Local Search for Small Business - Part 2 - Clicks vs. Leads
In Why Most Local Search Resellers Fail Their SMB Clients, I reacted to a recent study that revealed 90% of SMB's quit their search marketing programs after 6 months. It turns out that the reason why people quit these programs is because they do absolutely nothing to help the company generate new business!
700 clicks per month for $1500 -- Where do I sign up????
Caveat Emptor: Clicks don't mean a thing! They aren't phone calls, don't generate sales, or pay the rent. Most importantly, if these clicks are "bad clicks" -- meaning coming from people not actually looking for your particular service -- your ROI won't justify the expense. Bad clicks waste your company's time, and cost you potential revenue by throwing off your signal to noise ratio. If you become accustomed to only seeing bad clicks/leads, then you may become jaded toward the good ones.
What do I mean by "bad clicks"? Here's a real world example:
If you are a replacement window contractor in Minneapolis, you want clicks from people looking to have someone install replacement windows in their home. Unfortunately, if you buy a guaranteed number of clicks from a reseller, these clicks have to be supplied from from somewhere. A lot of the times, they will sell you clicks from people who searched for your company name or web site address; they are literally being a middle-man and charging you for clicks form people who have already found you! These navigational visitors actually tend to perform quite well, so we often recommend that you pay a premium to pull in these visitors (the alternative being that these clicks would otherwise go to a competitor).
When the navigational searches dry up, you will likely get clicks in your general area of service, but without any quality control measures in place. For every visitor who is searching for replacement windows, you will often get 3 clicks from people wanting window repairs or wanting to buy windows wholesale. There is even a chance some of your clicks might actually be coming from people looking for computer software! Unless you are selling an OEM version of Windows Vista alongside your double-hung or slider windows, you DO NOT want these people visiting your site!
Unfortunately, most SMBs are simply unaware when it comes to online advertising; they don't know, what they don't know. For that reason, they are easily impressed by the resellers sales pitches and as a result they make lousy online purchase decisions. When those investments don't pan out, they drop the program as soon as possible.
Because the search management company I had worked with in my previous role as marketing director gave me a pretty good education, (Thanks Jeff), I was a consciously competent online buyer -- I knew what I didn't know. As a result, when I asked questions like:
- How many of those monthly clicks could I expect to become actual leads?
- What was their landing page's conversion rate?
- What was their keyword optimization strategy?
- Do you A/B test your ads and offers?
I would usually receive a deer in the headlights look from the sales representative. Most even said that I was a lot more savvy and sophisticated than their typical SMB client - which proves our point that these resellers are preying on unsuspecting business owners and looking for a short term boost in revenue, and not long term customer retention.
These resellers rarely make an attempt at understanding their client's business. Because they are paid on commission, they want to make a quick sale, lock you in to the longest term they can -- and move on to the next sucker. At the end of the day they don't care whether the program actually works for you. They sell clicks, end of story.
The landing pages they develop - if any - are nothing more than a yellow page ad placed online. They are hardly conversion optimized. Many of these outfits don't even develop landing pages -- they just send the clicks to the SMBs own website, which is often a mess of logos, badges, photos, numbers and other content that confuses the user. As Jeff likes to say,"Most home improvement contractor web sites look like a NASCAR... and I don't feel comfortable sending my precious search traffic to their confusing home page!"
I was at a home improvement industry summit in April, and the prevailing sentiment among the business owners assembled in the room was that the guys selling online advertising today ranked just below pond scum and slightly above the Swine Flu in terms of popularity! Why? The business owners feel they've been sold a bill of goods by these guys. The sales reps create the impression that those 700 clicks translate into 700 potential new customers. When the advertiser doesn't see this monumental bump in business -- it's cut bait time!
The fact is that an average website or landing page conversion rate to clicks is often around 2%. (Three Deep's is usually much higher than that, but that is for another post.) What this means is that if you spent $1500 to get 700 clicks, with a 2% conversion rate about 14 people would likely have contacted you. If you are a SMB with a small ticket sale, like a dry cleaner, a car wash, a plumber or a restaurant, it's hard to justify a $1500 investment to get just 14 customers -- assuming you could sell them all!
But say you were that window contractor and you got 14 conversions, either through phone calls or emails. If you could set 75% of those inquiries into appointments that would be 11 appointments for your $1500 investment -- $136.40 per appointment. That's actually a pretty good number, given the fact that the average cost of generating a home improvement appointment today is well over $350!
Assume further that you could close 30% of those appointments and that you have an average sale of $8,000. That would be 3 sales for $24,000. Your $24,000 in business would have had a 6.3% marketing cost. When you consider that a lot of contractors today have marketing costs from 15-25%, a 6.3% marketing cost puts profit in your pockets!
The key here is conversion rate, not the number of clicks. That metric, while central to the work that we do for our clients is never, even spoken about by most resellers. Why? Because increasing a site's conversion rate is where the heavy lifting is. Selling clicks is the easy part.
It reminds me of a quote from an old Dan Akroyd movie: "You don’t know what it’s like out there! I’ve worked in the private sector. They expect results!"
Three Deep's only focus is to drive results.
I hope that you have enjoyed my two part series. I have a lot more thoughts on this subject and hope to do more posts of this nature in the future. In the meantime, if you'd like to talk with Three Deep about what we can do to help YOUR business, please fill out our free lead generation assessment form.