I have this unrelenting suspicion that people deeply, innately, in every fiber of ourselves need to be connected. Radical, I know.

I recently went back to Princeton for my college reunion and spent 48 hours either with people I hadn’t seen or spoken to in many years and yet because of Facebook and LinkedIn still felt oddly knowledgeable about, or with people I had actually never met but again felt oddly knowledgeable about through the sheer quantity and intensity of the virtual communications we shared. As inevitably strange situations and new sensations came and went at my reunion (because reunions are kind of wonderfully odd), I couldn’t escape constant little reminders of how the new technologies we’ve so quickly become immersed in, are playing a role not only in our need but also our ability to be connected.

While I was on campus, I gave a lecture on social media marketing (and giving a “lecture” at my alma mater was certainly odd for me in so many ways). We looked at the Susan Boyle phenomenon. Note that according to The Telegraph the episode of “Britain’s Got Talent” in which Susan Boyle debuted (it was the show’s season premiere) had was viewed on television by 11.8 million people. But in just a few days, the video of that same show on YouTube had generated more than 80 million views. That’s TV 11.8 million, YouTube 80 million. Anyone who grew up with television as the quintessential mass medium may need to take a moment just to absorb that fundamental shift.

And more and more people have a nagging suspicion that things like Susan’s YouTube video are stark examples that social media tools really are changing the way that we communicate, and wondering what to do about it.

I agree with this suspicion because I think such change is inevitable.

What we now call “social media” are just the latest in a long and continuing evolution of communication tools. From smoke signals to Morse code to radio to television, each new tool we invent changes the way we communicate.

If you imagine with me for a moment, communication tools shifting over time in four respects:

1. who sends the communication
2. who receives the communication
3. the ease of communication
4. what’s in the communication

we seemed to have had a long progression toward an ever increasing number of recipients from tools like Morse code (only a few people can send complex messages to a few other people, so presumably senders and recipients are chosen carefully as are the messages they send) to tools like television (once the infrastructure is built, a few people can send messages to massive quantities of people relatively easily and so senders are chosen carefully while the recipients not so much & the messages can be drivel or not).

Follow Maisha Walker on Twitter

But Social Media seems to have taken this progress on a new path where we are growing not just in the numbers of recipients but also of senders. Large numbers of people can now relatively easily reach large numbers of people, as if we are each our own publishing house.

But the tools go beyond that too. In the past large numbers of recipients meant one-directional messages — you could reach lots of people but they were passive recipients of your information. Now, these large numbers are also interactive. You can reach out to lots of people and every single one of them can immediately reach back. Instead of controlled, one-directional messaging, these tools enable a constantly evolving, living dialogue on a huge scale.

In it’s novelty, just the fact that the power to create large scale dialogue is in the hands of individual people is kind of amazing. As a business owner though, the fact that you can now communicate interactively and regularly with 10 or 1,000 times more people can seem overwhelming.

There is a middle ground.

In the 1970’s a sociologist named Mark Granovetter introduced a concept called “the strength of weak ties.” It is the idea that as we reach beyond our closest friends and families, we have “weak” but vitally important ties that connect us to other people and their networks and the important information and opportunities that those networks hold. It is far more often through the networks of our “weak ties” for example, that we get referrals for business and find opportunities for new jobs.

What’s amazing for small business owners about these new social media tools is that they are incredibly good at empowering individual people to efficiently and inexpensively maintain a far larger number of “weak ties”.

Half the battle of being a successful business is just making sure people remember your business and what you offer when it’s time to make a purchase or a referral. Through social media tools, a business can stay connected to a larger number of “weak ties” and the networks they belong to, have access to the information and opportunities in those networks, and do it better and faster.

By helping you maximize those weak ties Social Media Marketing provides small businesses with a powerful tool that doesn’t need an overwhelming amount of complexity to be useful. Its power is based on the simple human desire to be connected and the tools that now exist to enable you, as an individual to fill that desire.

Here are a few steps for how to maintain your sanity while using social media tools effectively.

1. Learn the differences, know what each tool is good for
   Each social media tool has its own personality, its own community of enthusiasts, its own speed and frequency. Take the time to learn them. Log on, create a personal profile and “lurk” for a while. Invite a few close friends and start to interact. Join groups that are of personal interest to you and watch how people share information. Learn first-hand how the tool is used by others before using it for your business.
2. Stay focused on your goals and know your audience
   While social media tools can reach millions of people as they did with the Susan Boyle video and for the Obama campaign, for most small businesses, reaching millions of people is just not the point. Don’t get sucked into the hype and forget that. Perhaps you need to find and build a few key relationships, or reach a few tens of thousands depending on the scale of your business. Figure out who & what you’re looking for and stay focused.
3. Don’t reinvent the wheel (yet)
   What’s already working for you? You don’t necessarily need to use social media in a completely different way if you’re not trying to reach a completely different audience. If you know what works with your audience now, start by figuring out how to achieve similar results but within the context of these new tools.
4. Don’t spread yourself too thin
   You don’t necessarily need to be active in all places at once. While Facebook, LinkedIn and Twitter are the hot spots of the moment, spend some time figuring out which ones will give you the greatest access to your audience and start there.
5. Don’t sweat it and don’t rush it
   Honestly everyone is still figuring out the best way to use social media tools. Heck, the sudden explosion of these tools themselves shows that people are still figuring out how best to use the Internet! Don’t give in to the feeling that you’ve missed the boat and rush into something that you’ll have to back pedal on later. Take the time to learn and do what’s right for you and your business.

Maisha Walker is the Founder & President of message medium, a 10-year old New York City Internet Strategy firm that focuses exclusively on Small Businesses. You can follow Maisha on Twitter or learn about her upcoming Web site and Internet Marketing Classes.

I was fascinated by the analysis of the Obama campaign. In many ways, Obama’s campaign and its success is a big, bright, “LCD sign” of the times. New media has come of age in a very public way.

Most people seem to agree that the campaign used a number of techniques to capture an audience and even inspire those traditionally lacking enthusiasm for politics. Some of my favorite attributes are:

Audacity – the fact that Obama wasn’t afraid to “redefine his target audience” and go after states like Indiana who this November voted for a Democrat for the first time in 44 years.

Mobilizing Large Numbers and doing it “Grass Roots” – unprecedented fundraising success by generating large numbers of small donations rather than small numbers of large donations to raise more than an estimated $600 million (McCain raised an estimated $250 million).

The Message Consistency – the message never wavered from the idea of being an “antidote” to the status quo.

But perhaps the most obvious and (to a techie like me) inspiring elements of witnessing this campaign was its focus on social technology to support and propel all of the other techniques.

The use of “new media”, from friend building on Friendster to the seemingly simple text message, proved to be a powerhouse for the campaign, as it extended the concept of “Team Obama” far beyond campaign headquarters literally into the hands of millions of Americans who voted and vocalized with their typing fingers.

For all the small business owners who couldn’t help wondering, wow – can I do that? My answer is Yes you can! (Sorry couldn’t help myself).

In taking a closer look, the technologies used form a rather familiar list:

• Official Web site: http://www.barakobama.com and http://my.barakobama.com
• Text messaging strategy – enabled via collecting phone numbers on a mass scale
• LinkedIn: http://www.linkedin.com/in/barackobama
• Flickr: http://www.flickr.com/photos/barackobamadotcom/
• Facebook: http://www.facebook.com/barackobama
• Twitter: http://twitter.com/BarackObama
• YouTube: http://www.youtube.com/user/BarackObamadotcom
• Meetup.com: http://barackobama.meetup.com/

The list reads like a “who’s who” of social media marketing.

But the real power in these technologies is understanding that the goal is not just to “set up” one tool or another, but to understand each tool’s potential. That potential in the Obama campaign was brought to fruition by:

• Having a consistent message
• Providing free and open access to “making a connection”
• *Always* keeping the tool up to date
• Providing pertinent digestible bytes of information that could be read, downloaded, passed on
• Leveraging the sheer quantity of enthusiasts and supporters on each tool to disperse messages almost instantly across an unbelievably wide, new network of venues and communities that hasn’t been seen since the invention of television.

Think about the leverage that a database of 948,000 people on MySpace and 3.1 million people on Facebook provides when you have a message to communicate (and consider that vs. McCain’s 221,000 on MySpace and 600,000 on Facebook).

As you think about your business and consider the challenge to build brand, generate buzz and stay on the radar as a small business owner with limited time and a limited budget, there are some very simple lessons to learn here:

1. Everybody needs a team. Whether you’re trying to build a team of millions of voters or a few thousand supporters of your business, build a team by building a venue for them to get involved. Even the simplest involvement can be powerful.
2. Email, the Web, and cellular technology have created an unprecedented venue for that involvement. Know who should be on your team and know the different ways they like to be involved.
3. Use wisely. Learn how these technologies work and learn by example how they can be leveraged to build a community of supporters for you.

This is an advantage that won’t last forever. As businesses gain competency in these techniques and learn to invest wisely, these techniques will slowly become standards rather than competitive advantages.

But it is possible for a growing small business to build a strategic, cost-effective and impactful social media campaign. As “Team Obama” has shown – yes, you can.

Maisha Walker is the Founder & President of message medium, a 10-year old New York City Internet Strategy firm that focuses exclusively on Small Businesses.  You can follow Maisha on Twitter or learn about her upcoming Web site and Internet Marketing Classes.

The first article of this series discussed page views per session as a kind of early warning system key performance indicator (KPI) for your website. The second discussed the time on site KPI as another warning flag. Both of these articles discuss specific measurements that can be used to forecast site problems. There are lots of KPIs you can set up to warn you of impending doom, or to better show your successes; but to go through each one would take me ‘til the end of next year. So to wrap up this series, this article will discuss the general metrics you should be looking at as an “e-business” and, more importantly, why you should be looking at them.

e-Business metrics:

The term “e-business” was coined by Ogilvy and Mather for IBM in November of 1997 and has stuck around ever since. Great advertising! Of course it came from “e-commerce,” which was a general term, but I can still remember the IBM jingle and the ads showing IBM’s vision of networked computing. There was nothing wrong with the IBM idea or their adverts. However, one problem with this ‘e’ part is that for some reason people decided that the Internet was not like other marketing mediums.

Everything became “e-” or “i-” something; it became associated with the brave new world of fast-moving, Venture Capitalist-led consortiums buying and selling companies based on their business plans and little else. No one measured success by ordinary standards anymore, you didn’t need to pay rents, have credit history, loyal customers, or reliable revenue, just a great idea and guts.

Great ideas aren’t measurable and neither are guts

We all know what happened next. The normally cautious VCs realized they had made some really stupid moves and pulled their money out before they went bankrupt. This starved the companies that they actually helped to mismanage and put a lot of otherwise talented individuals on the dole (sent them down the river, took away their jobs, you get the picture).

So why did ordinarily savvy business men and women jump on this particular bandwagon? And why did IBM, Dell and other notable brick-and-mortar businesses survive the dot bomb when so many others failed?

Survival was down to e-business as usual

IBM, Dell and the likes simply developed their businesses by doing what they already knew worked and applied what new business intelligence they could glean from the Internet to help them with their existing strategies. In other words, they used new information from Web analytics in combination with real business metrics to develop online business plans. There wasn’t anything particularly clever about it, it was common sense and all the metrics had one thing in common: they were controllable.

Web business metrics you can control

There are hundreds of reports you can get from Web analytic systems, and if you know what you’re doing they can really help you. Things like bounce rates, entry and exit pages, scenario analysis, first time versus repeat buyers, etc., are all extremely important to measure and build upon. They are individual KPIs I mentioned at the beginning of this article.

However, the only metrics which you, as an e-business, can directly control are average sale price, profit margin, overhead, conversion rate and visitors. You probably won’t see all of those five metrics reported in most Web analytic systems simply because it’s not up to a Web measurement system to tell you what your profit margin or overhead is, although most good ones can manage average sale price, conversion rate, and visitors.

Why these five metrics?

Let’s take a look at these five metrics and explain how you can affect them.

• Average sale price – You can directly alter your product prices to be higher or lower, thus affecting the average sale price.
• Profit margin – You can reduce overhead or increase sales prices to improve profit margins. You can also reduce your margin if it’s strategically a good idea to reduce sales prices, and you have no other way to reduce price other than eat into your margin. This is usually a good idea only if more of your visitors will buy due to a lower price, meaning that overall you can still have a higher net profit.
• Overhead – By reducing overhead you can improve profit margins, or affect the product sales price. One of our clients has sold a lot of one kind of product. Now he has a very low overhead for that product range, meaning he can reduce the average sale price of the product while retaining the same profit margin. Because his overheads are low, his prices are very competitive and he continues to do well with this product category.
• Conversion rate – Believe it or not, it is possible to control your conversion rate! By measuring the other KPIs mentioned above using good Web analytics tools, you can see how people are behaving on your website. Where you find problems (you undoubtedly will find some), fix them. This is how you can improve the chances that people will buy your products. It’s not really that simple, but that’s the way it generally starts.
• Visitors – The number of visitors you get is a consequence of your marketing efforts, whether paid or unpaid. You can engage in search optimization for critical keywords, or PPC marketing to drive traffic for keywords you can’t rank for organically. You can pay affiliates to send you traffic that buy your products. You can put out press releases. You can engage in banner advertising or behavioral marketing. Or you can do nothing and hope that your content alone provides enough traffic from websites that point to you. All of these methods affect the level of traffic. The key is getting relevant traffic, rather than traffic that isn’t interested in your product range.

In summary

I have shown two uses of Web analytics, using KPIs to serve as warnings when things are going wrong, and using Web analytics in conjunction with metrics to help you start thinking of your Web commerce as a business. By using the warning flags as indicators of where things might go wrong, you can identify problems and figure out whether your website is visitor-centric enough. By exercising control over the five metrics discussed here, you can improve your bottom line.

The problem with most e-commerce marketing strategy today is that companies don’t understand how to use tools such as Web analytics. Most e-commerce directors or Web marketers are given a budget and told to stick to it, and good analytics seldom come cheap. Without Web analytics you can’t even begin to measure key performance indicators (KPIs), which should be a part of any good e-commerce strategy. We often see marketers facing a problem, in that they know they need Web analytics; they just don’t know why they should pay for it nor what to measure. This three-part series of articles will hopefully help clear up some of the things that marketers should measure as key performance indicators, concentrating on one KPI per article.

What is a Key Performance Indicator?

In website measurement terms, a key performance indicator is a metric which will help your organization define and measure progress toward your website’s business objective. Key performance indicators are quantifiable website measurements that reflect whether you are successfully meeting or falling short of your website’s business goals.

That’s quite a boring definition of a KPI even if it is important, so in a last ditch attempt to keep you from falling asleep, let’s talk about Formula One auto racing, (or the Indy 500) and the KPIs they use.

What has Formula One got to do with Key Performance Indicators? There are many minute factors in Formula One that contribute to being a winner. Everything, down to the performance of the fuel, the tires, the speed of the pit stops, the quality of engine parts, the weight of the car, its aerodynamic ability, everything is measured and tested, long before the driver even gets into the car. The difference between the winner of a Formula One race and second place can be as little as a hundredth of a second.

That extra hundredth of a second could be because the fuel used on that particular race day allowed the driver to get more out of his car than the guy in second place.

How did the race team know which fuel to use? They knew because they had tested as many as 50 different types of fuel beforehand, each one tuned for the demands of different circuits – or even different weather conditions.

They got that extra performance by knowing the key performance metrics of the fuel, so they could say with confidence that ‘fuel A’ was better for their car if ‘condition A’ was satisfied.

Condition ‘A’ might have been the car’s weight that day, the type of road surface, and the weather. When all matched together, it meant that the race team had a particular choice to make when selecting the fuel for the car. The website KPI I’m about to discuss is the fuel that powers your e-commerce sales and lead-generation strategies. Both are measured by practically all Web analytics systems, but neither one is commonly measured to its full potential.

Page views per session, the fuel behind your Web business objectives

For those of you that know why page views and sessions are important, bear with me for a paragraph or two. For those of you that don’t, here we go.

Why are page views and sessions important?

Page views are a metric that represents the number of times your pages are viewed by the people who visit your website. On its own, page views might be an important measurement if you’re a well-trafficked content website looking to sell B2B advertising in the form of some kind of ad (such as banner ads).

If you can accurately say to an advertiser that you have 10-million page views per week, it’s very likely that this alone will be one of your KPIs, simply because if the count goes down, your advertisers will most likely not want to pay you as much to advertise with you. It would be important in this case that you keep the page view count at least to the same level every week, in order to keep the same level of banner revenue, for example.

Sessions represent the number of users (people) visiting the website over a given period. Again, it’s a very important metric to know, because as more of the right kind of people visit your pages, your bottom line will eventually improve.

By combining these two metrics we get a much more powerful way to use the figures.

Combining the two metrics as one KPI is done by calculating the average ratio of page views per session. So, if 1,000 visitors viewed 2,000 pages, the mean page views per visit KPI is 2. (2,000 / 1000 = 2)

Why is this combination important?

If your website e-store system requires that visitors view five pages to buy a product, and your KPI is telling you that your site gets an average of 2 page views per session, then the site is under-performing badly. If it takes five pages for your visitors to buy something, then your goal should be to get an average KPI of at least five page views per session. Otherwise, it means that the vast majority of your visitors aren’t going deep enough into the process.

Much more importantly, deciding on a KPI like this is giving you a measurable objective to work towards. If you know that the vast majority of people are abandoning your website after only viewing one or two pages, there is a problem which you must solve.

Somewhere within your Web analytics, you will be able to detect the areas of abandonment that are the problem. The simple fact of the matter is, if you have a low page views per session KPI, then your analytics system (if it’s any good), WILL be able to show you where the problem lies. Once you have found the problem areas, congratulations! You’re becoming a Web analytics expert. Now you know which pages have the problem and you just need to figure out why.

Figuring out why is the real secret It may be that you’re attracting the wrong kind of visitors, such as people who aren’t interested in your offer. It may be that you don’t have enough compelling content to keep visitors interested. It may be that your shopping cart has a problem with abandonment or your lead-generation process is too long or has a scary form to fill in. In all cases, your page views per session KPI is the first warning signal and you can monitor it quite easily.

Other warning signals

The other side of the coin is if this KPI is too high. What if you have 1,000 people viewing 20,000 pages? Unless you have incredibly compelling content, there is a problem. It probably means that people are very interested in something but can’t find it on your site. If this KPI is too high, analyze your Web analytics and see where the problems are. Are people skipping around between pages? How long do they stay on your site? Have you got site architectural problems with navigation?

Too high or too low, it’s all useful measurement

The point is to find out how to use the fuel, remember? If you start measuring page views per session as a KPI, you will begin to see whether you have a problem. You can get as deep and as sophisticated as you like.

For instance, you could measure page views per session only of the visitors who hit your shopping cart or lead-generation system. Content websites could use page views per session in particular content groups to work out how compelling particular kinds of content are. It all depends on the website business objective.

To summarize

Developing KPIs allows you to measure things on your website which directly affect your business objectives. By finding ways to improve the number of pages people view per session, you can increase the chance that those users will complete your calls to action (buy, register, subscribe, whatever Web business objective you may have). This first KPI can be an early warning signal that something is wrong; it’s very easy to set a measurement. The next KPI I’ll discuss is time spent on site, both why it is important, as well as how you can use that data in combination with page views per session.

The first article of this series discussed page views per session as a kind of early warning system key performance indicator (KPI) for your website. This article will discuss another KPI, the time your visitors spend on your website, and why this is an important metric.

Why time spent on your site is important

All websites, regardless of type, should measure time spent on site, simply because all websites can use it as a gauge to see how compelling their offers are, as well as to check website performance. It doesn’t matter whether you are running a content portal or an e-commerce sales operation; you should measure time visitors spend on your pages. If you have, for instance, a commerce site, you need to know how long your offers hold your audience.

The time spent on site KPI also warns you when things aren’t going well. If visitors leave your site quickly, if probably means you are losing sales.

Why you need warning signals

Life is full of warnings. Your body warns you with pain when you are doing something you shouldn’t. If you don’t exercise enough and sit in front of a computer screen for too long, you get muscle aches and pains, or a repetitive strain injury. That’s your body telling you to do more physical stuff, or else!

You begin to learn naturally that doing something you shouldn’t equates to pain, therefore you do your best to steer clear of the discomfort. Notice how the body gives you a taster? If you have been sitting too long in one position you get tired and achy? It’s your body’s natural “kick up the backside” to suggest that you get up and move around for a bit or you’ll suffer later on.

Look at website KPIs as a potential taster of some real pain, the signals that you use to guide your thinking about getting out of your chair and doing something.

What is the real pain?

The real pain is when you spend thousands of dollars on advertising to drive traffic to your website, but then, convert very few of them to your goal. Or you spend countless hours modifying website pages, yet don’t have a clue whether any of the changes you’re making have any effect on your customers. This is what you will likely experience if you look only at bottom line results, and not the causes of those results.

In all business websites, you should identify the advertising, the products, and those areas of your site that generate the highest number of visitors and/or greatest interest over the long term. If the time spent by visitors on your website is too short, your copy, graphics, or usability are wasted, and likely need to be re-written or re-designed to be more compelling.

When is the time spent on the site too short?

You need to figure this answer out before setting a base KPI. One method is to time how long it takes a viewer to complete an action. If you want someone to subscribe to your site, find out how long it does take to do that. This then becomes your base KPI. If the majority of people stay on your site longer than that period, then you’re happy and your KPI is telling you that you’re doing a good job. If the majority of people aren’t sticking around long enough to actually subscribe, then this KPI is a warning signal that something is wrong and you could be headed for pain. Your KPI will depend on the main action(s) you want viewers to take.

Examples of guidelines you could use for different kinds of website include:

• Lead Generation/Subscription: How long it takes, in seconds, to complete the sign-up form.
• E-commerce/Sales: How long it takes, in seconds, to purchase the product.
• Content/B2B advertising: How long it takes, in seconds or minutes, to find and read an article.
• Customer Service: How long it takes, in minutes, to satisfy the customer query.

We typically advise recruiting a group of users, who are not connected to the website, to do a short usability test. Then use the average time taken as an initial KPI.

What if the average time taken is too long?

When you have determined the minimum time spent on the site to fulfill your website goal, you should also pay attention to whether people are taking too long reading your pages. It could be that your users are becoming frustrated and can’t find what they need on your site. Time spent on site in combination with page views per session gives you a more complete picture of whether people are finding what they need.

Summary – The complete picture

Putting the KPIs together and understanding why you’re getting these results is the key to defining metrics which can help you make decisions. Start to think about what a good visit is and what a bad visit is. Determine which metrics define a good and bad visitor experience, and you’re halfway to getting the KPIs you need. By defining the KPIs before you start, you can begin to get a more complete understanding of what works. Then, armed with this information about what your visitors are doing, you can improve your website.

Your site positioning is the website equivalent to product positioning in market strategy and product strategy. You need to relate your website to the benefits offered to target users, and locate it in relation to its strategic focus on defined benefits for defined target users. Position your website to play towards strengths and away from weaknesses.

The classic marketing concept of product positioning is closely related to market segment focus. Positioning targets a product for specific market segments, with specific product needs, at specific prices. The same product can be positioned in many different ways. The illustration below shows an example taken from Philip Kotler’s book Marketing Management. The example shows how Kotler looks at the positioning of an instant breakfast drink, relative to the key variables price and speed. We think you can see how you can apply this concept to your website, positioning your website as if it were a product:

Another common framework for classic product positioning is taken from a series of questions. As you apply this idea to the Web, think about the Web version of the classic product positioning statement. You can position a product using a positioning statement that answers the important questions:

• For whom is the product designed?
• What kind of product is it?
• What is the single most important benefit it offers?
• What is its most important competitor?
• How is it different from that competitor?
• What is the customer benefit of that difference?

For example, the following are positioning statements used by Palo Alto Software to focus marketing for two new products:

• For the businessperson who is starting a new company, launching new products, or seeking funding or partners, Business Plan Pro is software that produces professional business plans quickly and easily. Unlike (deleted), Business Plan Pro is a stand-alone product, and requires no other programs to buy or learn.
• For business owners and managers who oversee their company’s marketing programs, Marketing Plan Pro is software that creates and helps manage professional Web plans. Unlike (deleted), Marketing Plan Pro provides a system for scheduling and tracking the entire marketing process from plan to action.

As a specific example of website positioning, consider this positioning statement used by Palo Alto Software to position this site, Bplans.com:

• For the person developing a business plan, Bplans.com offers directly relevant free information including dozens of sample plans, wizards, tools, and content. Unlike more general small business information sites, Bplans.com is focused on business planning and is full of valuable, real information.

Some positioning strategies will work better than others. Here again, strategy is focus. The best positioning plays to your company’s strengths and the product’s strengths, and away from weaknesses. Position your product to reach the buyers whose profiles most closely match needs you serve, in the channels you can reach, and at the prices you set.

Question 1.

What do you mean by conversion? Do you mean getting someone to answer the simplest call to action such as “read more here” or actually selling a product or service?

What you’re talking about here are two different ways to measure your website. “Read More Here” is what I would call a variable affecting your conversion rate. I call these kinds of variables “Micro Conversions” because they are all small (microscopic even) steps toward a full conversion. A micro conversion is something that you should test and measure. “Read More Here” might get a worse click-through rate than “Click here to find out how to win a month’s supply of vintage wine.” So by improving this click through, you get the person browsing to take another small step toward your final website goal. By doing this, you improve your overall conversion rate, which in this case is to get someone to register or subscribe to win a month’s supply of vintage wine. Micro conversions can be tracked by measuring the click through of links, or the read time for content, or the bounce rate for headlines and copy. Full conversion is persuading your visitors to do what you want them to do. In my example, it would be registering to win wine, but it could be subscribe to a newsletter, download an audio file, buy a product, sell a service or whatever, but it should reflect what your website’s business objective is.

Question 2.

What strategies would you suggest when there is no “online” conversion possible? I need them to call me for more info, to learn more and to eventually give them a proposal.

There is no such thing as “no online conversion”. You’re looking for leads who will eventually phone you but the visitor is the one with the power. If you don’t give your visitors a reason to let you continue to have a dialog with them, then they won’t. Using opt-in is one answer. If, for instance, you ask for a name, email address and telephone number from your visitor so that he can then get useful information from you in the form of a free report or audio file, you do two things. First, you qualify the visitor as someone who is interested in your services, and second, you get permission to contact him/her again. You need to build into your website a powerful reason for your visitors to give you permission to email or talk to them rather than expect someone to pick up the phone. In your case, you say they need to ring you to learn more. Put what they need to learn into some form that they can opt in to get, such as a white paper, report or audio file. Then you have a conversion rate that is the percentage of people who give you permission to continue the dialog with them by giving you their email address or phone number so that they can learn more about your offering. People visit a website to get information, so give them the means to get it.

Question 3.

What if the product you sell is also sold by several others on other websites? How do you get someone who is browsing the Internet to notice your site and want to order from you?

In offline marketing, a successful tactic is differentiation. It’s no different online. If you stand out from your competition, then you get noticed. What makes you different (not necessarily better, just different) from your competition? A USP makes an enormous difference to conversion rates. We improved subscriptions by 11% per month for six months by differentiating ourselves. The second point is that your site should be of use to your visitor. The one thing that all people online have in common is that when they browse they are looking for information. So give your visitors what they want in the form of education. If your potential customers become educated about your offer and take away something useful from your website, they will remember you over your competition.

Question 4.

How do you get the address, telephone number and name of the owner of any company that you’re trying to get in touch with to see if they would be interested in what you sell?

You need to get permission from the visitor to get that information. It can’t be done with any tracking tools available. There is a very good reason for this and it’s called privacy. If you or I went online and could have our names, addresses and phone numbers tracked by software, it could be potentially dangerous. Imagine if you were online and were talking in a chat room about going on holiday in a faraway land for the next few weeks and your personal information could be gathered. The person who sees that information then knows when to go to your address and rob you while you’re away. It’s OK to track browser behavior because no personal details are ever tracked. I for one hope it stays that way.

Question 5.

What should one look for in the web logs to determine conversion rates?

Web log files are a problem because they record everything. Web logs record every request to your site’s pages from search engine indexes, to email harvester software, link harvesters and visitors. So first you need to filter out from log files the information that isn’t relevant to visitors. Then you’re looking for unique visitors (not visits) or unique sites. Once you have that filtered figure, you have the approximate number of visitors coming to your site, still not close to 100% because of proxy servers recording multiple visitors as one browser, but it’s as close as you can get with log files. Then you divide the number of people who complete the conversion action by the total visitors. That is your conversion rate. If you can get software that doesn’t use logs like IRIS Metrics or log software that works out the filtering like Web Trends, it makes your job much easier.

Question 6.

What factors have the biggest impact on conversions on my web site?

The short answer is differentiation, target marketing, your site’s relevance to your desired audience, measurement, experimentation, and most importantly trust.

Differentiation is the first step in the process. You must find a way to stand out from the competition. It should start with the domain name, and continue throughout your entire website’s strategy.

Then in your content, your copy and your design, you must smack your target audience between the eyes. You have to find out exactly what it is they want and answer the wants and needs of that audience.

Relevance is hugely important, too. If you’re running a campaign on Overture or Google with certain keywords, your audience should land at exactly the right place after typing those keywords and finding your website. So if the audience types “Red Vintage Wine” into Overture and your link appears, on clicking through they should be taken to the page on your site talking all about and selling red vintage wine. They shouldn’t land at the home page of your website which has a small link to the red vintage wine section and 5 or 6 other types of wine for sale.

Measuring and experimenting is then the key to improving conversion rates. You can’t improve conversion without measurement unless you’re making educated guesses or you’re just plain lucky. So get a good measurement system, learn what it’s all about, and test your changes.

Finally and most importantly trust. You can’t sell anything if your audience doesn’t trust you. You can help them to trust you by prominently displaying your privacy policy, your shipping procedure, the fact that you use SSL encrypted protection for the forms on your site, that hundreds of satisfied customers have already bought from your store, that you make it very easy to find contact information such as a name and address as well as support via email. You could educate via your website with articles and ‘how to sections’ or newsletters and instill trust over time. In short, your prospect must trust you to part with his or her money.

What’s next?

In part two of this series, we’ll be looking at measurement software tools, the pros and cons of logs versus ASP vendors, average conversion rates, why it helps to track visitor activity using the software which is available, and what you should test and tweak to improve conversion rates.

Who competes with you for your customer’s time and money? Are they selling directly competitive products and services, substitutes, or possible substitutes? What are their strengths and weaknesses? How are they positioned in the market?

A good competitive analysis varies according to what industry you’re in and your specific Web plan and situation. A competitive analysis does have some common themes.

Begin by explaining the general nature of competition in your type of business, and how customers seem to choose one provider over another. What might make customers decide? Price, or billing rates, reputation, or image and visibility? Are brand names important? How influential is word of mouth in providing long-term satisfied customers?

For example, in the restaurant business competition might depend on reputation and trends in one part of the market, and on location and parking in another. For the Internet and Internet Service Providers (ISPs), busy signals for dial-up customers might be important. A purchase decision for an automobile may be based on style, speed, or reputation for reliability.

In many professional service practices, the nature of competition depends on word of mouth because advertising is not completely accepted and therefore not as influential. Is there price competition between accountants, doctors, and lawyers?

How do people choose travel agencies or florists for weddings? Why does someone hire one landscape architect over another? Why would a customer choose Starbucks, a national brand, over the local coffee house? Why select a Dell computer instead of one from Compaq or Gateway? What factors make the most difference for your business? Why? This type of information is invaluable in understanding the nature of competition.

Compare your product or service in the light of those factors of competition. How do you stack up against the others? For example: your travel agency might offer better airline ticketing than others, or perhaps it is located next to a major university and caters to student traffic. Others offer better service, better selection, or better computer connections. Your computer is faster and better, or perhaps comes in fruity colors. Other computers offer better price or service. Your graphic design business might be mid-range in price, but well known for proficiency in creative technical skills. Your automobile is safer, or faster, or more economical. Your management consulting business is a one-person home office business, but enjoys excellent relationships with major personal computer manufacturers who call on you for work in a vertical market in which you specialize.

In other words, in this topic you should discuss how you are positioned in the market. Why do people buy your product or services instead of the others offered in the same general categories? What benefits do you offer at what price, to whom, and how does your mix compare to others. Think about specific kinds of benefits, features, and market groups, comparing where you think you can show the difference.

Describe each of your major competitors in terms of those same factors. This may include their size, the market share they command, their comparative product quality, their growth, available capital and resources, image, marketing strategy, target markets, or whatever else you consider important.

Make sure you specifically describe the strengths and weaknesses of each competitor, and compare them to your own. Consider their service, pricing, reputation, management, financial position, brand awareness, business development, technology, or other factors that you feel are important. In what segments of the market do they operate? What seems to be their strategy? How much do they impact your service business, and what threats and opportunities do they represent?

Here’s the skinny on Internet sales tax: who pays it, who doesn’t and why it makes a difference to state governments and brick-and-mortar retailers.

It’s hardly a secret that shoppers hate paying sales tax and love a tax-free bargain. Case in point, the tax-free shops in airports that are so successful at separating Bahamas-bound travelers from their Mai-Tai money. But because you need an international boarding pass before you can buy a bar of tax-free designer soap, sales from these shops pose little threat to either Main Street merchants or tax collectors.

Enter the Internet, which takes tax-free shopping to a new level. In fact, no-tax shopping has become a prime lure of online retailers looking to hook consumers on click-and-charge buying. Despite what you sometimes hear, however, some Internet sales are subject to sales tax and consumers often have a responsibility to remit any unpaid sales tax on online purchases directly to their state.

Collecting sales tax: some do, some don’t
The obligation to pay sales tax is determined by the location of the buyer, not the seller. If a business does not have a physical presence in a particular state, such as a store or warehouse, it is not required to collect sales tax for sales from customers in that state. In legal speak, this connection between sales and location is referred to as a “nexus” and was established by the U.S. Supreme Court in Quill v. North Dakota, 504 U.S. 298 (1992).

Example
Margo is passionate about rare orchids. Unfortunately, she lives in a small town in Indiana, where her local nursery doesn’t carry the varieties she loves. Instead, Margo orders her supplies online from an orchid supplier with headquarters in Vermont. The supplier has all of its facilities in Vermont and collects payment in Vermont. Margo does not have to pay Indiana sales tax on her orchids.

A few months later, the supplier opens a warehouse in Indiana to handle its online orders for the entire country. Margo continues to order her orchids from the headquarters in Vermont but she must now pay Indiana sales tax. Her ride on the tax-free train is over.

Exceptions to the rule
Many big retailers with local stores can sell their products tax free over the Internet because they have established separate legal subsidiaries to handle Internet business. Put another way, the Barnes & Noble you buy a book from online is a different company from Barnes & Noble at the mall. Since the online Barnes & Noble doesn’t have a physical presence in your state, no sales tax is charged for online purchases. The practice of establishing a separate legal entity principally to avoid sales taxes has raised the ire of thousands of brick-and-mortar retailers whose customers must still pay tax.

The issue becomes even stickier when a company’s online and offline entities experience some customer interaction. For example, a consumer buys tax-free golf clubs from Wal-Mart.com but is allowed to return them offline to the local Wal-Mart store. Whether such entities are legally independent of each other is a matter that has not been tested in the courts.

Your responsibility to pay sales tax
If you live in a state that collects sales tax but avoid paying it on an Internet purchase, you are still required to pay the tax to the state. When you pay it directly to the state, it is referred to as “use” tax rather than sales tax.

The only difference between sales and use tax is which person — seller or buyer — pays the state. Theoretically, use taxes are just a backup plan to make sure that the state collects revenue on every taxable item that is purchased within its borders. But because collecting use tax on smaller purchases is so much trouble, states have traditionally attempted to collect a use tax only on big-ticket items requiring a license, such as cars and boats.

Now however, some states, including Connecticut, Maine, Nebraska, New Jersey and North Carolina, have changed their attitudes and are stepping up efforts to collect use taxes. But bureaucracy, complex tax rules and limited state resources have thus far prevented most states from pursuing use taxes. Since state governments are losing substantial revenue, the collection of use taxes may become a priority if the federal government continues its ban on Internet e-commerce taxes.

The Internet’s future as a tax-free zone
It’s difficult to predict whether Internet purchases will remain tax free. In 1998, Congress passed the Internet Tax Freedom Act (ITFA), which established a three-year moratorium on taxing Internet access services at the state or local level. “Internet access service” is defined as any service that allows users to obtain information, email or other online services and includes small Internet Service Providers (ISPs), large information portals such as Yahoo and other websites and companies that provide connectivity and information, such as AOL.

Under the 1998 moratorium there can’t be any new sales or other taxes applied to Internet purchases. The current moratorium on new taxes will last until October 2001. However, this ban does not affect your obligation to pay any sales or use tax owed under previous law.

To determine the future of taxes on the Internet, Congress created a 19-member Advisory Commission on Electronic Commerce to study Internet taxation and report on April 21, 2000. Early reports from the Commission indicate that it will recommend that Congress continue to maintain the Internet as a tax-exempt zone until 2006. Federal legislation following these proposals has already been introduced in Congress.

Naturally, there is a great deal of opposition from state governments and brick-and-mortar retailers. A look at the numbers explains why. Sales tax revenues currently amount to about $150 billion annually and make up approximately one-third of all state revenues. These taxes pay for everything from schools and police to roads, parks and other state services. States that don’t have a personal income tax, like Texas, are even more dependent on sales tax revenue. (The five states that don’t have a sales tax — Alaska, Delaware, Montana, New Hampshire and Oregon — aren’t hurt at all). Based on commonly accepted Internet sales projections, lost revenue in unpaid sales tax from online transactions could go as high as $10.8 billion by 2003.

Many Main Street retailers feel that allowing consumers to avoid sales tax gives online retailers an unfair competitive advantage, especially in states where sales taxes are high. They are particularly incensed by large retailers whose Internet subsidiaries permit tax-free sales but allow online purchases to be returned to brick-and-mortar stores. Supporters of equal taxation for all retailers have expressed anger that the Commission does not adequately represent their interests, and feel that the Commission’s report to Congress will be biased.

Streamlined Sales & Use Tax Project
In 2002, state governments organized to fight back. Under a state-led initiative known as the Streamlined Sales & Use Tax Agreement (SSUTA), 40 states and the District of Columbia banded together to simplify their sales tax codes in order to make sales tax collection easier. Under SSUTA, the collection of sales tax still remains voluntary. However, it is considered a necessary stepping stone to federal legislation.

The SSUTA has gained traction. Several national retailers have negotiated with member states for amnesty deals in return for future collection of sales tax, and more are expected to follow. In addition, several states have already amended their tax laws to conform to the SSUTA. With all of this pressure from states, many expert believe that within the next few years you’ll be throwing a few more dollars into your shopping cart for state sales taxes.

More information about Internet sales tax
You can find the Commission on Electronic Commerce website at http://www.ecommercecommission.org.

Other informative websites include:
E-fairness, (http://www.e-fairness.org) representing retailer organizations lobbying Congress for equal taxation.
The Sales Tax Institute, (http://www.salestaxinstitute.com) providing a range of services and links associated with sales tax.
The The Streamlined Sales Tax Governing Board (http://www.streamlinedsalestax.org) maintains a website detailing the organization’s progress.

Copyright © Nolo

There are many ways to have your website take off and make money. Traditional business mottos tell you to buy low and sell high, or to remember that the customer is always right. But in the brave new e-world, I think that there should be a new business maxim: Imitate Amazon.

If you do what Amazon.com does, you can’t go wrong. Of all online merchants, Amazon.com is the site and the business that does it right.

So, today we present the cyber-rules of the Amazon jungle:

1. Value the customer above all else. Amazon.com founder and CEO Jeff Bezos has repeatedly stated that he endeavors to make Amazon the most customer-centric business in the world, and a visit to the site confirms this. Amazon offers great customer service. It knows that responsiveness is the key to making online shoppers feel comfortable.It is important to realize that ordering online is different than purchasing something in a store, where you see the actual goods and get to take them with you after your purchase. Online, you can’t touch the actual products and you don’t talk to a real salesperson. You just cough up your credit card number, make your purchase, and send your order off into cyberspace, hoping for the best. For many people, it still seems like a proposition based on faith. So the first secret to getting customers to order from you, as Amazon has proven, is to convince them that you won’t let them down.Amazon first does so by immediately sending you an email confirming your order and telling you when they expect to ship it. Then, when your order does ship, they send you another e-mail with your tracking number. You should do the same; it creates confidence in your store. (Some e-commerce software builds this function right into the software, such as Yahoo! Store for example.) Like Amazon too, you should try and ship quickly and offer returns and refunds.If a customer has a problem, Amazon also responds quickly. For example, I ordered a book from Amazon a week ago and it took them a day longer than anticipated to ship my order. It confirmed my belief in the site when they e-mailed me, saying that they upgraded my order to a “priority” mail shipment because of the “delay.” I got the package the next day. It is things like that which build loyalty.
2. Make shopping easy and pleasant. Amazon has a “three-click” policy that dictates that if a customer can’t accomplish what they want to within three clicks, then the system isn’t working right. Imitate Amazon and make shopping at your store simple too.By the same token, Amazon’s pages are clean and professional. Their use of images, for example, is prudent: never too many, nor too big, so the pages don’t take long to load. They know that their job is to give you the chance to find what you want quickly and easily and to be able to purchase it without a hassle.
3. Offer plenty. What is Amazon? Now, besides being “Earth’s Biggest Bookstore,” it seems to be earth’s biggest store. When you too have a big inventory it tells your customers that you are here to stay and that they will be able to find what they want if they go to you first.
4. Offer great prices. A big reason that people shop online is because they think they will find prices that can’t be beat. That is certainly true at Amazon, and it should be true for your store as well.

While few of us have the resources to totally imitate Amazon, the spirit of the site is one to emulate. You might not become a billionaire, if you remember to Imitate Amazon, you will at least be on you way.

Today’s Tip: When selecting a bank for your business, remember that all financial institutions are not created equal. Talk to friends, business associates, accountants, and attorneys about their banking recommendations. It’s also smart to try and find a bank that is aggressively seeking new customers; you may get a special deal or extra value for your business. You should also consider smaller banks with just a few offices as they may have more relaxed rules and offer more personalized services. Finally, although price alone probably won’t decide your choice of bank, you should at least compare interest rates on deposit accounts and basic consumer loans.