Introducing Conversion Expectation

What it is and why you need to be using itSerge Milbank

Who are Stream:20?

CLIENT SNAPSHOT

1. A digital marketing consultancy, bridging the gap between agencies, technology providers and clients to optimise online marketing performance

2. Work at both ground-level execution and senior-level strategy and planning – onsite and on demand

3. Clients work with us in a number of ways, including:• Traditional strategy and planning retainer across

loyalty & retention and acquisition• Interim resource at both mid and senior level• Short term pilot campaign management• Audit and technology/agency selection projects

ABOUT US OUR CORE SERVICES

Digital Sales Organisation

Optimising your business structure for

success

Digital Sales Toolkit

Ensuring the correct toolkits are

implemented for success

Digital Sales Planning

Providing the toolkits and resource for sales

delivery

Digital Sales Delivery

Driving incremental revenue on Desktop/

Mobile/Tablet

The Innovation lifecycle and chasing salesIn the initial stage of innovation lifecycle of an organisation, to drive sales firms tend to

do:• For first 6-12 months-setting up multiple channels of marketing, getting them up

and running.• Next 12-36 months-Layering best practices of decision making, best budgeting

practises, analysing and getting in to recent industry channels.• 3 years+- Trying out new channels, coming up with variations and versions, in short

doing new things that could drive sales. when everything is in place, well layered and still the management is looking for growth

a question arises what to explore/exploit?

The Innovation lifecycle and chasing sales

LOW

HAN

GIN

G

FRU

IT

Getting good things done

BEST

PRA

CTIC

E

PUSH

ING

LIM

ITS

Doing current industry

initiatives better

Doing new things that

drive incremental

sales

6 -12 months 12 – 36 months 3 years +

We have been forced to look for ways to drive incremental

growth, beyond where you would normally go

Ironically one of the best metrics seems to be

Conversion Rate

or

Conversion Rate Expectation

Conversion Expectation- what is it?• Conversion expectation is what conversion rate you would expect at any given

point in time, assuming your marketing activities are, what you would normally do.

• Conversion rate – as you would expect this is the ratio of people visiting your site or a section of your site compared to sales (or upgrades or leads, or requests

• Any given point in time – Conversion rates are seasonal, and highly correlated with demand levels. More people have a propensity to convert in peak periods and less in lower periods. This means that conversion rates vary based on a point on the seasonal curve.

• Your marketing activities – your marketing actually has a large impact on conversion. Key factors are (but not limited to): • Traffic levels – the more traffic you receive, the lower the conversion rate• Offers – the better the offer, the higher the conversion rate• Product changes – if your product improves, so does your conversion rate

• Media mix – different media channels deliver different quality of inbound traffic and hence conversion rate

• Conversion rate is used for planning. • Creating an expected conversion rate (Conversion expectation) is not

about looking at last year’s conversion rate and upping it a bit to account for improvement in usability.

• It is a metric that opens multi-channel sales analysis up to new areas of investigation and importantly reveals approaches to drive incremental sales online.

• It is a robust method to establish what the consistency looks like, factoring out all of the influences. If you can accurately explain any movement away from expectation you have a very powerful digital sales planning tool.

We have started using Conversion ExpectationWhat we would expect conversion to be if you did what

you would normally do• If you used the same

offers

• If you had the same products

• You had the same media mix

• You had the same volume of traffic

It is such an important indicator – because it is the most consistent

It is not as complex as trade analysis

….but there is a lot of work on the curve to standardise conversion independent

of influencing factors

This then becomes a normalised, standardised means to predict the impact of sales

Conversion Expectation – key leversWhat we would expect conversion to be if you did

something different

• More traffic you pump in, the lower it goes

Conversion Expectation – key leversWhat we would expect conversion to be if you did

something different

• Depending on the offer you give it goes up

Conversion Expectation – key leversWhat we would expect conversion to be if you did

something different

• If your product improves, it goes up

Conversion Expectation – key leversWhat we would expect conversion to be if you did

something different

• Improve the usability, it goes up (marginally)

Once you have factored everything out….

Conversion Expectation is standardisedVariation from conversion expectation is a standardised measure, precise and independent of influencing factors

• You observe change from seasonal expectation in one point

• …..and it behaves consistently at other points

Conversion Expectation is standardised

• You observe change from seasonal expectation in one point

• …..And it behaves consistently at other points

• You can predict anywhere on the curve

Variation from conversion expectation is a standardised measure, precise and independent of influencing factors

New Approaches to Planning Incremental sales

Offer effectiveness & predictionOnce you have predicted an offer impact, you can layer in

traffic – which allows you to estimate sales

Creative Effectiveness testing

High performing creative in peak periods

Maybe it was performing within or below

expectations

Large campaigns with low performing creative

Traffic weight so high that conversion expectations

actually have to be lowered

OBSERVATION CHALLENGE REMEDY

High performing creative in line with great offer

Is the offer having the impact and not the

creative?

Measure against Conversion expectation curve to assess success

A predictor of cross channel success - SearchM

ISSE

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PPO

RTU

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ANN

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Evaluation of quality of traffic

Channel Channel Share

Conversion Expectation

Growth Potential

Predicted Conversion

30% 2% 2.2%

10% 1% 0.5%

5% 1% 1%

20% 1.5% 0.75%

10% 2% 2.25%

5% 4% 4%

Affiliates

SEO

PPC

Display

Email

Social Media

Sales Forecasting

• Your base line with low traffic

Residual Demand

• What it looks like in higher traffic scenarios

• Cros s Channel impacts

Traffic Growth

• W h at i t l o o ks l i ke wi th o ff ers

Offer Driven Growth

• Strategic growth projects

Other Factors

Conclusions

• Conversion expectation as a metric allows you to accurately estimate the impact of your initiatives

• It provides rigour to your teams and a method to judge performance – taking out external factors

• It opens up your ability to plan and take more measured risks

Thank you@stream20www.stream20.com