San Francisco Hotel” and another person who searches for “San Francisco hotel discount” will likely respond to different landing page content. The problem is that you don’t know exactly what either wants.

You might guess that the first was looking for proximity to a business meeting and should see more expensive business-oriented hotels. The second might be a student looking for last minute, schedule-flexible deals, and the quality doesn’t need to be very high. Or the “San Francisco hotel discount” searcher could be the executive looking to pay $400 instead of $600 to stay at the Ritz. 

What does a marketer do? The only answer is to test by running one version and then the other and comparing your Web logs, or using more sophisticated A/B or multivariate testing tools. I will describe these in more depth in a later article. As for what to test, here are some ideas:

1. Start by identifying what properties are most frequently purchased by prospects coming from each major search word group. Try showing a greater or lesser number of options from this list. Cycle through the list of most likely properties and find which converts best.
   
   
2. Pick one property that has the best deal on an elite property and feature it but include links to other options.
   
   
3. Create a content area that shows best deals, and another that has lowest price. And then test. The keys to relevance are testing and targeting. It can be easier than you think to target content and execute tests and increase conversion rates by 50 percent or more.

There are many facets of persuasiveness. These include: offer language, visual merchandising, copy style, length and tone, customer or external references. Testing and targeting is enormously valuable in identifying the most persuasive presentation. Companies are regularly surprised by what their users find most persuasive. 

The easiest to test is offer type and presentation. One major retailer found that pop-ups were not helpful in converting their PPC traffic, and that “Free Shipping” was less compelling than they thought but 10 percent off worked like a charm and was less expensive.

Other things to try are:

1. Timed offer: Limited quantity, Limited time offer, While they last …
2. Momentum: Hot seller, most popular
3. New or Unique: Preview products, online only, exclusive
4. Presentation: Bigger image, image with model, lifestyle image

There are virtually unlimited things to try, and many of them will perform differently in different contexts. There are two things that we know for sure: 1) there is always a better way, 2) finding the better way can produce significant improvements in conversion and therefore big increases in sales or sign-ups.

Jamie Roche is a founder and co-president and CEO of Offermatica. Roche brings to Offermatica the experience of leading a visionary technology company from the dawn of the commercial Internet, through the bubble burst and out again. Offermatica, formerly Fort Point Partners, Inc. is an eight-year-old software company that built many of the leading Internet commerce Web sites. With Offermatica, Roche has provided strategic direction to executives from over 50 companies on successful selling through the Internet.

Prior to Fort Point Partners, Roche ran Webfactory, a provider of Internet products and services to Yahoo, Netscape and other leading Internet companies at their formation. Roche also worked for KPMG Peat Marwick and SiliconGraphics. He is a graduate of Yale University.