Monday, July 18, 2011

5 ways for online marketers to increase conversions

If you have or have in the past operated any type of ecommerce website then you are probably familiar with low conversion rates and you probably have looked at things like time on page, time on site, cart abandonment, keyword conversions to try and improve those low conversions.

According to a recent study, about 10% of visitors to the average ecom website are actually there to consider making a purchased, and only 2% will actually make that purchase. 2%!!!!!

2% is a very low number for ecommerce (unless that is your chargeback ratio) so what most online marketers will do is try and push even more traffic to the site. The numbers do work, since 2% of 1000 is a lot more sales then 2% of 100. However, what about that 8% that were interested? How can you convert them? Increasing traffic is always important but why not look at some ways to increase the conversions to your site as well.

I believe that improving conversions is not only to look at the actual site, but look at suppliers to your business. Is your credit card processor the best fit? What about your call center?

Here are a five ways I think you can make your site more attractive to potential customers and increase conversions.

1. Look at declines from current Credit Card processor.

Depending on the type of account you have, where your customers are coming from and host of other factors, your decline rates might be way too high. If you have a US merchant account, but a significant portion of your traffic is international, then you may look at opening a international merchant account that you can process international transactions from. I have seen a lot of companies really increase conversions by doing this.

2. List popular items

This is very easy to do my looking at search queries and what is hot on your site. This is clearly what people are looking for the most and if you make it easy to find but putting it right in their face, you will have a better chance at selling it to them.

3. Engage your customer if they are taking too long.

This is great strategy if you see that customers are spending too much time on a certain page or on the checkout. Try and initiate a conversation through online chat to see if there are questions that the customer has.

4. Listen to your customers

Anyone can look at a best practice guide, but the best resource available your customer. Implementing a customer feedback system so you can see what people have issues with AND what they really like. But don’t just listen, it’s very important to take the feedback and address it on your website if you think its valuable.

You can also look at using incentives to get better feedback. Maybe entering customers into a draw of giving a prize if the feedback provided is valid and can be used.

5. Customer Service is Key.

Imagine walking into a store and you have some questions about a product you would like to buy. However, when you look around there is nobody to ask the question to or to help you. If that was me, I would walk out. The same principle applies online. Make sure your customer service is always available and can respond in a very quick manner. When a customer is making an impulse purchase, you need to make sure you address any concerns immediately before they are given the chance to walk away.

Having a great FAQ section, clear pricing shipping and return policies can address a lot of questions upfront, so make sure you have that in place. Also consider adding a live chat service.

In summary, online marketers invest massive amounts of money and effort to get visits. But if your site or service isn’t optimized to convert those visitors then a lot of money is being left on the table.

Tuesday, July 12, 2011

How to be effective when looking at your online merchant account pricing.

As mentioned in a previous post, the pricing quote you receive is not always the price you are going to actually pay. Anyone that's had to deal with online merchant accounts and credit card processing (with the exception of those that process strictly offshore) will tell you that its can be a pretty confusing subject. When you looking for a new merchant account there is a lot of things you need to factor, and although I have stated that price isn’t the only thing and that value is extremely important, you still need to understand exactly how your pricing works. So, when you start looking for a merchant account or would like to evaluate the one you currently have, there is a lot that needs to be taken into consideration. You've need to look at the discount fees, qualification rates, interchange, authorization fees and more. The list of potential charges can go on and on.

One of the biggest dirty secrets in the online payment processing space is to quote a merchant the qualified rate, which sounds great, but not really disclose all of the additional fees that you will pay. This is something that unfortunately has become common practice with too many companies these days (not all) and its something that I hear from merchants I work with all of the time. This is where most of the margin is, and my belief that it’s important to disclose all fees and teach merchants how the pricing work. I think if you are honest with a merchant then it’s much better for you in the long run.

Instead of looking at the big picture, merchants fixate on a single aspect of an account such as the discount rate or the early termination fee (which is a fee I am not a fan of). I completely understand this as I would do the same in a business that I am not familiar with, but what really needs to be looked at is what we call the EFFECTIVE RATE. Once you start looking at the big picture you will see that merchant accounts aren’t that hard to figure out and you will be able to not only accurately forecast your merchant account costs but also compare different quotes you receive.

The term effective rate is used to refer to the percentage of NET sales that a business pays in credit card processing fees.

For example, if a business processes $100,000 in NET credit card sales and its total processing expense is $4290.00, the effective rate of this business's merchant account is 4.29%. The qualified discount rate on this account may only be 2.25%, but surcharges and other fees bring the total cost over a full percentage point higher. This example illustrate perfectly how focusing on a single rate when examining a merchant account can prove to be a costly oversight.

Effective Rate = Total costs/ total sales

You need to make sure you are also looking at all of the possible fees, this can include:

  • Discount Rates

  • Monthly Service Fees

  • Statement Fees

  • Batch Total Fees

  • PCI/DSS Fees (Data Security)

  • Administrative Fees

  • Transaction fees

  • Any other miscellaneous Fees

In my opinion, when looking at costs the effective rate is the single most important factor when you're comparing merchant accounts. But again, cost shouldn’t be the only factor when deciding on the merchant account.

Calculating the effective rate of a merchant account for an existing business is easier and more accurate than calculating the rate for a new business because figures are based on real processing history rather than forecasts and estimates. Calculating the effective rate of a merchant account for a new business is a little tougher because of the lack of processing history from which to judge how a business's transactions will qualify. Nevertheless, making a conservative estimate of an account's effective rate is still vital.

To calculate the effective rate of a merchant account for a business without processing history you will need to estimate a few figures such as the business's average ticket, processing volume, etc. The actual methods involved in calculating the effective are pretty involved and beyond the scope of this article. Hopefully, these calculations aren't something you should have to worry about. In this case I would work with an experienced consultant of or a processor you can trust

If the effective rate ends up being significantly greater than your qualified discount rate, or the rate you were quoted, it’s time to re-examine your account and make changes. Using the example above, let's say the qualified discount rate for this account is 2.25%. That would mean the effective rate of 5% is more than double the qualified discount rate. In a situation like this, the chances are very good that there are a lot of additional surcharges being applied and you can either have a discussion with you current provider ( but would you want to work with a company that already has been deceitful) or look to work with a new provider.

Any provider that's courting your business should be able to speak with you and request the information they need to offer you a reasonably accurate effective rate. Alot of times this will be in the form of previous processing statements (if available) If they're unable to do this or they don't know what an effective rate is, they're probably not the best choice for your new merchant account provider.

If you need any help with deciphering credit card statements or if you are looking to get an effective rate quote on your business - please do not hesitate to contact me.