The Traffic Numbers

First off, I just want to say that I was absolutely shocked to find out that within just a few months, Pinterest has already cracked the top 10 traffic sources for our online store. Below is a Google Analytics report that shows some metrics for Pinterest. Note: This is just one months worth of data.



As you can see in the table above, Pinterest is sitting nicely as my 7th highest traffic source. The results are somewhat misleading however since our store just recently got linked to by baby.about.com which sent us an unusual surge of traffic. In reality, PInterest should be sitting at #6.

What has really surprised me has been the bounce rate and the average time on site. You would think that people clicking on pretty pictures online would have a very short attention span. But the numbers seem to indicate that a good number of Pinterest visitors actually stop to look around. I was actually expecting to see bounce rates in the 80′s or 90′s and a much shorter visit duration.

Overall, the boost in Pinterest visitors has caused our traffic numbers to be the highest they have ever been which can’t be a bad thing.

Do Pinterest Visitors Buy Anything?

So getting extra traffic and awareness for your company is all fine and good but do these people actually buy anything? Surprisingly, the answer is yes. Most of the pins we have on Pinterest are for our content pages and not our actual products so I was shocked to learn that a decent number of people actually are in the buying mood after clicking on a Pinterest pin.

Here are some of our conversion numbers for last month organized by revenue.



As you can see above, Pinterest visitors are actually converting at a little over 1%. This isn’t bad at all, especially since Pinterest is a completely free traffic source that tends to grow virally on its own.

The per visit value is kind of on the low end at 51 cents per visitor but if you think about it, making 51 cents per visitor isn’t too shabby when you aren’t expecting anything at all.

Remember, this table is sorted by revenue which means that PInterest has already cracked the top ten in terms of earnings. Pinterest traffic has even managed to overtake Facebook in just a short period of time!

Some Observations

After playing around with Pinterest for the past several months, my wife and I have discovered that the better looking or more informative your pictures are, the more likely that people will repin your stuff. Duh! So here are a few things that we’ve done to help encourage repins.

First off, we’ve added “Pin It” buttons to all of our wedding handkerchiefs, our linen guest towels, our table linens and all of our content pages. This is important because not everyone will have the toolbar installed. You want to make it as easy as possible for people to share your pictures.

Second, we started pinning more intricate versions of our existing photos. Here’s an example of exactly what we mean by “intricate”. On our online store, we provide free arts and crafts tutorials that utilize our products as the raw materials. In other words, we use the content on our online store to educate the customer about cool projects that can be made with our products.

But instead of pinning a single picture of the final result of a craft project, my wife had a great idea to try and pin the entire tutorial within a single picture that could be posted online. Here’s is an example of our Pillowcase Dress craft that has received a large amount of repins and Facebook likes as a result of this photo.



Posting our craft photo this way serves a couple purposes. For one thing, arranging a group of photos this way in a tutorial really makes the photo stand out on a Pinterest board. Because it’s made up of multiple pictures, the resulting shot is really long and narrow which takes up more board space.

The second benefit is that the photo actually conveys information to the viewer which entices him/her to actually click on the photo itself.

Conclusion

In any case, this article is not meant to be a Pinterest tutorial. After all you can find a million of those types of articles online. The key point here is that Pinterest is actually an excellent form of social media traffic that actually converts at a decent percentage. So if you have an online store, you should at a minimum place a Pinterest “pin it” button on every page of your site. It’s really simple to do!

Follow Our Store On Pinterest!

I will never use Paypal again. After being a loyal customer for over 3 years, one day they decided to place a 6 month hold on my money for no reason. I couldn’t access over 20k in my account which I needed to pay my bills!

The above quote was just one of many emails I received in the past few months since my article went live. In the interest of full disclosure, I use Paypal Website Payments Pro to accept payments for my online store and I’ve never had any problems with them in 4+ years. But the fact that so many readers have such strong anti-Paypal sentiments made me a little paranoid about my business. After all if you can’t process credit cards, you can’t make any money.

Paypal Horror Stories From People I Know

Most of the horror stories I’ve read about Paypal through surfing the web have to do with Paypal randomly limiting accounts or freezing funds. Most of the complaints I’ve come across seem to indicate that Paypal will rarely hold your funds for longer than 6 months, but 6 months can be a long time if you need access to your money. And once they freeze your funds, it doesn’t make sense to continue accepting money through Paypal if you can’t access it. In other words, once your account is frozen, you are pretty much screwed.

All of the stories that I’ve read online are from people that I don’t know personally or from people that I’ve never heard of before so I’ve been taking them with a grain salt. However, I do have a few fellow blogging friends that have had their accounts frozen for no reason so I asked them for their side of the story.

In both cases with my blogging buddies, they had their accounts frozen after a big product launch. For one of them, Paypal limited their account by only allowing them to process $10,000 per day. The other blogger had over 40K in funds frozen for 180 days. It seems as though Paypal doesn’t like seeing huge spikes in money being received into your account.

In the case of my online store, the revenue we receive is pretty steady and consistent from month to month but occasionally we get spikes of revenue when we hold a sale. So, I decided to call my dedicated account manager at Paypal to get the story straight and here’s what I found out.

Why Paypal May Limit Or Freeze Your Account

After talking to my Paypal rep for over 30 minutes, they reassured me that it’s extremely rare that they ever place holds on user accounts. They also told me that there were no limits on my account whatsoever and that I could process as much money as I wanted to in any given day. When I brought up the stories about my blogging friends and how they had their accounts frozen, the representative assured me that the reasons for limiting an account vary greatly from user to user and largely depends on the situation.

Under the following circumstances, Paypal has certain triggers in place as a safeguard against fraud. Here are some reasons why some of these safeguards might be triggered

• You’ve received an abnormally large amount of money in your account that is way above your average
• Someone has filed a complaint to Paypal about your business
• A series of chargebacks have been placed against your account
• Your website has questionable content
• You are in violation of Paypal’s use policy. For example if you sell drugs or anything illegal, you may get banned
• Your account information is not up to date or your account is not fully verified
• Someone has logged into your Paypal account from a strange location.
• Your credit score is low or something with your background history makes you a higher risk customer
• They have detected fraudulent activity on your account.

Preventing Paypal From Ever Limiting Your Account

Towards the end of my conversation with Paypal, they assured me one last time that only a very small fraction of a percent of people get their accounts frozen and that accounts are rarely frozen for the full 180 days. They also recommended the following guidelines to greatly reduce the chances of this happening.

• If you are expecting to receive a large sum of money, then you should call Paypal ahead of time so they expect to see the extra funds. In other words, if you are planning a large product launch, make sure you let them know ahead of time
• When you first signup for Paypal Website Payments Pro, there’s a survey that you have to take. Make sure that you check off higher numbers in terms of how much money you anticipate making every month
• Contact Paypal to make sure that your account is not limited in any way in terms of how much money you can accept per day. Sometimes limits are placed depending on various factors relating to your credit history or background checks
• Make sure your name or the name of your business is on your Paypal account and that it exactly matches your bank account and credit cards.
• Use the exact same addresses and phone numbers that match your bank account and credit cards
• Always use trackable methods of shipping if you ship physical goods in case a dispute is filed against you
• Make sure that your FEIN or social security number exactly matches the name of your business on the account
• Link both a credit card and a bank account to Paypal

Does This Sound Like Too Much Trouble?

Here’s the bottom line how I see it. If you are in the business of selling informational or digital goods and your revenues are extremely lumpy, then I would go with a regular merchant account and gateway like Merchant Plus. If you have low credit scores or any history of fraud or criminal activity, then go with a regular merchant account and gateway like Merchant Plus. If you never want to deal with the possibility of getting your account frozen or limited, then go with a regular merchant account and gateway.

The main reason my wife and I use Paypal is because they offer an extremely convenient way to ship packages and accept Paypal payments with one easy to use interface. Paypal’s fees are higher than a traditional merchant account but the perks are worth it for our store. But if you do decide to go with Paypal, it’s probably a good idea to give them a call to make sure that there aren’t any artificial limits on your account.

Photo By nffcnnr

Me: Let’s go pick up everyone’s gifts at “The Big Convenient SuperStore” (Not the real name).

Wife: I will never shop at that store again.

Me: Huh? Why not? It’s so convenient and cheap. We can get all of our shopping done at one place.

Wife: I ordered there a few years ago and had a bad experience. Can’t remember the full story but I didn’t get my order on time.

Me: Is that all? Was it their fault?

Wife: No, they shipped it out the same day, but it got lost in the mail.

Me: So what’s the big deal? That’s not the store’s fault. It’s the shipping carrier’s fault. Did you get a refund?

Wife: Yes, but I don’t care. Still never shopping there again.

Me:**Rolling my eyes** Okay whatever.

Wife: What do you mean whatever!?! If you must know, the customer rep I spoke to was rude and condescending.

Me: Ahhh ok…I get it. But it’s a large company and you probably just got someone in a bad mood.

Wife: Doesn’t matter. They should train their employees better. Oh and don’t say “Whatever” to me ever again!

Me: Yes ma’am.

I learned quite a few things from this brief conversation with my wife. Lesson 1, never say “whatever” to your wife. Lesson 2, shopping is often more about the experience than the product or the price. My wife was so furious with this company that she vowed never to shop there again.

But if you look at the situation from an outside perspective, the store didn’t really do anything wrong. One, we received the package late but it wasn’t the store’s fault and two, we got a full refund. No harm was done and no money was lost. Yet this store managed to lose a customer for life just because of a bad phone conversation. Perhaps the customer rep used the word “whatever”. Who knows?

The Anatomy Of A Bad Review

Later that day, I happened to be reading through some Yelp reviews of restaurants in my area when I noticed some interesting patterns of behavior. While most of the reviews were thoughtful, written in a neutral tone and provided an unbiased review of the food, every now and then I’d come across an absolutely scathing review that had nothing to do with the food whatsoever. Here’s an example.

The food came quickly. But the servers (they switched between 2) were rather curt. I mean this one guy slammed the plates on our table and didn’t care ask who ordered what. And what shocked us the most was when my brother hadn’t even finished his appetizer, the waiter took away the plate right from under his nose… and never apologized even when we called him out. This was by far the most awful experience we’ve ever had. We’re never going back again and wouldn’t recommend you do either. This place deserves a zero but 1′s the lowest you could give out here

Almost every 1 or 2 star Yelp review had similar characteristics. The customer was not upset at the food so much as the service which resulted in the restaurant getting slammed.

The Real Reason Customer Service Matters So Much

I’ve been doing customer service for quite some time now and the situations are almost always the same. When someone calls with a complaint about your business, the actual situation is often quite trivial. Blah Blah Blah…my order didn’t arrive on time. Blah Blah Blah…you accidentally sent me the wrong thing. Blah Blah Blah, the quality of your product is not good enough.

The strange thing is that as a customer, you rarely remember the financial hit that you took when placing the order. It’s all about the disrespect or the indignity that you faced when speaking with the customer service rep.

When a company representative angers you or treats you with a lack of respect, that tends to override everything else. For example, whoever spoke to my wife must have really said something bad for her to boycott an entire store because no harm was actually done. A simple “whatever” and a rolling of my eyes inadvertently disrespected her as well, a mistake that will probably come up again in a future altercation. **Sigh**

Key Takeaways

So what have we learned? When a customer takes the time to send you an email or call you on the phone, make sure that the customer never leaves angry. Do what you must do and make things right, especially if it is your fault.

If there’s one piece of wisdom that I’ve gained from dealing with customers, it’s that their emotions are worth way more than any dollar value. If you can deal with a negative situation in a positive fashion, you can almost always turn the customer around.

After all, whenever you are representing your small business, you have to take off your operations hat and don your marketing cap. Conversations with the customer absolutely matter and even though you might lose a few dollars in the process, it’s worth every penny in terms of mind share because the effects are exponential.

“The Big Convenient SuperStore” lost more than just my wife as a customer that day. I’m no longer allowed to shop there and most likely my kids and her friends will not either. Word travels fast.

Getting Punished For Being Honest

Here’s just a sampling of what I had to go through in order to install one piece of software that we use everyday for our business. Without this software, we can not sell personalized items in our store. So get this. Even though I completely reinstalled the program using my original and authentic installation disk, the software would not run because I needed to reactivate it!

With programs like Microsoft Windows, reactivation can be done completely online. However, this company required me to contact them directly to get a new activation code. Not only was this a major hassle but I also had to wait until Monday morning before I could contact support which meant that the weekend’s orders could not be processed.

So finally Monday rolls around, I get a hold of support and they inform me that my software was registered using a different address, email address and phone number than before and that they couldn’t reactivate my software unless I used the original information. But the kicker was that they also couldn’t tell me what info I had used in the past.

After arguing with the sales rep for about 20 minutes, she finally relented and gave me a new activation code. But the damage was already done. This ordeal wasted several days of my valuable time and caused numerous delays with our order fulfillment. The worst part? I paid good money for this software, so why was I getting punished and hassled just because someone else decided to copy it illegally?

More Ridiculous Copy Protection Shenanigans

Getting a new computer also meant that I was forced to upgrade my operating system to Windows 7 from Windows XP. And it just so happens that one of my software CDs only has the XP version which won’t run on Windows 7. So I contact support and they provide me with a download link to the Windows 7 version of the program. Cool! Everything is all good until I try and run the software.

The program requires the CD to be in the actual CD drive in order to run!!! Since I didn’t have the Windows 7 version of the CD, I had to contact support and have them send me another one. Another week lost and once again I was getting punished for paying for my software!

More Chaos And A Lesson Learned

In the midst of all the chaos, we also had to deal with one very annoying customer issue. The other day we received a surprise return in our mailbox. But it was not just any ordinary return. This particular lady had the gall to ask for a refund for goods that she had already used. Actually, the word “used” is a mild way of putting it. To be specific, she purchased a set of napkins and returned them to us completely filthy and then demanded a refund.

When we told her that we didn’t accept returns that are not in resell-able condition (not to mention nasty used napkins), she claimed that the napkins were this dirty when she received them. Yeah right…

Your return policy says 100% Satisfaction Guaranteed. I’m not satisfied.

Since it wasn’t worth having her throw a fit and getting all upset over 35 bucks, we begrudgingly gave her a refund.

The funny thing though is that this one isolated incident made my wife and I completely reevaluate our return policy. Currently, we offer a 30 day money back guarantee but this lady pissed us off so much that we seriously considered making all sales final. No returns period.

But once we calmed down, we thought about our ordeal with the sewing software companies and realized that we were probably feeling exactly how they felt whenever someone copied their software. And here we were considering some drastic anti-return measures to prevent future customers from cheating us out of money.

After a while, we realized that canceling our return policy just because of this one crazy lady was ridiculous. But man was it tempting. As a business owner and a human being, it’s really easy to overreact especially when you feel completely ripped off and taken advantage of. But it’s important not to lose sight of the big picture and focus on your main customer base, the customers that you care about.

Is your business making important decisions based on a few vocal customers? Are you making your business worse for the majority of customers because of a few bad seeds that are abusing the system?

Now I don’t want to discount the importance of protecting your business profits, but I just hate it when a small group of people spoil things for the rest of us. Let’s try to not to let that happen with our small businesses shall we?

We Track Repeat Customers

Out of the box, Google Analytics bunches every customer that visits your site into several generic buckets. Sure, many of these buckets are useful, but sometimes you want to further segment your customers down depending on what type of customer they are.

For example, whenever someone makes a purchase on our store, we tag them as a “paying customer” using a custom variable in Google Analytics. By tagging them in this way, we can filter out and specifically look at analytics data just from our repeat customers. Here are a few ways we apply this data.

• We analyze which products our repeat customers are looking at and specifically target them with coupons or special promotions.
• We analyze where our repeat customers are coming from and focus our advertising spend and optimization efforts on that traffic source.
• We discover which products are more likely to be purchased repeatedly and adjust our inventory accordingly. For example, if customer X always buys napkins in the middle of November, we can account for that sale when buying our napkins ahead of time.
• We use repeat customer data to measure customer loyalty and experiment with ways to improve repeat business

As most business books will tell you, the easiest way to make more sales is to sell to your existing customers. Since we are in the wedding industry, a large subset of our clientele are not repeat visitors. However, the customers that do buy from us regularly tend to spend a lot of money because they are event planners, hotel managers or restaurant owners.

We Track Customers Who Have Created An Account

Most people who shop at our store do not register for an account during checkout. What this means is that when they make a purchase, they do not want their information kept in our system for future purchases and promotions. Those that do choose to register however, exhibit drastically different behavior than our unregistered customers.

For example, registered users are much more loyal and tend to become repeat visitors. Registered users are much more likely to browse our new products. Registered users are more likely read our newsletters and spread the word about our online store. That is why it’s important to track registered users in a separate category.

By default however, Google Analytics does not distinguish between registered users and guests and everything is lumped into one big category. But by implementing a custom variable in Google, you can filter out and track your registered users separately. Then, you can use this data to make changes to your store and offer promotions specifically tailored towards your best customers.

We Track Users Who Use Our On Site Search Engine

One of the biggest problems with many shop owners is that they neglect the search engine on their own site. In a previous article, I talked about ways to improve your online store search engine, but often times you can’t tell whether your search engine optimizations are making a difference unless you track your progress.

That is why it is important to be able to filter out and analyze those customers that actually perform searches using your online store search engine. By segmenting out search customers specifically, you can determine…

• Whether customers are leaving your store because your search engine is not returning good results
• Whether customers are finding what they are looking for and actually making a purchase
• How customers browse through your store after performing a search. Are you directing them to the right product and/or the right content?

In a nutshell, you can easily measure how good your onsite search engine is by simply looking at how well customers are converting after performing a search on your site. By filtering out searches for products that you actually carry, you can determine how well you are funneling customers in the right direction and what percentage of customers are actually finding what they are looking for.

We Track Visits And Conversions Based On Product Category

By default, Google Analytics allows you to track individual page views. Therefore, you can easily see how many people are looking at specific products in your online store. However, if you want to take a step back and take a birds eye view at which product categories are performing the best, you need to provide Google Analytics with more information.

Analyzing your data at the category level is important because you can make decisions at a higher level to determine where you should focus your efforts on. For example, if category A is performing especially well, you may want to invest more into category A. Conversely, if category B is hurting in sales, you may want to consider removing that category altogether or try to figure out why those products are not selling.

Some of you are probably thinking that all of this information is available offline in Quickbooks or in your shopping cart backend. However, I’ve found that analyzing all of my data online through Google is more productive because I can obtain all of the necessary data in one place. In addition, Google allows you cross reference other valuable pieces of data such as the traffic sources, marketing campaigns and demographic data about your customers.

Conclusion

Don’t get me wrong. The default tracking of Google Analytics is extremely powerful. But if you want to get down and dirty with specific aspects of your shop, you will need more power than what is provided out of the box with Google Analytics.

By default, Google Analytics spits out too much broad based information for you to interpret correctly. In order to effectively use analytics, you must learn how to filter out only the information you need and focus on what will make you the most money.

For more information, you should read up on custom variables, advanced segmentation and filters. Fortunately, Google offers some great tutorial videos on how to implement everything that I’ve mentioned in this article. You just have to apply it to your specific needs. Enjoy!

Make Sure You Set Up Ecommerce Tracking

Google Analytics has many ecommerce specific features which are not setup by default with the standard javascript snippet. While many shopping cart packages support Google Analytics ecommerce tracking out of the box, you sometimes have to enable this feature in the admin panel of your shopping cart because it involves sending Google all of your conversion rate information. And by all your information, I really mean ALL which is why some people get a little apprehensive about giving all of this data to the big G.

For example, once you have the full blown ecommerce tracking set up, Google will know exactly which products you sell, how much you are making as well as how much you charge for shipping. However, while you are sending Google a lot of private information, they will never access your records without your permission and the tracking that comes along with it is invaluable. Trust me.

In any case, once you have ecommerce tracking set up is when the fun begins. Here are a few things that Google Analytics will help you track.

• The total amount of revenue broken down by products sold and correlated with every traffic source that you receive
• Your conversion rate depending on the traffic source. Do certain mediums convert better than others?
• The demographic data of your customers. Is someone in New York more likely to spend more than someone from Wyoming? Is someone from Georgia more likely to buy a certain item from your shop?

As you can see, ecommerce tracking in Google Analytics essentially allows you to gather and cross reference many key pieces of data for your online store. Very valuable stuff.

Refining Our Google Adwords Ads And Our Product Mix

So what are some of the primary ways we use Google Analytics? Probably one of the most important uses of Google Analytics is to refine our Google Adwords ads. By tracking all of the search queries that customers type in when searching and clicking on our Adwords ads, we know exactly what the customer is looking for and we can adjust both our ad keywords and our landing pages accordingly.

For example, if a customer arrives at our website looking for something that we do not carry, we can add negative keywords to our Adwords campaigns. Negative keywords prevent Adwords ads from showing up when a customer types in a query that contains a specific keyword. As a result, we save money with our ad spend because we will never pay for ads for customers that don’t stand a chance of buying from us.

Another way we use Google Analytics is to decide on what new products to add to our online store. For example, if we look at our reports and find that a disproportionate number of people are searching for “European Handkerchiefs”, we may decide to carry them in our store. In fact, we added European imported lace handkerchiefs to our product mix earlier this year for precisely this reason.

Focusing Our SEO Efforts

Once you have ecommerce tracking setup, you can immediately start correlating your revenues based on which keywords customers are using to arrive on your online store through organic search. For example, when we found that our conversion rate for the term “ladies handkerchiefs” was on the order of 15-20%, we immediately started focusing our SEO efforts around this particular keyword.

Today, our online store fluctuates between the top 2 spots for this search term and it brings in a good amount of revenue every single month for free. Without keyword analytics, it’s hard to tell which search terms will bring you the most revenues. After all, you only have a finite amount of resources and the only way to succeed is to focus your time and effort on activities which will maximize your profits.

Tracking Marketing Campaigns

The problems that most brick and mortar stores face when launching an ad campaign in a newspaper or magazine for example is that it’s difficult to determine how much in sales and foot traffic were generated as a direct result of the advertisement.

With an online store however, it’s very easy to track all of your online marketing campaigns via click tracking in Google Analytics. For example, whenever we send out a broadcast email to our store email list, we insert a link to our online store within the email that is specifically tagged with our promotion. As a result, whenever someone clicks on that link to shop at our store, we know exactly which marketing campaign resulted in that new customer. Analytics will also tell us exactly how much money we made as a direct result of the email promotion.

Using similar principles, we also know which sources of traffic generate the most revenues for our store and can make the necessary adjustments. This past year, conversions from both Bing and Yahoo have started increasing significantly which indicates that we may want to focus more efforts on these 2 search engines. In addition, traffic from Facebook has eeked into the top 10 this past year as well.

Tracking Visitor Information

One other trend that we’ve been noticing lately via analytics is that more and more people are now shopping on their mobile devices. This month, over 5% of our revenues have resulted from orders placed from a mobile phone. At around the same point last year, this number hovered around 1% or less. Depending on the percentage of mobile traffic to our store, we may want to consider creating a separate design specifically optimized for mobile phones.

Another way we use Analytics is to track where our visitors are coming from. This comes in especially handy when deciding how to allocate our advertising dollars. For example, certain wedding websites charge based on how many regions you wish to display advertisements for your store. Because it’s way too expensive to advertise nationally, we use Google Analytics to tell us which states bring us the most revenues and purchase our ads based on this information. After all, there’s no point in paying for ads if there’s not a lucrative market.

Conclusion

These are just a few ways that we use Google Analytics to improve our store. Just because you run a small shop does not mean that you can’t track customer behavior. Google Analytics is very powerful and completely free so there’s no reason not to use it. What are some ways you use analytics for your business?

Organic Search Results Aren’t As High As They Used To Be

In case you didn’t notice, my much vaunted #1 ranking is at the bottom of the screen! The primo spots for search are mostly occupied by the paid search results, followed by Google Merchant center results and finally followed by the organic listings.

In fact on my laptop, the only organic search result that is above the fold is the #1 result! Now let’s take a quick look at what most people run their screen resolutions at when they visit my online store.



As you can see in the table above, most of the people who visit my online shop have vertical screen resolutions that are 1024 pixels or less. What this means is that at most 2 or 3 organic search listings are visible above the fold whenever someone does a search. Therefore, unless you are in the top 3 in the search results for your targeted keywords you aren’t going to be getting as much click through traffic as you’d expect.

Taking A Closer Look At Visitor Behavior

Now with the above results in mind, let’s take a closer look at the behavior of my customers who actually end up making a purchase.



Looking at the data above, it appears that most of my converting customers make their purchase during their first visit! What does this mean exactly? It means…

• Most of my customers are impulse buyers
• Most of my customers don’t really shop around all that much
• Most of my customers are ready to buy on the spot

Therefore, it is absolutely critical that I get these customers on my site BEFORE they visit anywhere else. Otherwise I might lose the sale.

Maximizing Profits

The reality is that the organic search results keep getting pushed lower and lower. So if you want the top spots in search with the highest click through rates, you’re going to have to pay for them. In the case of my store, Google is almost forcing me to pay for Adwords if I want to increase my sales and visibility.

In addition, there are now individual product listings from the Google Merchant Center that also occupy valuable real estate in the search results. And guess what? Getting your products listed here can be bought as well!

So what is the point here? The point is that depending on the behavior of your customer base, simply relying on organic search may not cut it anymore if you want to maximize profits.

Now don’t get me wrong. My store still makes the bulk of its sales through organic search and direct traffic. But if this trend of organic listings getting pushed lower in the search results continues, pay per click marketing services like Google Adwords will increasingly become a part of your ecommerce strategy whether you like it or not.

Using Groupon Will Cost Your Business An Arm And A Leg

You might have read some Groupon horror stories already, but the reality is that Groupon is extremely expensive. If you look at their faq, they give off the impression that running a Groupon campaign is free. They collect the money online from prospective customers, send you a check and mail out the coupons automatically.

What is not explicitly spelled out is that they take 50% of your revenue as a fee for using their service. So given that most Groupon campaigns offer the end customer around 50% off, let’s run some numbers here. Say your product retails for $100. By giving a 50% discount to customers, you will only make $50. After Groupon’s 50% cut, you only get $25 for something you normally would charge $100 for. Depending on what your markup is, it better be more than 400% otherwise you could potentially lose money on every transaction!

What’s attractive about Groupon is that they run the campaign for you and simply send you a check. It’s not until later when you have to fulfill orders with these ridiculous discounts do you realize how much money you are potentially losing out on. For our online wedding linens business, most of our customers are one off wedding customers and the other half are party planners and small business owners. It is questionable that taking a huge loss on thousands of orders would prove beneficial to us in the long term.

Groupons Don’t Make Your Business Memorable

From experience, I’ve used Groupon a few times as a consumer and you know what? Both times, what stood out in my mind after my purchase was not the business itself but how great of a deal I got on the product or service. In fact, I remember bragging to a colleague at work about what a killer deal I got at this local restaurant and tried to convince him to sign up for Groupon as well. Not once did I mention the quality of the food or any details about the restaurant. I was too excited about the bargain itself.

Using a Groupon takes the spotlight away from your business. After all, it was Groupon that provided your customer with the coupon and the unbeatable deal. It was Groupon that made your customers’ purchase exciting and fun. As a result, customers are more likely to brag about the groupon and not your business.

Groupon Deteriorates The Value Of Your Business

Whenever a store offers an incredible deal or discount, there is this perception that the markup was already ridiculously high. If company X can offer a 50% discount and still make a good profit, then they must be jacking up their prices. Once a customer receives a large discount, it trains them to wait for later coupons and deteriorates the value of your products and services.

There is this dining card I sign up for almost every year called “The Passport” card which entitles the card holder to a free entree at select restaurants when another entree is purchased. The card lasts exactly one year until it expires and you have to pay to reactivate it. One year, we decided to let the card expire and you know what? We refused to dine at “Passport” sponsored restaurants during this period because it didn’t seem worth it without the card. We were so used to getting a free entree that we didn’t want to pay full price again.

While this principle applies to coupons in general, the price erosion caused by a Groupon are infinitely worse because the discounts are so steep.

Groupon Hurts Loyal Customers

Don’t you hate it when you are a loyal customer of a product or service only to find out that the company started issuing huge discounts for new customers only? This happens all the time with cell phone carriers and it really pisses me off. Using Groupon has a similar effect on your regulars and your loyal customer base.

By taking a loss using Groupon to obtain new customers, you are essentially forcing your loyal customers to make up for your losses. And this is counter-intuitive to the way you should be doing business. Your regulars should be the one rewarded with discounts and perks.

There are 2 possible outcomes when a regular customer sees one of your Groupons and both are bad. In one case, your loyal customer could get pissed off and consider shopping with a competitor. But more likely, your regular customer could buy a S@$% load of Groupons and only pay a fraction of the price for what they normally would spend at your store. In effect, you would be losing out on future business with this customer because you would be taking a loss or breaking even on what could have been a 4X profit!

Conclusion

Outside of the issues I’ve already covered, the main problem with Groupon is that the longer term effects are extremely hard to measure. It might be possible to measure repeat business somewhat but it’s almost impossible to measure the word of mouth effect.

To sum it up, I think of Groupon as a shortcut with major consequences. The attraction is that you’ll get a lot of customers upfront, but once everything is said and done, you’ve lost a lot of money and the long term benefits are questionable.

My general philosophy in business is to focus on the long term. Instead of trying to get a one time flood of customers, why not put forth your efforts on making your business stand out? Be the store that everyone wants to shop at because you are awesome and not because of a coupon. Be the store that offers the best customer service. Be the store that gives customers the best shopping experience. Giving a one time discount isn’t going to win over any followers.

Photo By Fr1zz

Now if you order 20 nuggets, you are only allocated 3 packages of sauce. For a 10 piece, you get 2 and for a 6 piece, you only get 1. For me when I order a 20 piece nuggets, I need at least 5 packets of sauce. No doubt someone at McDonalds calculated the sauce usage for the average consumer and determined that 3 was the magical number. In any case, sauce packets now cost an additional 30 cents a pop at checkout.

I hate getting charged an extra 60 cents for something that used to be free (I’m cheap), so one day I decided to try a different tactic. Instead of telling the cashier up front that I wanted to order 2 extra packets of sauce with my 20 piece, I simply asked for 3. Then once the cashier had already swiped my credit card, I said “Actually I change my mind, could I get 2 more packets of sweet and sour sauce please?”. Sure enough, the cashier handed over 2 additional packets of sauce for free!

My Experience Shopping For Embroidery Machines

When my wife and I were shopping around for embroidery machines for our business, we were extremely price sensitive. After all, these machines cost anywhere from 5-15 thousand dollars and we wanted to only pay for as much machine as we needed. For such a large purchase, we shopped mostly at physical store locations and a variety of sales tactics were used against us.

Some retailers tried to present us with large package deals. Buy this machine along with an embroidery starter kit a one low price! Buy this package and receive free servicing for life along with all of the accessories you need! Other salespeople tried to sell us the base machine and then nickel and dime us for all of the extra accessories.

But the smarter salesmen read my wife and I like a book. Sensing that we were extremely cost averse, the sales person that we ultimately purchased the machine from didn’t try to sell us anything more than the base machine. He seemed conscious of the fact that we wanted to spend as little as possible and didn’t try to push anything on us at all. However, once we had settled on a price and were all ready to make the purchase, he casually walked us over to the accessories aisle and gave us a brief tutorial on additional items that we might need. And somehow, we ended up spending a good amount of extra money on these accessories and didn’t feel too bad about it either.

The Common Denominator

So what do these 2 stories about chicken nuggets and sewing machines illustrate? It’s that both customers and retailers are much more vulnerable once a commitment has already been made. And as I’ve already illustrated with the stories above, this can be used to your advantage.

As an online store owner, make sure you upsell an existing product or cross sell your customer with additional accessories and/or related items when they are ready to checkout from your store. For example if you sell cellphones you might want to present the customer with a variety of cases or a car kit just before checkout. If you sell shoes, hit them up for some socks or other accessories. If you want to see an extreme example of cross selling, go and try to buy something from GoDaddy.com. While I think that GoDaddy’s tactics are annoying and way over the top, it clearly works otherwise they wouldn’t be doing it.

As a consumer, you can extract every last value of your dollar by asking for additional concessions after a salesperson has already committed to helping you and you’ve both already agreed on a price. This tactic works especially well for larger purchases but ultimately depends on how desperate the shop owner is or how trivial your demands are.

The Secret To Increasing Average Order Size

The hardest part of sales is convincing your customer to choose your store. But once that decision has been made, adding a few extra items isn’t as big of a deal. In other words, they already like your company and your products so it then becomes a question of what to buy and not whether to buy. Therefore, it is crucial to get your customer to commit to making a purchase no matter how small the cost and then try and cross sell them with additional enticing items just before checkout.

As a shop owner, you should always use cross selling in conjunction with a draw in item that is priced very attractively. Customers who commit to buying your inexpensive draw in item will be vulnerable to cross sells because psychologically, they’ll feel inclined to spend what they had already planned on spending. “Wow I just saved 50 bucks! May as well blow this money on something else. After all, it’s practically free money!”

Many larger retail chains use this tactic all the time. Stores like Fry’s Electronics and Best Buy routinely offer ridiculously low priced items to get you in the door and as a result most consumers end up buying additional higher margin goods on their way out.

My wife and I increased our average order size by roughly 29% almost immediately once we started using draw in items and cross selling. We found that the easiest and painless way to do cross sells is to rely on prior sales data by pointing new customers to what others have already purchased along with what is in their shopping cart. It takes a bit of hand tweaking to make sure the recommendations make sense, but it’s well worth the time.

Another tactic that we’ve found useful for increasing average order size is by offering free shipping and discounts when certain purchase amounts are met. For example, customers can save up to 11 dollars on shipping for all orders over 100 dollars at our store. On many occasions, I’ve observed(in real time) customers looking for extra items to add to their shopping carts just to cross the 100 dollar threshold. These tactics work and are an effective way to increase revenues without having to increase foot traffic.

Photo By Dan Brady

Especially if you have small customer support team or even just a single person manning the phone lines, it is important to have some sort of virtual phone system in place. By handling your phone calls via the web or through a computer virtually, you can make it appear as though you have a large customer support team even though you might have only one or two people.

Not only that, but you can easily correlate and track your online marketing efforts with the customers that call. Voice over IP technology has improved a lot over the years and there’s a lot of cool things that you can do with it. Here are just a few.

You Can Easily Track Conversions From Outside Marketing Campaigns Like Adwords

One of the main problems with Adwords or any other PPC marketing campaign for that matter is that if you end up taking an order over the phone, the conversion tracking that Google provides does not log the sale. This is problematic because it could completely throw off the way you evaluate your keywords. Certain keywords might only bring in phone customers which may make them seem less effective than they really are.

With a virtual phone service, it’s really easy to allocate different numbers to different marketing campaigns. As a result, you can assign a special phone number just for people that arrive at your online store through Adwords and display a completely different number for everyone else. That way when they call, you can easily log and correlate a sale to a specific Adwords customer. This method of tracking works for any marketing campaign that you might want to run. Adding and subtracting phone numbers is as easy as clicking on a tab on the virtual phone system’s website.

By tracking your customer calls through a specific number, it also makes it easier for you to pinpoint a particular customer using the live tracking features of your shopping cart. For example if an Adwords customer calls, I can usually narrow them down, pull up their statistics on the spot and see which products they were looking at as well as which keywords they used to arrive at our site. It’s very powerful.

You Can Route Calls To Different Departments

So what if you only have one or two people running the phone lines! By setting up a greeting with menu prompts to route calls to different departments, you can easily track the types of calls you get with your business. Are the majority of your calls about returns or delivery times? Are the questions mostly about a particular product line? By analyzing this data, you can easily observe trends and figure out ways to tweak your website to reduce these types of calls. Most importantly, separating your calls into departments allows you to prioritize your calls so that you know which ones to follow up with ASAP.

For example, you might want to address all angry customers in the “complaints” department first before calling back those customers with regular product inquiries. In any case, you get the picture. The other side benefit is that your small customer service department will appear larger than it really is.

You Can Easily Record Calls

It’s weird listening to yourself talk, but recording and replaying previous customer calls is a great way to improve you customer service skills. Did you handle that last irate customer the right way? Is one of your employees not treating customers that way you would like? At one touch of a button, you can easily record any call that you receive.

Keeping recorded calls comes in especially handy if there’s any dispute in regards to store policy or if there’s a discrepancy between what was promised and what was actually delivered.

You Can Manage All Calls, All Voicemails, And All Call Transcripts From A Single Interface

When you first open your online store, this might not seem like that big of a deal. But a virtual phone system allows you to manage all live customer interaction by logging into a single website. As soon as a customer calls, you can immediately pull up their entire call history. Did this customer order via phone before? Was this customer difficult to deal with in the past?

You can even jot down notes about a particular customer based on their phone number so that you can provide a more personal experience the next time they call. Good virtual phone services have easy integration to popular CRM software packages as well. After a conversation is over, you can log the customer’s details in a database for future reference. This is extremely powerful especially if you want to provide a customized experience for your customers.

A good example of this is with my dentist. Even though I see my dentist once every six months for my cleaning, she always seems to remember specific details about my life. “How’s your son doing? He should be 6 months old by now”. “The last time you were here, you mentioned it was your anniversary. How did that go?” I used to be completely flabbergasted that my dentist remembered our conversations so clearly until I accidentally peeked at her notebook and saw that she pulled this data from a printout. Even still, that personal touch really worked on me until I discovered the truth.

You Can Forward A Single Number To Any Phone That You Want

This feature is awesome. With a virtual phone system, you can give out one number to your customers but have it ring any phone that you want. You can even have it ring different phone numbers in a round robin fashion if you want to evenly distribute customer calls to several employees.

If you have two people in your customer support team, you can route all morning calls to one employee and then route all afternoon calls to the other employee. If you happen to be on the road or away from your desk, you can simply set the forwarding number to your cell phone at one click of a button. If you don’t have the answer to a customer’s question, you can simply forward the call live to someone else who can help.

Having full control over your phone calls saves a lot of time and headaches. One of the most important features of a virtual phone system is the ability to queue up calls. Every phone call matters and it’s always better to have a customer hold for a few minutes rather than turning them over to voice mail. There’s no way a regular phone line can do this.

You Can Track Your Calling Trends

By analyzing the patterns of when and where your calls are coming from, you can observe certain trends about your customers. Do you get more calls in the morning or at night? Are most of your callers from a specific region?

Our business for example gets most of its calls in the morning and the phone lines almost go completely silent after 1pm PST. In addition, most of the calls we get are from the Midwest. Why is this information useful? It means that we can optimize our efforts by skewing our support hours more heavily towards the morning. If my wife has to schedule an appointment, she’ll schedule it in the afternoon.

It’s Not That Expensive

After reading about all of the cool things that you can do with a virtual phone system, you might assume that the service is too expensive. Wrong! If all you want to do is forward calls from a single number to any number that you want, Google Voice will do that for you for free. But even if you want the fully featured phone system, a service like Ring Central only costs $10 dollars month. No what the size of your business is, it makes sense to have a virtual phone system. After all, your reputation is at stake.