Want to Increase Your Online Sales?

By Larry Kavanagh

Traffic is like oxygen for a website: it can't "live" if it doesn't get it, no matter how cool its features and graphics are. The simple truth is that you need visitors to get sales. Want to increase your sales by 20 percent this holiday season? You need 20 percent more web traffic to do so.

What's not so simple, though, is figuring out how to cost effectively boost your traffic. Boosting traffic costs time, energy and/or money. In the early days of e-commerce, sales went up because new shoppers were flocking to the web each year. A site just had to be ready to "catch" the visitors that came along.

Today, traffic growth is slowing. To grow sales, you have to aggressively look at ways to increase the number of new buyers on your website. The secret to doing it effectively? Knowing how much you have to pay to generate web traffic, and how well different sources of traffic convert.

The First Step: Reporting
The first step to cost-effectively recruiting more traffic to your website is to report on how much you spent on different traffic sources. Keep in mind that most types of traffic have several different subcategories. Here's a minimum list of what e-commerce marketers need to pay attention to:

● search engine optimization (SEO) — this further breaks down into the different search engines, including Google, Bing, Yahoo, etc.; 
● search engine marketing (SEM); 
● comparison shopping engines (CSEs), which have 10 to 15 viable traffic sources; 
● email marketing; 
● offline media, such as print ads, catalogs, radio and TV; 
● social media; 
● online marketplaces such as eBay and Amazon; 
● affiliate programs; and 
● direct traffic from consumers who type your URL directly into their browsers or have your website bookmarked.

Most sources of traffic have reporting that shows you how much you spent. Add to that some estimate of how much time you spend managing different traffic sources. Some companies view SEO as free because they don't have to pay for clicks. It's important to include your time, however, so that you can get an accurate picture of your true return on investment.

The Second Step: Allocation
Next, allocate sales to each traffic source. Here's where reporting gets tricky. The problem is that the tracking and reporting software for different types of web traffic over-report associated sales. It's very good at reporting costs, but terrible at reporting sales!

Google AdWords, for example, places a cookie when someone clicks through an AdWords link. If a consumer doesn't purchase on that click, but later comes back via an email and purchases, Google gives the AdWords click credit for the sale. Of course, your email program will give the email credit for the sale as well! The result is double counting of sales.

Double counting of sales makes it impossible to determine the number of new customers and true ROI that you're producing from different traffic sources. Many companies use outside vendors for SEO and SEM. The answer is to come up with some type of allocation model so that you're only counting a sale once.

There are several types of allocation models to choose from, but the most effective uses a marketing database to bring all sources of web traffic together, then de-dupes responses in a single report.

Marketing databases take into account the amount of time that's passed since a shopper was exposed to a particular form of advertising, then decides which traffic source should get credit for a sale.

Separate out SEM and SEO orders that are the result of someone searching for your company's name from amongst other keywords or phrases you're either bidding on or optimizing for. "Company name" sales were ultimately driven by some other marketing activity. No one wakes up one morning knowing your company name; you did something to produce that brand awareness. A good marketing database will reallocate many of these sales to a previous marketing touch.

The marketing database will also treat shoppers who come directly to your website — i.e., they type your URL directly into their browsers — the same way.

Finally, separate out new customer acquisition from repeat customer purchases. Retargeting previous buyers via email and offline marketing does a great job at getting them back to your site for repeat purchases.

Increasing the rate at which shoppers buy from you a second time or third time provides a short-term boost in sales. However, to achieve long-term, sustainable growth, you must find ways to attract and convert more first-time shoppers.

It's getting easier to find good marketing databases. While you can pay a lot more, many service providers will produce and maintain one for you for less than $50,000 per year, some as low as $25,000. While this may seem expensive for something that doesn't directly produce revenue, it's become a necessary expense to grow an e-commerce business. Otherwise, you just can't know where to spend more time and money effectively to increase new customer acquisition. And that means you're likely to waste more than the marketing database costs!

Larry Kavanagh is founder and CEO of e-commerce software-as-a-service developer D.M.insite (lkavanagh@dminsite.com).