Use the Right Search Metrics to Drive More Customers Into Your Stores Page 1CATALYST RETAIL WHITE PAPER

BY: DAN BECA | DIRECTOR OF MARKETING TECHNOLOGY

Use the Right Search Metrics to Drive More Customers Into Your Stores

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EXECUTIVE SUMMARY: FOCUS ON THE METRICS THAT MATTER

In the retail industry, paid search is one of the best ways to acquire new customers and keep current customers coming back — even if your main goal is to drive traffic to your brick and mortar stores. There is an abundance of search data to help marketers measure and optimize their campaigns. But how do you know which metrics to focus on? (Hint: it’s not clicks.) How do you ensure that your paid search program is delivering the maximum value to your business? How do you drive online shoppers to the physical store? Can paid search really do that?

The answer is yes. In this white paper, we’ll discuss three things you can do to make sure that your search program is delivering traffic and in-store sales:

1. Go beyond the top of the funnel and focus on metrics that matter How will you measure the success of your strategy?

2. Realize that not all conversions (and sales) are equal Are your campaigns focused on different segments? Are your offers aligned with your segments to drive the best value?

3. Stay ahead of the pack by testing When you’re first beginning your program, you’re looking for continued growth. After your program is mature, you’re looking to avoid decline. Testing will help determine whether your program is effective and delivering against your strategy.

1. GO BEYOND THE TOP OF THE FUNNEL AND FOCUS ON METRICS THAT MATTER

At Catalyst, we focus on metrics that deliver a true return on investment, not just directional metrics such as cost per click. Your metrics should tie back to specific business goals – such as driving more foot traffic and sales to your physical stores.

Below is an example of how we measure ROI for retail clients that use paid search marketing. For the retail industry, assume that “online conversion” refers to one of these actions:

• Downloading a coupon

• Locating a store

• Calling the store

• Signing up for a marketing offer

• Adding products to an online shopping cart

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Catalyst goes beyond the online conversion and uses actual sales to

drive the best optimization (Our goal is in-store sales, not website actions)

Most companies optimize to online conversion data

Impressions

Clicks

Conversions

In-StoreSales

Paid Search Sales Funnel

You don’t just sell one product or service. Chances are, you don’t sell to a single type of customer either. So why would you want to value each sale the same way?

We decided that, although return on ad spend for online conversions could be directionally helpful, it didn’t tell us whether we were delivering positive ROI unless we measured against actual in-store sales. Also, looking at exactly who those customers were would tell us whether we were actually driving incremental sales – or merely subsidizing existing customers. (For more information about measuring incremental sales, see our white paper, “Incrementality: The Right Way to Measure ROI.”)

2. REALIZE THAT NOT ALL CONVERSIONS (AND SALES) ARE EQUAL

You don’t just sell one product or service. Chances are, you don’t sell to a single type of customer either.

So why would you want to value each sale the same way?

Often, the easy way to assign value is to assign the revenue associated with the product or service. Although that’s better than assigning the same value to all sales, you’ll do better by considering your different audiences in combination with the product or service.

An example: Look at the length of time your customer has been your customer. If you were to assign a higher value to new customer conversions and a lower value to existing customer conversions, you might be able to optimize your search program to drive in more new customers rather than subsidize existing customers.

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This strategy assumes that you can see the difference between new and existing customer conversions. If you can’t tie conversions directly to customer longevity or different market segments, you can still make some pretty valid assumptions by looking at data after purchase and using that data to help guide your decisions.

If you still can’t connect your paid search efforts directly to sales, you can approximate by differentiating the value assigned to your online conversions. Instead of only using the generic “funnel approach” to assign different values to various actions taken on your website (e.g., if one out of every ten online conversions leads to a sale, each conversion is worth 1/10 of a sale), mix in other variables to more accurately reflect the conversion value. For example, you might want to consider segmenting your customers, if you’re not doing so already. Your segments might include:

• Whether the customer is new or existing

• The type of device they’re using (mobile/tablet/desktop)

• The mix of keywords that brought them to you in the first place – i.e., branded terms, non-branded terms, competitive terms

The more you can segment your audience, the more information you will have and the more you can use that information to optimize spend. For example, you may see that customers using mobile devices spend less in your stores … so you might not want to spend as much to get them to visit you. Or, you might find that new customers spend more in your stores, so you would want to optimize your search program to deliver more new customers. Segmenting customers effectively can dramatically improve your search optimization programs.

3. STAY AHEAD OF THE PACK BY TESTING

After you’ve established a paid search program that aligns with your business goals – and you’ve assigned different values to different sales in your customer mix – it’s time to test. How will you continue to ensure that your program is improving and not stagnating? How can you tell whether you are staying ahead of your competitors? The answer is testing!

At Catalyst we view testing as a two-pronged approach: • Small-scale frequent optimization testing

• Large-scale less frequent “big idea” testing

SMALL-SCALE TESTING

We define small-scale testing as the testing that everyone should be doing

The more you can segment your audience, the more information you will have and the more you can use that information to optimize spend.

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to make sure that their paid search campaigns are running as efficiently as possible. Types of small-scale testing include:

• Modifying keyword maximum bids

• Mining for new keywords

• Testing different keyword types

• Testing new ad copy

• Making small tweaks to your landing pages

This type of testing should provide incremental increases in program performance.

LARGE-SCALE TESTING

Large-scale testing is done less often and should drive a much bigger impact to your program performance. This would include:

• Offer testing

• Restructuring of campaigns

• New platform functionality

• Location targeting

• Time of day/day of week testing

• Large landing page overhauls

• Audience modeling

By constantly running small-scale tests, you will know that your campaigns are running efficiently and effectively while creating incremental value. By running large-scale tests periodically, you can elevate your program significantly.

PUTTING IT ALL TOGETHER

Paid search advertising offers marketers a unique way to connect with retail customers who are looking for specific products and services. It also offers the ability to accurately measure program performance at many different levels of the sales funnel. Take the time to map out a paid search strategy that aligns with specific business goals, focuses on metrics that matter, assigns the right value to various types of sales, and ensures that you are always testing. I guarantee that your program will be miles ahead of the competition … and drive more in-store sales.

Paid search advertising offers marketers a unique way to connect with retail customers who are looking for specific products and services.

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DAN BECAdbeca@catalystinc.com

Dan creates holistic, customer-centric, omnichannel marketing solutions that are focused on growing revenue and reducing costs. As the director of marketing technology for Catalyst, Dan develops digital and web strategies that include database design, email, search, and mobile marketing. He holds a BS in information technology from Rochester Institute of Technology and is currently studying for his MBA.

ABOUT CATALYST

Catalyst (www.catalystinc.com) helps retail providers develop more profitable customer relationships through better acquisition, retention, upsell, cross-sell, and experience design.

We take the guesswork out of marketing decisions by combining our intellectual curiosity and inquisitiveness with hard-core analytics and measurement. We call it Science + Soul.

Headquartered in Rochester, NY, our retail clients have included The Goodyear Tire & Rubber Co., TTI Floor Care North America and Valvoline Instant Oil Change, among others.

800.836.7720 | www.catalystinc.com | info@catalystinc.com Facebook Twitter LinkedIn © 2016 Catalyst