Every E-Tailers’ 2011 Wish List

By Larry Kavanagh

Don't know what to get that e-commerce merchant on your shopping list? Here are a few suggestions (sing along to the "Twelve Days of Christmas"): On the seventh day of Christmas, my true love gave to me …

seven (thousand) new Facebook friends;
6 percent boost in average order size;
five viral videos;
four tweets today;
three cool widgets;
two A/B test winners; and
an iPhone app for my site.

Delicious, buzzworthy stuff. But what any e-retailer really needs to make 2011 a great year is some way to grow year-over-year visitors by 10 percent to  15 percent.

Three metrics determine e-commerce success year in, year out: conversion rate, average order size and total site traffic. Of these, the last is the most important.

Projects to increase conversion rate and average order size are worthwhile — and can even keep revenue growing for a year or two — but eventually you'll run out of ways to improve your website. You need to get more shoppers into your online store in order to continually grow sales.

For a number of years, growing traffic has been pretty easy. Each year more consumers shop online. Therefore, like magic, more people show up on your site. But as that trend continues to slow, you must make increasing traffic a central part of your planning. Start by tracking the sources of web traffic on your site, including:

direct — shoppers who type your URL directly into their browser or have your site bookmarked;
pay per click (PPC) — include Google AdWords, Bing and comparison shopping engines;
search engine optimization (SEO) — natural search;
email — both trigger and campaign-based; and
other — namely, social media and links from sites that aren't search engines.

Direct
Direct traffic is critical to cross-channel merchants. These visitors primarily arrive at your website as a result of some form of offline advertising — e.g., direct mail, radio and TV advertisements, in-store signage, catalogs, etc. However, it's difficult to track sales generated by offline campaigns back to a specific promotion. As a result, many retailers have cut back on offline advertising. But yet they're then surprised when the growth rate of their online store declines.

A decline in direct traffic has a second consequence for online retailers: Generally, direct traffic is the highest converting source of web traffic. These shoppers know who you are. Therefore, you might need to add 30,000 visitors from SEO or PPC to make up for 10,000 direct shoppers lost.

It's very important to measure direct traffic, with a close eye on spotting trends. If you see direct traffic declining and know that your company is cutting back on offline advertising, make your case for increasing online ad spending, which is more trackable, to offset this decline. Look for opportunities to promote your online store more prominently in offline advertising as well.

You can also encourage direct traffic by adding a buy online/pick up in-store option to your e-commerce site. This functionality can be a particularly effective part of a mobile site strategy. Allow shoppers to purchase items impulsively on their phone or iPad when the thought occurs, not when they're home in front of a computer. In-store pickup of these impulse items makes this even easier. And don't forget to promote this option in-store as well. Give shoppers the idea and they'll do it.

PPC
You can make an enormous difference in the traffic generated via PPC advertising by focusing on landing pages. PPC programs tend to spend time and money on developing new key phrases and ads. These are critical in driving more traffic to your site, so this effort makes sense. However, most merchants simply find a page on their site that's most relevant for the keyword or phrase, usually an existing category or product page. The problem is that category and product pages are designed for shoppers navigating from your homepage who already know who you are. Many PPC-generated visitors are either new to your site or haven't been there in a long time. You can improve the conversion rate of these shoppers up to 20 percent by simply adding the ability to dynamically recognize and welcome them.

More importantly, the impact on your PPC program is much greater than a 20 percent improvement appears to be at face value. Let's say that for a particular key phrase you can only afford to bid up to position six. At position six, the phrase produces about 50 visitors a month. After a 20 percent improvement in conversion rate, you can afford to bid more, helping you reach position three. At position three, you generate 250 visitors a month from the same phrase, resulting in a five-fold increase in profitable traffic from the key phrase! This is the magic of landing page improvements related to PPC.

SEO
SEO still represents the biggest opportunity for most sites, particularly multichannel merchants, to increase traffic. In the past, it took months for SEO efforts to show up in terms of generating visitors. However, Google has made a number of changes that reward your SEO efforts more quickly. Plan on spending more time and money on SEO in 2011 — budget for at least a 20 percent boost in effort. The increased traffic generated from SEO will make all your cool conversion techniques that much more effective.

Email and Other
Email doesn't have the ability to dramatically increase raw traffic numbers. You can keep this source of visitors growing, however, by working on ways to increase the percentage of visitors who give you their email address. You need the number of deliverable email addresses you have to grow year over year. If your program is stagnant, look at where and how often you ask for email addresses, and what you offer in return.

Finally, the best thing to do with the "other" category is to track it and look for trends. It's where the next hot source of new traffic will come from.

The naughty merchant will likely see flat traffic next year, prompting a real struggle. But if you're nice and follow the tips above, you'll be well on your way to achieving double-digit sales growth in 2011.

Larry Kavanagh is founder and CEO of e-commerce software-as-a-service developer D.M.insite. He can be reached at lkavanagh@dminsite.com.