Friday, January 30, 2009

What's Your Conversion Rate?

I had a great brainstorm this morning with Todd Miechiels, a B2B marketing expert that specializes in lead conversion for small to medium-sized businesses. We were talking a lot about how surprising it is that many marketers still place so little emphasis on conversion. It seems like the focus remains on lead generation - generating as many qualified leads as possible - but less on conversion of those leads.

What's an Acceptable Conversion Rate? What is ROI to You?
Ask any marketer what an acceptable conversion ratio is for any strategy they're using in their marketing mix, and chances are good they know. Often, they consider anything that converts above the industry average to be a success. Others look more at ROI, often equating the return as anything above and beyond the cost of the campaign. If a campaign generates more than a dollar per dollar invested, it's considered a success. There was a return. In my opinion, ROI should be a specific and measureable goal - the desired yield from your investment. If you spend $1, how much will you generate in return. If it's not more than $10, I'd question the value of the program.

It's still surprising that so many marketers don't have an adequate system in place to track conversion - beyond their search engine marketing programs, where it's much easier to nail this down. Of course there are many issues surrounding conversion - first, what's your definition of conversion?

Rather than jumping on the latest marketing trend - like video, social networking or micro-blogging - it's better to take a step back and figure out which tactics will generate the highest-possible conversion rate for your industry, target audience and budget. The information is out there, often only a couple of clicks away.

As you're working through your marketing budget, or looking for areas to cut as you've got less money to work with, it might be a good time to ask yourself "What's my conversion rate?" on this program. Is it enough to justify spending money on it?

Marketing Automation Systems Can Help You Manage and Optimize Your Marketing Investments for Greater ROI
If there's one area you should invest in this year - assuming you haven't already - it's in the area of marketing automation. There are some great new platforms out there for managing the entire marketing progress, each of which delivers its own set of positives for tracking conversion and ROI. The more efficient you can make your marketing machine, and the better data you can get from your systems, the better position you'll be in to predict outcomes and adjust budgets accordingly. One good Atlanta-based company in this area is Pardot, which I currently use for some of the projects I'm working on. I'll talk more about these types of solutions in an upcoming post.

A quick note on email. If your current email marketing platform doesn't provide you with insightful conversion information, you might want to check out MailChimp (another Atlanta company). Not only does MailChimp provide you with valuable ROI calculators, but the provide you with comparison conversion averages and other useful data for your industry category. MailChimp also integrates seamlessly with Google Analytics, so you can more easily close the loop on conversion through your email campaigns - beyond opens and clicks.

Questions to Consider
As far as evaluating your conversion efforts goes, consider asking yourself these questions to help you refine your focus:
  • Do you really know the return you're currently generating from each marketing program you spend money on? Can you loosely draw a line from investmetn to revenue realized?
  • Are you setting your conversion goals based on industry averages (such as 5% being a good conversion ratio for direct mail), or are you striving for the best possible (above average) conversions?
  • Is there anything you could do differently to improve your conversion ratio across any of the programs? If not, are the results enough to justify continued investment?
  • If you use outsourced resources or agencies, are they providing you with regular assessments of the ROI they're generating for you? Do you know what their conversion ratios are? Do you agree with those assessments, or are you taking their word as experts?
  • If you were only to spend your money on one marketing program, which is most valuable to your organization? Chances are, this is the area that converts at the highest percentage.
  • Is there a different new marketing initiative you could invest in that would perform better than what you're doing today? For example, when was the last time you updated content on your website? Do you have a call to action or other way for visitors to engage you on every page? Are you using landing pages? So on, and so on.
The whole point with this post is to challenge you - particularly in leaner times - to look at all your investments across sales and marketing to determine areas where you can improve performance. It's sometimes easier than you might think to increase your results, even when demand is on the decline.

In truth, I'm not the expert in online lead generation and conversion, that's more Todd's area. You should check out his website and blog for more on this topic. Another good resource would be Brian Carroll's B2B Lead Generation blog (he's probably considered the top industry expert on this subject - not to take anything away from Todd).

What Do You Think?
So what do you think? What investments generate the best conversion ratios for your business? What's the best source of qualified leads for you? Are you using marketing automation systems already? If so, how have they helped you refine your processes and improve conversion? Let me know.

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