A good analogy to compare marketing process that leading to a sale is to compare it to an inverted pyramid. The wide open end of the base (top) of the pyramid is where you get first contact with your visitors. Of course, you know that everyone who hits your sales page isn’t just a visitor, they’re a potential customer.
The trick is to guide them as they move down the successively narrower parts of the pyramid until they reach the end point where you make the sale. Along the way more and more of these people drop out of the process. The pyramid gets narrower and narrower as it reaches the sales point.
After there’s been enough visitors and sales it then becomes possible to calculate statistics that describe various stages and how effective they are. Called conversion ratios, they express the ratio of visitors to sales or the number of people entering a stage to those that leave it bound for the next step instead of dropping out and quitting.
For example, the number of people that click on an advertisement can be used to calculate the click-through rating. The click-through rating is the percentage of total number of impressions (number of times an ad is seen) the ad has that click on the ad.
Click-through rates are one of several forms of conversion. Another conversion statistic is the number of people that hit your landing page and sign up with an email address. Still another is the number of people going from the sales page to complete the ordering process. Each step along the way has a conversion ratio, the higher that number is the more efficient that step is.
Many things affect conversion rates: the sales copy, page layout, clarity of sales copy, what kind of the offer the potential buyer and any number of other factors
By keeping track of conversion rates, click through rates, signup rates, etc. you can see what areas of your site and sales process can be improved.
Part of it is research … keywords, product knowledge, knowledge about typical users / buyers of the product, and part of it is trial and error. Constantly making small changes and tracking what effect they have on sales and conversion ratios.
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