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Merchant Secrets for Sales Conversion - Part 2

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Posted November 14, 2005 By James Maguire     Feedback

New research reveals current strategies for boosting online sales, including the top ten conversion techniques, loyalty programs, post-sales tactics and more.

As detailed in Part 1 of this series, merchants are now focused more than ever on their site's all-important sales conversion rate. An extensive recent research study, "Merchant Secrets for Driving Conversion," detailed the many tactics that e-tailers are using to boost conversion rates.

The report's author is Lauren Freedman, the CEO of the e-tailing group. Knowing that effective merchandising is essential to increasing conversion, in a related survey Freedman asked 250 merchants to rate a list of 44 merchandising techniques. She ranked their responses on a descending scale, with the most popular techniques near the top.

The top ten winners were:

Seasonal promotions: 94 percent
E-mail as merchandising vehicle: 91 percent
Keyword search: 91 percent
Sales or specials: 90 percent
Cross-sells: 84 percent
Free Shipping: 79 percent
What's New: 78 percent
Up-sells: 75 percent
Advanced Search: 70 percent
Affiliate Program: 68 percent

Note that the top tactic, seasonal promotions, is as old as retailing itself. "Retailers have lived and died by that for years," notes Freedman. Cross-sells and up-sells are also timeless strategies. But many of these popular merchandising tactics are completely Web-centric - search shows up twice in the top ten (keyword search and advanced search). In short, successful e-tailing is a combination of very old and very new techniques.

E-mail marketing is, of course, a leader. Even though it ranks second, it could be seen as number one, since top technique "seasonal promotions" comes and goes, but e-mail is 52 weeks a year.

Other sales tactics that online merchants rate highly include: Gift Center or Suggestions (68 percent), Coupons/Rebates (67 percent), Top Sellers (67 percent), Customized Content (63 percent), Search/Order by Catalog (61 percent) and Gift Certificate (57 percent).

Using "time-based" tactics is also a merchant favorite. These include limited time discounts, free shipping for a certain period, or a special deal that coincides with a seasonal event — in other words, the age-old tactics that brick and mortar sellers have always used. One proven winner is the free trial period.

Merchants reported great success with presenting lists of "what's hot" and "what's new," updated frequently. Presenting the "best seller" list throughout the site harnesses the power of group psychology, and is a sure sales booster, merchants say.

It's no surprise that free shipping is listed among the top ten conversion drivers, yet merchants reported struggling with the right balance. Driving conversion is one thing, but driving profitable conversion is another. In Freedman's yearly "secret shopping" survey (in which she shops at 100 Internet sites and records the results) she found that in the 2004 holiday season, just 46 out of 100 e-tailers offered a free shipping option with a qualified purchase.

Though free shipping isn't universally adopted, stories abound about its effectiveness as a conversion increaser. One merchant noted that free shipping is even more of a sales driver than a 20-30 percent discount. Another noted that a free shipping pop up on the home page always bumps the site's conversion rate by a few percentage points.

E-tailers are developing an ever-more impressive array of tools, Freedman notes. "The depth and breadth of merchandising and marketing tools being offered on sites has grown exponentially with increased cross-channel integration, resulting in more compelling customer experiences," she says.

Does Your Site Actually Work?
As Freedman surveyed e-tailers, they often spoke of the importance of basic functionality. A site must be error-free — no broken links anywhere, no improper labeling - or shoppers quickly flee. She cited additional research by Hostway indicating that 70 percent of shoppers were likely to not buy from (or even return to) a site at which they ran into a basic problem.

A critical part of this basic functionality is customer-based navigation. "This includes quick access to key categories, including customer service, cross-channel capabilities, and search, as well as information about the company as a whole," Freedman notes. One merchant in her survey recommended having a layperson surf the site to remove as much industry-specific lingo as possible.

A navigation improvement tactic used by many merchants is to show subcategory links earlier. Instead of just showing, say, links to men's and women's shoes on a front page, show links to men's and women's athletic, dress, and casual shoes. Shoppers who arrive at their destination faster are more likely to buy, and hidden merchandise won't sell.

The foundation of shopper-centric navigation is effective on-site search. A recent study by Forrester Research indicates that 74 percent of shoppers with four years of online experience say relevant search is important to them.

But many sites do not yet have a good search tool. There's a "serious divide between the haves and have-nots when it comes to on-site search," Freedman finds. To be sure, adding a quality search tool represents an extra expense for a merchant — yet it's well worth the investment. "For those who don't yet have a strong search experience on their site, I'm confident that adding functional search is a surefire way to drive conversion," she says.

For example, Shoe e-tailer FootSmart reported that a "shoe finder" advanced search box on its home page resulted in a remarkable 23 percent conversion rate.

The secret weapon: combining e-mail marketing and search. Several forward-thinking merchants are adding a search box to all their HTML customer e-mails. One merchant found that this set a record for e-mail sales.

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