Bernard Louvat shows how to boost your company's current SEM plan.

With numerous options for online marketers, finding the right balance between (Google/Yahoo!/MSN/LookSmart) search marketing, customer sales support, and usability enhancing web site re-design is a difficult task. Here are the steps for an online retailer to intelligently increase profits.

1. Analyze the data for the last month of your search engine marketing (SEM) campaigns to understand the amount of money you will have to spend to get an additional SEM-driven sale on your website. This is done by multiplying the Cost Per Click (CPC) and the Conversion Rate, (e.g., $2.59 Average CPC for the HDTV campaign) with a sales conversion rate of 1.10 percent yielding a $236.15 cost for an additional sale via SEM.

2. Web analytics can help you understand how people find your site, the comparative sales conversion rate of individual keywords, the navigation path users take through your website, what region/country users are coming from, and what the peak time for user traffic is. Use a web metrics package to analyze the purchase conversion funnel to understand the value of lost prospects, (e.g., from 3,100 visits), how much revenue do the prospects who either did not checkout their shopping cart after adding a product (234-90=144) or did not complete the checkout process (90-34=56) represent? Assuming an average sale of $800, it would be ((144+56)*800) = $160,000 in our example.

3. Now you will need to get intuitive. What analytics cannot do is get inside the mind of the user who abruptly decides to leave your site. By fostering a dialogue with the user you'll be able to quickly understand the reasons shoppers are not translating into buyers. You can spend all the money you want on search advertising, but to truly optimize for maximum sales, you want to ask the customers themselves why they are abandoning their shopping carts. To address this challenge, use a set of business rules on your site to proactively offer sales assistance via the medium of choice of today's consumer -- online chat/instant messaging -- with users who have lingered for more than 15 seconds on your shopping cart addition and checkout pages. To ensure accurate statistics, make sure that there is always someone on your staff, or better yet a 24-hour outsourced contact center, to assist your prospects. As added incentive for price-sensitive customers, consider allowing your live chat reps to offer a discount or free shipping to overcome the hesitation, and increasing ROI from your marketing spend. The live chat marketers would offer an incentive if the prospective customer expressed hesitation due to price or shipping costs during the conversation. Use the information collected by the live chat reps to improve the FAQs, add more helpful website content based on questions asked in the live chats, and then compare before/after metrics from the Purchase Conversion Funnel using a web metrics package. Chat transcripts can also be a great source of ideas for new products - straight from the mouths of your targeted customers. If the prospect decides not to buy your product, be sure to have trained representatives chatting live with your prospects to record why the customer didn't buy. Tabulate the sales saved by the live chat sales assistance.

4. Calculate the expense of using proactive, chat-driven sales tactics, and thus the cost of an additional sale via live chat. This assumes: a) there is a $35/hour total cost of using an outsourced chat center using their own smart, well-trained employees, quality assurance agents, supervisors, facilities, computer systems, and their own live chat software to carry out a consultative sale, b) the agent handles 5 simultaneous chats, each lasting an average of 10 minutes (30 chats/hr) yielding a 10 percent conversion rate and thus 3 sales/hour. That would mean that the cost of adding an additional sale using live chat would be $11.67/sale.

5. Compare the cost of an additional sale via search engine marketing versus optimizing search engine-driven leads.

In this example it seems that optimizing leads provided by the current SEM budget is the answer, but depending on your particular numbers, your answer may be different.

These steps should yield a very clear answer as to whether you should spend more money on search engine marketing/advertising, or on pro-active live chat-driven sales support, or in improving the navigation and information on your website.