It’s hard to argue that split testing (also know as A/B testing) is changing the face of marketing. According to Unbounce, 44% of online businesses are using split test software. And software products like Unbounce and Visual Website Optimizer are making it ever easier. Split testing, done right, with good context, can put a stop to all the guesswork, anecdotal conclusions, and correlation/causation errors that can abound in marketing circles.
But it’s not without risks: split tests are expensive to run, requiring investment for both software, and staff/consultants to run the tests. Not to mention the opportunity cost of lost time exploiting other profit levers in your business.
All of which underscores the importance of testing the right metrics in your business, and the potential cost in time and resources of testing the wrong ones.
While I can’t speak for all businesses, what I’ve seen again-and-again with clients and peers is businesses gravitating toward what’s easy to test – landing pages, checkout pages, email subject lines, and sales pages (all of which can be extremely important in the right context) – rather than what’s important.
That’s why one of the most meaningful changes you can make in your business is to implement a process for identifying which parameters to test and optimize. Below are 3 metrics you need to know before you spend one more minute split testing.
1. List-to-Sale Conversion Rate
What if I told you one simple calculation would tell you whether to optimize any conversion metrics between an opt-in and a sale, or to look elsewhere? That’s what the list-to-sale benchmark gives you. “List-to-sale” is the percentage of buyers of your product or service over a given time period relative to the number of opt-ins to your email list for the same period.
Say in a given month you get 1,000 opt-ins to your email list, and in that same month, you make 55 sales of your flagship product. Wondering whether you should go with a webinar funnel instead of an email onboarding sequence? Whether to incorporate video into your sales page? Whether to change the color of your “buy now” button?
The answer to all of them is “no”, and I didn’t even need to take a look inside your funnel. Why? With 55 sales, you’re converting at a staggering 5% list-to-sale.
To calculate, just take the sales in the last 30 days and divide those by opt-ins over the same time period.
Some readers will be noticing the absence of a sales cycle in that calculation (i.e. since it takes days-to-weeks and several touch points to make a sale. We should be comparing this month’s buyers to last month’s opt-ins). You can control for this with a simple average:
- Take the last 4 months, and average the opt-ins over the first 3
- Then average the sales over the last 3.
- Then perform the same percentage calculation. (Sales divided by opt-ins)
For example, say you’re calculating in August:
- First you’d average the monthly opt-ins for April, May, and June. Let’s just say the average is 1500.
- Then you’d average the sales from May, June, and July, in order to leave a 30-day lag. Let’s say that average came out to 75.
- Dividing the sales by the opt-ins, and you’d get 5%.
The benchmark you should be aiming for? 1-2%. Below that, go nuts with split testing parts of your funnel. Above 1%, look elsewhere.
Above 2%, and I’d seriously consider raising your prices. In the hypothetical case of the 5% from above, I’d immediately double the price.
Next, and especially if your list-to-sale conversion is at-or-above the 1-2% benchmark, it’s time to look at your traffic.
2. Opt-in Conversion Rate
The vast majority of businesses I work with have list-to-sale conversion rates closer to benchmarks than their opt-in conversion rates. Put another way, if they’re wasting any resources split-testing their funnel or sales copy, they’re completely ignoring the sizable cohort of website visitors who never even see the offer because they bounce off the site.
As with list-to-sale conversions, you can do a back-of-the-napkin calculation for opt-ins. Just count your new subscribes from the last 30 days and divide it by total website visitors during that same 30 days.
The benchmark to aim at for opt-in conversion is 10%.
If you haven’t ever found your opt-in rate before, my guess is you’ll be astonished how low it is. I’ve seen it as low as 1-2%.
Luckily, there’s a simple strategy to improve it:
- Find the individual opt-in rates of your biggest webpages and your 10 most popular content pieces. (If you’re using a plugin like SumoMe or OptinMonster, you can set up the software to tell you your opt-ins for each page.)
- Look for the “outliers” – content pages often perform worse than home and about pages.
Once you’ve identified the worst-performers, perform this simple checklist (from lowest-hanging-fruit to more subtle)
- Can readers find your opt-in offer, or is it buried below the fold or ¾ of the way down a blog post?
- Are you giving your visitors only one thing to do on each page or post, or are you offering 3 different giveaways on various parts of your page?
- Is your opt-in offer not just well written, but well copywritten? Does it specify exactly who it’s for, describe a clear, specific benefit, and emphasize the urgency for opting in? (Even high performing opt-ins can usually be improved).
- Are you requiring your subscribers to double-opt-in? This will lower your opt-in conversions. Many founders I’ve talked to like to use a double-opt-in because it seems more “polite”. In my opinion, making somebody go off the page to get the freebie they just gave your email address for, let-alone to wait up to 20 minutes for it to arrive in their mailbox isn’t particularly polite. When I give my email address to get a lead magnet, I want it now – not after reconfirming my email address and waiting 20 minutes for the email.
This is not the type of page you want to create if you’re looking to increase opt-ins.
Don’t give your readers more than one choice when optimizing for opt-ins
Split-test ninjas take-note: if you’ve read this far, and your opt-in rate is indeed garbage, there’s ample opportunity to split test:
- Two versions of a homepage with different opt-in copy/design.
- Two versions of an exit-pop on a popular content piece.
If you’re among the extremely lucky minority with list-to-sale conversions at-or-above 2%, and opt-in conversions at-or-above 10%, and you’ve raised your prices, I have some disappointing (although kind of good) news: split testing is not a good fit for your business.
Here’s the question to ask: Are your monthly sessions at least 50% of your list size? (i.e. if your list has 2,000 subscribers, are you getting at least 1,000 uniques per month?) If not, you need a traffic strategy. Don’t waste your time A/B testing anything.
While I’m a conversions expert and not a traffic expert, here’s a quick decision tree:
- Determine your market size. If you could 5x your traffic, are there enough people in your market to support it?
- Implement a content/syndication/guest-post strategy ASAP. It’s practically the only guaranteed winner across all verticals, but it can take up to a year to bear fruit.
- Consider hiring a paid traffic expert for one month to test customer acquisition costs from various paid sources. Choose the most profitable and double down while you wait for organic traffic to grow.
Bottom line: the same month spent split testing two opt-in offers on a homepage, landing page, or content page, could provide a 2-4x increase in revenue (by, say, improving an opt-in conversion rate from 1% to 4%), while the same time and money spent trying to boost an already maxed-out sales conversion rate would have a much smaller return.
That’s why a little context can save you thousands.
About the Author: Nate Smith is a direct-response copywriter and funnel expert who helps businesses scale by exploiting their most powerful profit levers. Nate is founder of 8020MarketingGuy.com.
If you’re doing online marketing right, you should be driving a steady stream of inexpensive, qualified leads to your sales team.
That means tons of sales and profit for your business, right?
Unfortunately, that’s not always the case. Often, you may be sending all the right leads to your sales team, but they simply aren’t turning into sales.
What’s going on?
Is it a problem with your sales team? A problem with your leads? Maybe, but often, the problem is simply a marketing-sales mismatch.
When Things Go Wrong
A few months back, we were using paid search to drive leads for a client. We thought we were doing a pretty good job, but there was a problem-our leads weren’t turning into sales.
To be honest, this came as a surprise.
We had a lot of experience in this particular industry, so we knew our campaigns were driving a lot of high-quality leads.
In fact, from a marketing perspective, our campaigns were a hands-down success! We were sending hundreds of high-intent leads to their sales team at a great cost-per-lead.
What more could you ask for, right?
In our experience, they should have been closing at least 10% of these leads…but they weren’t. As it turned out, they were only closing 1% of their paid search leads.
What were we doing wrong?
On paper, everything looked great, so I called the client to get his thoughts. His answer was both candid and insightful:
“Jake, the leads are great. We don’t have a lead problem. My sales team just doesn’t know how to close these leads.”
Now, this problem isn’t unique. I’ve seen it before. Great online marketing can get leads in the door, but it can’t make them close.
That job rests on the shoulders of the sales team.
So, if you want your online marketing to yield great results, your job doesn’t end with lead generation. You need to make sure your sales team knows how to get those leads to close.
Turning Leads Into Sales
With online marketing, you control all aspects of the lead generation process: targeting, ads, landing page content and call-to-action.
The problem is, while you may intimately understand your leads, your sales team might not really know where your leads came from, why they reached out and what they are looking for in a business.
And, unfortunately, if your sales team doesn’t really understand their leads, they are going to have a hard time closing them.
In order to successfully close online marketing leads, your sales team needs to understand a couple of key things about their leads:
You’re Not the Only Business After Their Business
When it comes to online marketing, you can’t expect leads to sit still.
If someone is interested enough in what your business has to offer to reach out, there’s a pretty good chance that they’ve reached out to your competition, too.
However, first to call is first to close.
New leads are also 100x more responsive if your sales team reaches out in 5 minutes instead of 30 minutes and several thousand times more responsive if you’re reaching out within 5 minutes vs a day or two later.
Fortunately, most of your competitors wait hours or even days to respond to new leads, so if your sales team is quick on the draw, they have a good chance of being the first to respond, make contact and close the deal.
The Internet is a Distracting Place
When it comes to online leads, you can assume that by the time you reach out, they’ve already moved on to something else.
Maybe it’s a competitor’s site. Maybe it’s social media. Maybe it’s back to whatever they were doing before your ads caught their attention.
Whatever the reason, they usually aren’t sitting around waiting for your call.
That means your leads are probably distracted and might miss (or ignore) your first few contact attempts. So, if you want to get a hold of your leads, your sales team can’t just send one email and call it quits.
In fact, it takes a minimum of 8-12 contact attempts to get a 90% contact rate. Even if you’re only after a 50% contact rate, your sales team will still need to make at least 6 contact attempts.
The only problem is, most reps only make 1-2 contact attempts per lead. As a result, internet leads are only contacted about a quarter of the time.
You fight tooth and nail to get those great leads in the door and sales only contacts 25% of them?
Imagine what would happen if your sales team started reaching out 8-12 times and achieved a contact rate of 90%. That would increase your contact rate by 360%.
If your sales team’s contact-to-close rate stayed the same, contacting 3.6x more leads would result in 3.6x more sales. Can you imagine how that would affect your business?
Getting Marketing and Sales in Alignment
In addition to giving your sales team insights into what tactics work best for online marketing leads, there are a couple of things you can do on the marketing side to improve sales performance.
Talk to Sales!
Online marketing leads convert because they believe that your company has the solution to their problems. Your sales team’s job is to confirm that belief.
However, if your sales team isn’t making good on the promises of your marketing, your customers will feel betrayed and they won’t want to buy.
To avoid this, your sales team’s message needs to match your marketing message.
Yes, that means you’ll have to talk to your sales team about the intent, pain points and goals of your leads, but guess what? The better your sales team understands where their leads are coming from, the more effective they will be at closing sales.
In my experience, getting marketing and sales on the same page will make your online marketing effects far more effective and can drive millions in added revenue for your business.
There is Such a Thing as Too Many Leads
If you’ve got your campaigns set up right, online marketing (especially pay-per-click marketing) is pretty simple.
Insert the money, out come the leads.
Now, you and I both know that there’s a ton of work behind that equation, but if you’re feeding too many coins into the marketing machine, the resulting surplus of leads can make your sales team a little lazy.
As a result, ambitious sales reps might be tempted to sift through your leads to pick the ones that will be easiest to close.
They’ll look like superstar salesmen, but on closer inspection, you’ll notice that their lead-to-close rate is actually terrible.
Even though these “rockstar” reps look like they are closing a lot of deals, they waste a ton of expensive leads. In many cases, companies will end up paying more for those wasted leads than they’ll earn off of that “all star” rep’s closed sales.
So, how can you avoid this?
Easy, just keep your sales team hungry.
If you’re putting less money into the marketing machine, your sales reps will pay more attention to the individual leads they’re getting.
However, you want to be careful with this tactic. Give your sales team too few leads and you’ll hurt productivity and morale.
So, if your sales team is begging for more leads, up your marketing budget. On the other hand, if you’re not getting any requests for more leads and your close-to-sale rate isn’t doing so hot…you might want to dial back your marketing spend.
It’s hard to make a profit off of online marketing if your sales team doesn’t know how to close your hard-won leads.
But, if you’re willing to work with your sales team, your marketing campaigns will not only produce profitable leads-they’ll produce profitable sales.
And isn’t that what online marketing is all about?
You’ve heard my two cents, now it’s your turn.
In your experience, how have sales short-changed your online marketing efforts (or vice versa)? How have you helped your sales team work more effectively with paid search leads?
About the Author: Jacob Baadsgaard is the CEO and fearless leader of Disruptive Advertising, an online marketing agency dedicated to using PPC advertising and website optimization to drive sales. His face is as big as his heart and he loves to help businesses achieve their online potential. Connect with him on LinkedIn or Twitter.
Columnist Amy Bishop believes it’s time to rethink the age-old strategy of a singular conversion point. Learn how to leverage your content to guide consumers through the purchase funnel while obtaining marketing insights that will help you drive sales.
Please visit Marketing Land for the full article.