Conversion Is the Name of the Game

Though online retailers sold $2.4 billion worth of goods in 1997, only 20 percent of online adults have purchased anything on the Net. As competition heats up, merchants face one primary challenge: converting visitors into buyers.

Internet retailing has not come to measuring attrition but eventually will. Currently, the primary concerns for Internet merchants are attracting visitors and finding reasons to get them to return.

Online research firm Forrester Research Inc., Cambridge, MA, recently surveyed 75 merchants in 15 business categories that sold $1.5 billion dollars of goods online in 1997, representing 60 percent of the total online sales. The sentiment was that online sales were booming, surging 260 percent over the previous year. With more than 40 million households wired and more than 25 million people on the Net in any given month, the issue is how to attract qualified visitors.

Anyone who buys rotation banner ads on the top search engines knows it's easy to attract visitors. But qualified visitors who are ready to buy are elusive. We often are asked how do you attract qualified buyers? How do you get them to buy?

Overcome conversion barriers. Consumers' greatest concerns are security (53 percent). They are most worried about whether their credit cards will be pirated or used inappropriately. The next difficulty (35 percent) stems from something you wouldn't expect from mature Web sites: frustration with navigation. Limited product selection (27 percent) is another barrier. Merchants concerned with annoying traditional channels offer limited product lines or “dog” products for sale. Lack of trust or an unfamiliar retail name (24 percent) was the next greatest concern.

One way to minimize these concerns is to find “savvy” Net visitors. Much like what traditional catalogers have discovered, profiling and targeting is essential to make marketing more efficient. What these 75 Web merchants found is that the concerns drop substantially when a visitor had more than two years experience online.

Attract repeat visitors and shoppers. More advanced merchants are investing in both repeat customers and visitors. Repeat customers are attracted by enhanced customer service, guarantees, personalized content and coupons. Promotions and free offers with incentives to revisit attract new visitors.

Capturing e-mail addresses for follow-up is excellent for targeting when a promotion or product becomes available that meets a customer profile.

Repeat visitors should be 15 percent to 25 percent of a site's traffic, according to Forrester. As the Internet grows and more people are shopping online, new shoppers will swamp retail sites.

Smart merchants will reward loyal visitors by following up with them after the sale with a recommended product or service.

Tips to grow your business:

* Focus on market share now — profits in three or four years.

* Partner with affinity groups, such as AARP with Sierra Club.

* Build a quality database and segment it according to profile.

* Concentrate on visitors who have two or more years of online experience.

* Form partnerships with other online companies who have customers like your own.

Segment your visitors. The rising prominence of the Internet alongside traditional retail, mail and telemarketing channels calls for segmented marketing. Income is one broad-based method of segmentation, age is another. More than 90 percent of people who make $50,000 or more are active buyers on the Internet. More than 51 percent of online purchasers are over 45 years of age. Companies pursing marketing to segments also may want to consider Forrester's segmented classifications when developing online marketing techniques:

* Digital hopefuls: family-oriented technology lovers with low incomes.

* Mouse potatoes: high-income entertainment-focused technology consumers.

* Fast forwards: high-income career-oriented technology adopters, time-strapped dual income homes.

* Gadget grabbers: lower-income consumers focused on tech-based entertainment.

* New age nurturers: affluent believers in technology for family and education.

* Sidelined citizens: low-income technophobes the least receptive to any technology.

* Techno-strivers: up-and-coming believers in technology for career advancement.

* Handshakers: successful professionals with low technology tolerance.

* Media junkies: high-income entertainment-oriented individual not PC savvy.

* Traditionalists: high-income family-minded individuals suspicious of technology.

Whether you like the cute terms or prefer a more traditional approach to segmentation based on profiling by identifying the characteristics of your traditional customers, matching products to visitor profiles is important to appeal to buyers. If you want to win, sharpen your Web segmentation skills to keep those visitors and customers coming back.

Robert McKim is a partner at M/S Database Marketing, Los Angeles, a database and interactive marketing consultancy.

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