When to chuck a merchant for bad conversion rates

[rfung]

I have an adwords campaign going to my site which provides a positive review of a product, and of course a link to the merchant.

This month I received 600 clicks to my site, out of which 450 clicked through to the merchant. Out of those, only 5 sales occured. Yes, I have been losing money.

Now, people are clickin on the adwords ad to come to my site AND they go to the next step, but 5 sales out of 450 clicks?!... that's a lousy conversion rate. Are the words not targetted properly? isn't the indicator that they are clicking through to the merchant a good sign? how can I improve anything on this process, or should I just blame the merchant for having a bad converting page and see if I can find another one?

[Undead Hunter]

R:

5 out of 450... well, basically a 1% conversion rate. Depending on the industry, a 2% conversion rate is "good" for a store.

This is from Fireclick, a web analytics company, from Dec 1 2003 - March 4 2004:

Catalog stores 6.1%
Specialty stores 3.9%
Fashion/apparel 2.2%
Travel 2.1%
Home and furnishing 2.0%
Sport/outdoors 1.4%
Electronics 1.1%
All verticals 2.3%

For what its worth, I help a friend with a fashion store who gets almost that % to the decimal point.

Another consultancy reports that "Sales to visit ratios can go from 0.5%-8% depending on the industry".

[TrustNo1]

I like looking at conversion rates but i look at EPC the most. You could have 1 page converting better than the other, but the other you could be earning more per click. Depends on the category and/or merchant if thats a good conversion rate or not. Does the merchant have a coupon code available that you haven't listed? If they do, then when the person reaches checkout and sees the coupon box they might pop open another browser looking for the code and if there's one might shop thru that site. There's also coupon sites that auto set cookies (against the rules) so they might not even have a code but will get the sale because they got their cookie in. If there is another merchant with the same product try them, see which one converts better. Then you could use the better converting merchant on future campaigns.

[Michael Anthony]

Rogerio - on the assumption that you've made a test purchase to ensure that it's not a tracking issue, just ditch the merchant and move on.

Maybe the product itself just won't sell online and you need to reconsider the thing that you're trying to sell. Failing this being the problem, maybe try another merchant in the same industry.

Perhaps if you told us what you were trying to sell, someone with experience in this area could mnake some recommendations.

[wrgvt]

As the affiliate, you're only the advertiser for the product. You've written an ad (AdWords) to get people to your page. You've written another ad (your web page) to get people to click through to the merchant. If people are clicking on the AdWords ad, you've done the first part well. If they're clicking through to the merchant, you've done an OK job there. There are two questions left to be answered:

1) Are you providing enough information about the product on your web page to convince people to buy the product, or are they clicking through in hopes of finding more information than you have on your site? If you just have some basic info and nothing that grabs your visitors about this product, they may just be clicking through to see what else they can find out about the product.

2) Is the product competitive in the market? How does the price and features compare to identical or similar products at other merchants? What is the demand for the product? If the product doesn't sell well in general or isn't competitive, nothing on your web page will overcome that. It's time to find a new product or lower the cost of your AdWords bids to bring your expenses in line with your revenues.

[rfung]

1) Are you providing enough information about the product on your web page to convince people to buy the product, or are they clicking through in hopes of finding more information than you have on your site? If you just have some basic info and nothing that grabs your visitors about this product, they may just be clicking through to see what else they can find out about the product.

This is a valid question - I provide for reviews on the product - and I only setup adwords campaigns on products that are rated positive :) - so let's say I review/sell a specific digital camera - my adwords ad say "Read reviews on this camera and find low prices here" - 600 people click on this ad. They go to my site and read feedback saying 'great camera, recommended'. Then they click on the merchant. But they don't buy... Uhm...it could be tha they want to find more info on the product besides the short 'sales' description I have on the site.

2) Is the product competitive in the market? How does the price and features compare to identical or similar products at other merchants? What is the demand for the product? If the product doesn't sell well in general or isn't competitive, nothing on your web page will overcome that. It's time to find a new product or lower the cost of your AdWords bids to bring your expenses in line with your revenues.

I'm not sure it's relavant wether it's competitive in the market against other products? I try to see this strictly from the point of view of the variables I have access and can control - 600 clicks to my site, 450 to the merchant, 5 sales. They've been presold on the quality and effectiveness of the product, so they either buy the product, or close the window and do something else?...

It seems like they may be hunting for more information besides the review - I'll assume that unless someone can come up with some other reason to explain user behavior. I'm just curious that's all.

[eljefe3]

If it's a high ticket item, chances are there will be a lot of window shoppers and tire kickers. Just because they clicked through doesn't mean they actually intend on buying today, tomorrow or next week.

Make sure you merchant has a long cookie life and also you have links to different merchants so no matter where they buy online, you'll have a shot provided the merchants cookie is long enough and doesn't get overwritten by another affiliate cookie.

[fclark]

Even if you don't have acces to all data, you still need to look at it from the shopper's perspective.

"find low prices" is a message that appeals to price-sensitive shoppers, and if you don't offer price comparison, then they will check it out and leave, hopping all over the Internet until they have compared your product to competing products that fill the same need. They will also compare your price to prices on the same product elsewhere. Chances are your cookie will be overwritten.

I would modify the AdWords ad to cut down on comparison shoppers or add this functionality to your site.

1% isnt bad. It will go up as you narrow your AdWord message.

[disgust]

agree that 1% isn't bad at all, depending on the category. (if it's tech related, I'd say that's probably a good conversion rate really..)

how much are you losing exactly? what did you figure your conversion rate would be when you decided what to pay per click?

with a 1% conversion rate, 15% commission, and a 100$ buy, you could spend up to 15 cents a click and break even.

I'd recommend using that to determine how much you can pay. change the commission rate to reflect the merchant, pick a modest average buy, and figure a 1% CR.

(keep in mind that's assuming it's either direct to merchant OR you're getting 100% CTR to the merchant from your landing page)

[teenwolf]

I would definitely try another merchant.

I've made the mistake many times of sticking with a new merchant way too long.

[rfung]

I just looked at the numbers:

9% on a $100 sale - 50% of the clickthrus to my site from adwords go to the merchant. 10 cents per click.

600 clicks * 0.10 = $60
5 sales * 9 = $45

ops!...not much of a loss, but I've since reduced the cost to 0.05 cpc....

[rfung]

As it were - I just logged in to check my stats on this particular merchant -

either someone ordered 15 units of the same product today, or the stats were slow to update, but from the 5 sales for the reason for this post - it just jumped to 20 now. This is through linkshare btw.