May 14, 2014

Measuring Conversion - We Mess It Up All The Time

The upper right segment buys 14 times a year (almost always in-store), and only visits the website 21 times a year.

The lower right segment buys 13 times a year (more often online than in stores), and visits the website 100 times a year.

Shouldn't the strategy for each segment be different?

That first segment ... your web analyst will tell you that the customer "doesn't convert". Then the marketing team will start throwing money at this customer ... 20% off ... 30% off ... free shipping ... gift with purchase. 
But in all honesty, the customer converts at a 67% rate, with most purchases in stores.
  • Analytics and Marketing Teams view this customer as a digital failure.
  • This customer is an amazing, highly profitable customer.
Look at the second segment. The customer visits your website every three days. Why do we bore this customer to death with the same home page for fifteen days of the month? The customer will see the home page five times before it changes! And just as important ... this customer buys once every four weeks ... that's an amazing rate ... and yet, your web analyst and marketing expert will say that this customer doesn't "convert" ... and as a result, will start throwing money at this customer ... 20% off ... 30% off ... free shipping ... gift with purchase.

A little bit of measurement patience and cross-channel measurement discipline completely changes our view of each of the two customer segments outlined here. Stop wasting company money and gross margin dollars demanding that the customer convert according to your rules!

Contact me (kevinh@minethatdata.com) for your own, customized Online / Retail Dynamics project.