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How to increase conversions online

Peter Hammer, head of insights and analytics at Yahoo7, spoke to Internet Retailing about the relationship between online browsing and purchasing. Hammer explained a number of key findings from the media company’s recent report on the topic, including how to increase mobile conversions and how the appeal of incentives varies by category. 

1. Those who browse more frequently, purchase more frequently.

Peter Hammer: If we look at the data, around 64 per cent of respondents said they browse each week, but only 36 per cent purchase. So only half are converting to actual purchase. What’s interesting is that this varies a lot by category. Something like women’s clothing converts very well but men and children’s clothing doesn’t convert as well. Bigger ticket items like appliances, computers, tablets and furniture actually had low conversions.

This is a really interesting takeaway for the marketers out there because it shows that browsing is extremely important. They should potentially be focusing on browsing as a campaign objective, because the more people that browse the more people will end up purchasing. This speaks to the need to have a regular program of communication and advertising to push these different objectives.

2. The majority of purchases are planned.

PH: If you think about other retail environments, there are a lot of impulse purchases, but e-commerce isn’t quite at that phase. Of the respondents we surveyed, 64 per cent said they had planned their purchases. This is slightly higher for men and older people. The areas where planning is more likely to occur are for those bigger ticket items like laptops, appliances and furniture; less so for movies and other entertainment items that you think about the night of.

But because purchases on the e-commerce channel are less impulsive, we need to treat this channel different from the physical store. If you think about e-commerce players, a lot of them are mixed mode with both a physical store and an e-commerce store. What our research really highlights is that retailers need to apply different strategies to each and get more insight into how they’re driving business to the e-commerce platform. Potentially the communication strategy driving people to browse and purchase needs to be different [depending on the channel].

3. Fast and easy process is the key motivation to purchase on mobile.

PH: We found from our data that fewer people are browsing on mobile, but when people do browse, they’re converting at a rate of 63 per cent on mobile compared to 56 per cent overall. So that’s an opportunity for all the e-commerce brands out there to step up their mobile development.

Understanding what’s going to make a good experience for users is key and this can be achieved with good research and analytics. At Yahoo7 for instance we leverage Flurry, which is an analytics platform, so we can see any pain points for our customers. Understanding those pain points can make it faster and easier for people to make purchases in an e-commerce environment.

4. Intent to use mobile varies by category.

PH: We asked users about their likelihood to make a purchase on mobile in the next few months, and one in two said that they would. There is an intent to take up mobile in e-commerce, but it does vary by category. So something like food or entertainment actually holds the greatest opportunity according to our data, and they have high potential on mobile. There are a few other categories in there, like men’s clothing, shoes and groceries, that show potential. They’re not getting a lot of purchases at the moment, but there is high likelihood that they will in future. We think there are a few categories that will explode in the next 12 months.

5. Appeal of incentives varies by category.

PH: We’ve got variations by category in terms of purchasing and browsing. We also looked at discounts, delivery and loyalty schemes and found that the appeal varies by category. Discounts work better for computers and entertainment products, whereas delivery [incentives] work better for groceries and books.

Brands trying to get people onto their e-commerce platforms should think about using incentives to attract them. Knowing that incentives vary by category is really important because you have to use the right incentives to get the right action for your business.

6. Online and TV advertising are effective across the five stages of purchase.

(The five stages of purchase are trigger, awareness, consideration, loyalty and advocacy.)

PH: Across all the different media types, including radio, print, outdoor and social media, we found that TV and online consistently over indexed compared to other media formats. TV was a bit better in terms of awareness, but online was a lot better at the loyalty side of things. What we found really interesting was that social under indexed across four out of the five stages of purchase. It was only when it came to advocacy, so when people are really embedded in an e-commerce platform, that it stands out relative to the other media.

At the moment, given the maturity of the industry and based on the data from this report,I would say it’s actually better to leverage a mix of online and TV advertising to drive e-commerce. But again, this depends on the objectives that different brands are looking to reach. So TV will work more in terms of awareness, and online will be better particularly for loyalty and driving conversion to purchase.

[In terms of online advertising] we tested four main formats as part of the Yahoo7 Labs experiment. We took a general display ad, a piece of sponsored content, a native display ad and a video ad format and tested them against those five key stages of purchase. We found that display continues to be really good for awareness, video tends to have high impact overall, but native display and sponsored content combined, so native advertising, actually over indexed on four out of the five stages purchase. That was interesting because native display and sponsored content is still relatively new in the market and there’s not much data out there looking at the effectiveness of it.

7. Digital formats deliver to differing stages of the journey.

PH: If you’re a brand that’s evolving in the e-commerce space, you’re going to need a different strategy than if you’re a brand in the loyalty or advocacy phase. If you’re in the trigger and awareness space, there’s different kinds of communication and ad format strategies you want to use, whereas if you’re in the loyalty, advocacy space there are different ones you want to apply there. [See above.] What we wanted to do was provide these deeper insights so that brands could understand where they’re sitting on the spectrum and what strategies they could use to achieve their objectives.

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