Earlier this year Shop.org and Forrester Research produced their annual report of e-commerce benchmarks based on a survey of retailers that sell online. The report noted that 29 percent of retailers believe that mobile traffic and sales negatively impact their overall conversion rates. As visits from smartphones and tablets increase, retailers are looking to improved optimization across all channels to help ensure consistent sales performance.
Improving online experience is a good strategy. But where is that extra budget going to come from? One way to create budget for conversion improvements is to first improve the average booking value and profitability using Purchase Point Optimization (PPO). The objective of PPO is to optimize the sale of additional or ancillary products which will put more profits in your shopping cart for each converted visitor.
Here is how this can work for you:
If 10 customers make an online purchase and each spend $100, that’s $1,000 in gross sales. With a net profit margin of 1 percent, you will receive $10 in profit to work with. Now let’s say you want to fund additional optimization work on the site to improve that bottom line. One way is to spend more on conversion optimization, but this has the effect of reducing margins further in the short term- – hoping for improved ROI over time.
If you begin optimizing ancillary products at checkout and successfully convert 10 percent of your core purchasers, that’s just one customer in this example. Let’s say the ancillary product they purchase costs $10. Now you have gross sales of $1,010. Not a huge improvement. But ancillary products have a much higher margin than core products. Let’s assume a margin of 30 percent. So now you have a profit of $13 – a 30 percent improvement – off a single sale. That extra $3 can be used to fund optimization efforts at the top of the sales funnel – SEO, etc.
Purchase Point Optimization provides an outstanding accelerator when applied to digital marketing efforts. And, adding ancillary sales to your optimization efforts gives you options when facing challenges like mobile optimization.