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Landing Page Optimization

Session 5 Incentive

Session 2 Lesson Plan

Landing Page Optimization INTRODUCTION

Landing Page Optimization


Session 5 Introduction

Conversion Sequence

C = 4m + 3v + 2(i-f) - 2a
Wherein:
C = Probability of conversion m = Motivation of user v = Clarity of the value proposition i = Incentive (additional) to take action f = Friction elements present a = Anxiety elements present

Session 2 Lesson Plan

Landing Page Optimization EXPERIMENT

Landing Page Optimization


Session 5 Experiment

Experiment ID: (Protected) Location: MarketingExperiments Research Library

Research Notes: Background: A student from our certification course in landing page optimization tested two different incentive options on a B2B email landing page seeking to promote the download of a specific white paper Goal: To improve landing page conversion rates while generating opt-ins for ongoing communication Primary research question: Which incentive will generate the most conversions? Approach: A/B single-factor test

Landing Page Optimization


Session 5 Experiment

Incentive #1

Incentive #2

a chance to win one of twenty $25 Amazon gift cards...

a chance to win one of ten $50 Amazon gift cards...

The cost of these offers was the same, but which do you think performed best?

Landing Page Optimization


Session 5 Experiment

31% increase in conversion rate


The second incentive outperformed the first by 31.4%

Subscription path Incentive #1 Incentive #2

CR 43.0% 56.5%

Relative diff v. control 31.4%

Landing Page Optimization


Session 5 Experiment

Experiment ID: (Protected) Location: MarketingExperiments Research Library

Research Notes: Background: An online people search company that was losing many orders due to cart abandonment. We wanted to find a way to recover as many of these orders as possible with a minimum incremental marketing spend Goal: To recover partially completed but abandoned orders through a sequence of basket recovery emails Primary research question: Which basket recovery sequence and offer will generate the most sales? Approach: A/B split test (variable cluster)

Landing Page Optimization


Session 5 Experiment

The table below shows the performance of the initial test, using a sequence of two email messages.
Emails Sent
ND ND 8834 8610 17444

Email Description
Email Capture 1-hr email Email Capture 24-hr email

CTP Clicks
252 100 352

CTR
2.85% 1.16% 2.02%

Sales
24 1 25

CR
9.52% 1.00% 7.10%

Price
$29.00 $29.00

Net Rev
$696.00 $29.00 $725.00

EMAIL TOTALS

Note: With no additional marketing spend, the initial set of basket recovery email messages yielded 25 recovered sales for $725 in additional revenue from a single send.

Landing Page Optimization


Session 5 Experiment

We then added a third email to the sequence that offered a discount on the cost of the service as an incentive.
The original price was $29.95, the discounted price is $19.95 (33% off).

Landing Page Optimization


Session 5 Experiment

149% Increase in Conversion


The third email increased the conversion rate by 149% Emails 3 Description Message Series with Discount Incentive: Email Sent
Email Capture 1-hr email Email Capture 24-hr email Email Capture 5th day email ND ND ND 8834 8610 8419 25,863

CTP Clicks
252 100 145 497

CTR
2.85% 1.16% 1.72 1.92%

Sales
24 1 63 88

CR
9.52% 1.00% 43.45% 17.71%

Price
$29.00 $29.00 19.95

Net Rev
$696.00 $29.00 $1,256.85 $1,981.00

EMAIL TOTALS

What you need to understand: Adding the discount incentive email boosted conversion rate for the series by over 149% (17.7% vs. 7.1%) and generated a more than 273% higher level of net revenue ($1,982 vs. $725). Conversion from click through to sale for the third email was over 43%.

Session 2 Lesson Plan

Landing Page Optimization INCENTIVE

Landing Page Optimization


Session 5 Incentive - Definition

Definition: Incentive
(Dictionary general usage): Something that incites or tends to incite to action or greater effort, as a reward offered for increased productivity. (Marketing): An appealing element you introduce to stimulate a desired action (discount, bonus, ).

Landing Page Optimization


Session 5 Incentive Principles

Key Principles

1. The objective of Incentive is to tip the balance of emotional forces from negative (exerted by Friction elements) to positive.

ABANDON
Friction Elements Incentives

COMPLETION

2. Often, businesses will try one incentive offer and then quit. Incentives must be tested. Until you find one that gives you a major boost, you must assume you have not yet found an ideal incentive.

Landing Page Optimization


Session 5 Incentive Principles

Examples of Incentives:

Discount Incentives (20% off, buy-one-get-one-free)


Content Incentives (Whitepapers, Books, Articles, Reports , eBooks) Add-on Incentives (subscription extensions, warrantee extensions) Order/Delivery Incentives (Free shipping, accelerated shipping, instant download) Accompanying product Incentives Free accessories (carrying case) Complementary products (memory card)

Landing Page Optimization


Session 5 Determining the Ideal Incentive

F
3.

Key Principles
Determining the ideal incentive consists of three primary components: Marketing Intuition Perceived Value Differential (PVD) Return on Incentive (ROIc)

Landing Page Optimization


Session 5 Determining the Ideal Incentive

Key Principles
The path to finding an ideal incentive

FEASIBILITY

All Incentives

Using marketing intuition to determine which incentives are relevant to the audience as well as cost effective

OPTIMALITY
Using PVD to narrow-down and determine the optimal incentives to test

ACTUALITY
Testing and using ROIc calculations to find best performing incentive

Ideal Incentive

Session 2 Lesson Plan

Landing Page Optimization MARKETING INTUITION

Landing Page Optimization


Session 5 Determining the Ideal Incentive Marketing Intuition

F
1.

Key Principles
When we refer to marketing intuition concerning incentives, we are referring to the ability to answer two often overlooked questions:
A. Is the incentive relevant?
To the ideal customers motivations To the core offering of the page

Landing Page Optimization


Session 5 Determining the Ideal Incentive Marketing Intuition

Whats wrong with this incentive?

U2 Ticket Contest - Call


today for a chance to win
two free ticks to see U2 live

Landing Page Optimization


Session 5 Determining the Ideal Incentive Marketing Intuition

Note: If you have to spend time explaining the value or attempting to sell the incentive, it is not relevant enough to your ideal prospects. The value of the incentive must contribute value to your offer, without competing against it.

Landing Page Optimization


Session 5 Determining the Ideal Incentive Marketing Intuition

F
1.

Key Principles
When we refer to marketing intuition concerning incentives, we are referring to the ability to answer two often overlooked questions:
1. Is the incentive relevant?
To the ideal customers motivations To the core offering of the page

2.

Is the incentive practical?


In terms of cost (i.e., versus return) In terms of logistics (e.g., delivery)

Session 2 Lesson Plan

Landing Page Optimization PERCEIVED VALUE DIFFERENTIAL

Landing Page Optimization


Session 5 Determining the Ideal Incentive PVD

PVD = Vp - C$n
Wherein: PVD = Perceived Value Differential

Vp

= Perceived Value of Incentive

C$n = Net delivered cost of Incentive

Landing Page Optimization


Session 5 Determining the Ideal Incentive PVD

Example:

An incentive that costs $5 per unit but has an estimated perceived value of $49 is better than one costing $19 but an estimated perceived value of $30.

Incentive #1: $49 - $5 = $44


Incentive #2: $30 - $19 = $11

Better (Higher PVD)

Note: Of the feasible incentives, you want to identify those with higher estimated PVD, for they are more likely to drive the biggest differential between net revenue and net delivered cost.

Landing Page Optimization


Session 5 Determining the Ideal Incentive PVD

F
1. 2.

Key Principles
High PVD is predicated on both market-driven elements and marketer-driven elements. For market-driven elements, you are seeking an item that combines high market value with low delivery costs. (e.g., bundled, electronic, outsourced) For marketer-driven elements, you are seeking to improve the presentation of the incentive.

3.

Lets look at five ways to improve the presentation of the incentive

Landing Page Optimization


Session 5 Determining the Ideal Incentive PVD

The Name and Description


Not this A FREE Set of 15 Golf Balls

But this A FREE Box of 15 Titleist Pro- V1x Golf Balls Sign-up for 12 Months of Golf Digest and get

Landing Page Optimization


Session 5 Determining the Ideal Incentive PVD

The Packaging
Not this A FREE Set of Titleist ProV1x Golf Balls

But this
A FREE Set of Titleist ProV1x Golf Balls Sign-up for 12 Months of Golf Digest and get

Landing Page Optimization


Session 5 Determining the Ideal Incentive PVD

The Exclusivity

2010

Exclusive Reserve Set

Sign-up for 12 Months of Golf Digest and get

A FREE Set of Golf Balls from the 2010 Masters Reserve Supply (only 200 sets in existence)

Landing Page Optimization


Session 5 Determining the Ideal Incentive PVD

The Proximity (to Authority)

Sign-up for 12 Months of Golf Digest and get

The 60-Minute Training Video How I play Golf by Tiger Woods + A boxed set of the golf balls Tiger prefers to use on his own home course.

Landing Page Optimization


Session 5 Determining the Ideal Incentive PVD

Now, we will look at an example of how we might calculate PVD

Landing Page Optimization


Session 5 Determining the Ideal Incentive PVD

Vs.

Vs.
PRE-EVENT EMAIL TRAINING

What is the ideal incentive for an email marketing tradeshow?


1. 2. 3. Printed email marketing book Downloadable digital email marketing book Pre-event email marketing training

Landing Page Optimization


Session 5 Determining the Ideal Incentive PVD Perceived Value Differential (PVD): Print book

PVD = Vp - C$n
Est. Perceived value (Vp): $450 Net Delivered cost (C$n): $30
PVD: $450 - $30 = $420

Landing Page Optimization


Session 5 Determining the Ideal Incentive PVD Perceived Value Differential (PVD): Digital book

PVD = Vp - C$n
Est. Perceived value (Vp): $400 Net Delivered cost (C$n): $1
PVD: $400 - $1 = $399

Landing Page Optimization


Session 5 Determining the Ideal Incentive PVD Perceived Value Differential (PVD): Pre-event Email Training

PVD = Vp - C$n
Est. Perceived value (Vp): $500 Net Delivered cost (C$n): $275
PVD: $500 - $275 = $225
PRE-EVENT EMAIL TRAINING

Landing Page Optimization


Session 5 Determining the Ideal Incentive PVD

PRE-EVENT EMAIL TRAINING

PVD = $450 - $30

PVD = $400 - $1

PVD = $500 - $275

PVD = $420

PVD = $399

PVD = $225

This PVD calculation suggests that the printed book will be the ideal incentive, with the digital book as a close second. However, because of the ever-changing perception of digital media, gaining certainty about these incentives would require testing and further ROIc calculations.

Landing Page Optimization


Session 5 Determining the Ideal Incentive PVD
For instance, after testing both incentives, you might discover that the actual perceived value of a digital book is greater than estimated and will generate a higher return.

200 Total Sales

190 Total Sales

ROIc = P$n - C$n ROIc = $100,000-$86,000

ROIc = P$n - C$n ROIc = $95,000-$76,190

ROIc = $14,000
Print calculations: P$n = (200 sold) x $500 = $100,000 C$n = (200 sold) x ($400 + $30) = $86,000 (Ticket Price - $500 Delivered Cost - $400)

ROIc = $18,810
Digital calculations: P$n = (190 sold) x $500 = $95,000 C$n = (190 sold) x ($400 + $1) = $76,190

Session 2 Lesson Plan

Landing Page Optimization RETURN ON INCENTIVE

Landing Page Optimization


Session 5 Determining the Ideal Incentive ROIc

F
1. 2.

Key Principles
Incentives must be tested. The ultimate and final indicator that you have discovered the ideal incentive is ROIc. There are two primary ways to measure this: 1) Total ROIc and 2) Percent ROIc.

Landing Page Optimization


Session 5 Determining the Ideal Incentive ROIc

Key Principles

Total ROIc: The total dollar difference between incentive offer cost and net increase in sales over a specified time period. Focuses on total volume of return.
Example:

ROIc = P$n - C$n


Wherein:
ROIc = Total Return on Incentive P$n = Net profit impact from Incentive C$n = Net delivered cost of Incentive

ROIc = P$n C$n


(P$n = $14,000) (C$n = $10,000)

ROIc = ($14,000 $10,000) ROIc = $4,000

Landing Page Optimization


Session 5 Determining the Ideal Incentive ROIc

Key Principles

Percent ROIc: The percent difference between cost and net increase in sales for a specified time period. Focuses on efficiency of return.

ROIc% = (P$n - C$n) / C$n * 100

Example: ROIc% = P$n C$n


(P$n = $14,000)

Wherein:
ROIc% = Percent Return on Incentive P$n = Net profit impact from Incentive C$n = Net delivered cost of Incentive

(C$n = $10,000)

ROIc% = ($14,000 $10,000)/$10,000 ROIc% = 1.4 * 100 ROIc% = 140%

Landing Page Optimization


Session 5 Determining the Ideal Incentive ROIc

Appendix
ROIc Calculations (click on any of the following links to see example ROIc calculations for specific incentive types)
1. Example 1: Whitepaper 2. Example 2: Free Gift 3. Example 3: Complementary Product

4. Example 4: Free Shipping


5. Example 5: Product Discount

Landing Page Optimization


Session 5 Determining the Ideal Incentive ROIc

Final Note: ROIc is simple in principle can be messy in practice due to differing 1. Revenue models
Subscription (length, renewals, multi-year) E-commerce (Order size?, attribution)

2. Incentive types
Premiums (free gifts, electronic v. physical) Discounts (terms)

Rebates (terms)
Free shipping (thresholds, )

You should partner with your accounting and sales departments to establish the correct computation of the ROIc elements for your particular business model.

Landing Page Optimization


Session 5 Determining the Ideal Incentive

The path to finding the ideal incentive:


The path to finding an ideal incentive

FEASIBILITY

All Incentives

Using marketing intuition to determine which incentives are relevant to the audience as well as cost effective

OPTIMALITY
Using PVD to narrow-down and determine the optimal incentives to test

ACTUALITY
Testing and using ROIc calculations to find best performing incentive

Ideal Incentive

Session 2 Lesson Plan

Landing Page Optimization CONCEPT SUMMARY

Landing Page Optimization


Session 5 Concept Summary

Key Principles

1. The objective of Incentive is to tip the balance of emotional forces from negative (exerted by Friction elements) to positive.

ABANDON
Friction Elements Incentives

COMPLETION

2. Often, businesses will try one incentive offer and then quit. Incentives must be tested. Until you find one that gives you a major boost, you must assume you have not yet found an ideal incentive.

Landing Page Optimization


Session 5 Concept Summary

F
3.

Key Principles
Determining the ideal incentive consists of three primary components: Marketing Intuition Perceived Value Differential (PVD) Return on Incentive (ROIc)

Landing Page Optimization


Session 5 Concept Summary

Key Principles
The path to finding an ideal incentive

FEASIBILITY

All Incentives

Using marketing intuition to determine which incentives are relevant to the audience as well as cost effective

OPTIMALITY
Using PVD to narrow-down and determine the optimal incentives to test

ACTUALITY
Testing and using ROIc calculations to find best performing incentive

Ideal Incentive

Landing Page Optimization


Session 5 Concept Summary

Key Principles

PVD = Vp - C$n
Wherein: PVD = Perceived Value Differential

Vp

= Perceived Value of Incentive

C$n = Net delivered cost of Incentive

Landing Page Optimization


Session 5 Concept Summary

F
4. 5.

Key Principles
High PVD is predicated on both market-driven elements and marketer-driven elements. For market-driven elements, you are seeking an item that combines high market value with low delivery costs. (e.g., bundled, electronic, outsourced) For marketer-driven elements, you are seeking to improve the presentation of the incentive.

6.

Landing Page Optimization


Session 5 Concept Summary

F
7. 8.

Key Principles
Incentives must be tested. The ultimate and final indicator that you have discovered the ideal incentive is ROIc. There are two primary ways to measure this: 1) Total ROIc and 2) Percent ROIc.

Landing Page Optimization


Session 5 Concept Summary

Key Principles

Total ROIc: The total dollar difference between incentive offer cost and net increase in sales over a specified time period. Focuses on total volume of return.
Percent ROIc: The percent difference between cost and net increase in sales for a specified time period. Focuses on efficiency of return.

ROIc = P$n - C$n


Wherein:
ROIc = Total Return on Incentive P$n = Net profit impact from Incentive C$n = Net delivered cost of Incentive

ROIc% = (P$n - C$n) / C$n * 100


Wherein:
ROIc% = Percent Return on Incentive P$n = Net profit impact from Incentive C$n = Net delivered cost of Incentive

Session 2 Lesson Plan

Landing Page Optimization END

Session 2 Lesson Plan

Landing Page Optimization APPENDIX

Landing Page Optimization


Session 5 Determining the Ideal Incentive ROIc

Example: White Paper or E-Book This Internet newsletter publisher offers three free e-books when you register for their free electronic newsletter. Assumptions: Net profit value of a new subscriber is $2/mo. from ad and list revenue. Incurred cost for e-book delivery is $0.10/unit for royalties + bandwidth. Avg. subscriber retention: 12 mos. Incentive generates 600 additional units per month from 5000 to 5600.

Landing Page Optimization


Session 5 Determining the Ideal Incentive ROIc
Example: White Paper or E-Book

Step 1: Compute Net Profit Impact


P$n = [Signup-vol-impact(#subs) x (Avg net profit per new subscriber)] P$n = [+600 units x $2.00] = $1,200/mo.

Step 2: Compute Net Delivered Cost


C$n = [Signup-vol-impact(#subs) x (Avg cost/e-book)] C$n = [5600 units x $0.10] = $560 Assumptions: Net profit value of a new subscriber is $2/mo. from ad and list revenue. Incurred cost for e-book delivery is $0.10/unit for royalties + bandwidth. Avg. subscriber retention: 12 mos. Incentive generates 600 additional units per month from 5000 to 5600.
56

Step 3: Compute Total Return on Incentive


ROIc = ($1,200 $560) = $640 in the 1st month 12 mo. impact of 1st mo. subs: ROIc1,12m = ($640 + ($1,200 x 11 mos.)) = $13,840.

Landing Page Optimization


Session 2 Lesson Plan

Landing Page Optimization END

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