Chris Myer is one of the pioneers of eCommerce. His company, Cyberspace Automotive Performance, was the first auto parts store on the Internet back in 1993. He later founded Racing-Seats-USA.Com, a Yahoo store where he sells racing seats, including Corbeau Seats, and Sparco Seats. CyberAuto has since expanded to 7 different eCommerce websites. In his copious spare time, Chris is also a Colonel in the Army National Guard and is serving his second deployment tour.
Revenue Generation the RS Way
(An Oversimplified Approach)
OverviewThe secret to success revolves around converting key word phrases (CKWP), those phrases that have historically brought buying customers to your site from search engines. For best results you must:
- Look at CKWP over all time
- Find CKWP from all sources
- Consider not only your own CKWP but also the CKWP for your top competitors
Once you have this source data, you will analyze it to determine which phrases are generating the highest revenue per visitor. This is a clear indicator of where your website is able to produce revenue-generating conversions if you can get the traffic. At this point, that is where you need to prioritize your efforts, which should include the following:
- Improving page rank
- Buying pay-per-click (PPC) ads
By “oversimplified”, we mean that this is simply to show you the general process. For maximum effectiveness, this must be done on a far broader scale and with access to much more tools and resources. The goal here is simply to bring the reader up to speed on the basics so he or she has a chance to keep up with Rob when he gets into the more advanced stuff.
Step 1: Identifying CKWPThere are a number of key resources for gathering CKWP. For a Yahoo store, first and foremost is Yahoo Web Analytics (YWA). If you haven’t enabled this do it immediately. Unfortunately, it can only gather CKWP when enabled, so if you haven’t done this already you’re not going to get any results for some time. There is no cost associated with YWA and it’s easy to enable. Simply log into your store and follow the instructions provided. The link below provides the instructions for getting started in YWA.
To get your CKWP from YWA, simply log into your Yahoo store, click on the “Analytics Reports” link underneath the Yahoo! Web Analytics section:
This will open a new window with a navigation bar on the top and side. On the side navigation bar (titled “Reports”), select Marketing, Conversions, SEO&SEM, then “by search phrase”.
At this point a report will be generated. At the top of the report is a nifty graph that has some value but is not what we’re after at this point. More important is the list of keyword phrases with the number of visits, actions (sales), and revenue associated with each. Note that this is not just a list of CKWPs, as a keyword phrases is not a converting keyword phrase until at least one sale (action, as Yahoo calls it) is generated. The list will look like the example shown below. Note that the real CKWPs have been replaced by CKWP1, CKWP2, and so on.
By default the top 10 actions are shown, sorted by actions (sales) in descending order. At the top-right of this table is a “Results per Page” selector. Change it from 10 to the maximum (500) and you will see more results.
Start by reviewing this information looking for groupings. These groupings will often lie around a single keyword, which typically will be a brand name or manufacturer name. If you sell dog food from two different manufacturers named Chubby’s and Sparky’s, you will likely find CKWP like this:
- chubbys dog food
- chubbys puppy chow
- chubby chow
- sparkys yumyum
- chubby high performance
- sparkys dog chow
Assuming the phrases above were sorted by number of sales, the two obvious keyword buckets would be “chubbys” and “sparkys”. Which should you pursue first? As you will see our attention is going to go to those keywords that produce the most revenue. What that means is that when someone comes to your site looking for those keywords, they are most likely to find what they are looking for and make a purchase before leaving. It would be easy to simply say that since chubby has 4 out of the top 6 action-producing keywords that it is the winner, but not so fast. Do a quick bit of math dividing revenue by the number of visitors to derive revenue per visitor (RPV). If you recently added the Sparky’s line, or if Sparky’s doesn’t yet have the name recognition as Chubby’s, you may find it is the best way to go. Don’t try to calculate the RPV for all of these. That is what we’re going to do next. You’re simply trying to identify which revenue bucket to start with.
So now we start drilling vertically down into the CKWP mountain. Do this by going to the “SEARCH REPORT RESULTS” field. You will find this above the keywork phrase table but below the graph on the main YWA window. Select the right drill bit, that is search phrase. No, not “chubbys”, the one right next to it: “chub”. Much better! This allows you to search not only for the correct spelling of the brand but also common misspellings, like “chubies”, “chubbies”, “chubys”, etc. Don’t make the mistake of overlooking these gems! They can point you to some incredibly inexpensive opportunities to win sales.
Now you have your first keyword bucket from the mountain. To achieve full efficiency we want to export this to an Excel spreadsheet so that we can derive value from this data. At the top of the window you will see an MS Excel icon. Click it to start the export process.
At this point an “Export Reports” window will appear. You have the option of either sending this to the screen or having it emailed to you. Under the Export Options section, change the number of lines from “Screen” to the highest number available (200,000.) Excel should already be selected under the Select Format section. Then, select the “Email Export” tab, enter your email address, and click “Export Report”. The window will then report that the report is being emailed and you can close the window.
There is an added benefit to mining just one vertical keyword shaft at a time. When you receive your email from YWA, it will either have the report attached (if it is not too large) or it will inform you that “Due to the large number of rows contained in this report, the export is scheduled as a Volume Export. When the export is completed, you will receive an email notification that you can download the report from the Volume Export Download Center (Settings - Volume Export Download Center).” You will have to wait for the email that says, “The exported report is available for download in the Volume Export Download Center (Settings - Volume Export Download Center)” and then go download it.
Either way, open the provided report in spreadsheet format. Way too much formatting for my taste. The first thing I do is chop out all of the empty lines added simply for looks, and change the column widths. I then sort the table (in descending order) by the number of actions. Delete all of the rows that have less than one action. This last step turns our chubbys key word phrase bucket into a chubbys C(onverting)KWP bucket. Add a new column all the way to the right called “RPV”. Enter a formula so that this column displays the amount of revenue generated by this CKWP by the number of visitors. What you achieve should look something like this:
If all of this makes your head spin, get your kid to show you how. This is not only really easy to learn it is also really valuable.
Now, focus on those CKWP that have 2 or more actions. A single action is called “luck” and doesn’t yet merit your precious time. If it is more than luck it will become readily apparent in the future. Of those with 2 or more actions, look at the revenue per visitor. Holy puppy chow, Batman, every time someone comes to your site looking for “chubbys chow” they give you $11.65. And that is a worst-case scenario because we used “Visits” and not “First Time” visits, which may actually be a bit more accurate.
Now, we all realize it isn’t this simple, but whether you think of it as described above or as 1.77% of all visitors spending $ 658.56 each, the results are the same. Every time 56.51 people visit your store, they are going to leave $658.56 with you.
In order to use this information to generate revenue, we have two routes to consider.
- Increase our organic page ranking for the CKWP
- Pay (through pay-per-click advertising) for visitors looking for these phrases to come to our site.
The truth is we need both. Being number one for a high RPV CKWP is obviously the best, but it is beyond our immediate control. However, even if you are number one, search engines will display paid advertising above and beside your company in the results. Further, if you are #1 and what the search engine displays to the potential visitor isn’t as appealing to them as what they display for #2, you may still not get that click which is going to result in $11.65 revenue. If you’re not #1 or, worse yet, if you’re not “above the fold” (so that the search results have to be scrolled through to find you) then the odds that person searching for “chubby chow” will come to your store quickly drop from possible to unlikely to improbable.
So, now, the first trick question. If you have to pay for visitors looking for “chubbys chow” to come to your, how much should you be willing to pay? First, calculate your net margin. No, your REAL net margin after not only cost of goods sold but electricity, telephone, merchant service fees, labor, shipping, and everything else. Let’s use 10%. That means you can spend up to $1.16 to get a new visitor looking for “chubbys chow” to your site and expect not to lose money. In fact, since you will almost certainly increase in profitability through increased volume as fixed expenses remain unchanged, you can probably spend a little more. But we’ll work with this number. Add a new column to your spreadsheet to show “max ad spend” based on your true net margin.
Now, go to your favorite PPC advertising account. Don’t have one? Well, you’ll need one but setting it up is beyond the scope of this discussion. What we need now isn’t so much the account as the tools that are provided. Google provides an especially valuable keyword tool that is free for anyone to use. If you log into your account you will find it under the “Keywords” tab, but if you’ve not got an adwords account simply go to Google and type in “adwords tool” or click on the link below and it will give you the public interface. Same information, you just have to enter the CAPTCHA code that prevents machines from using it.
Enter the CKWP from the list above (and the CAPTCHA code, if required) and click “Get Keyword Ideas”. When the results appear you can then un-select the “Get Synonyms” box, then select “Exact” under match type.
This gives you a set of results that is more manageable. You get some very valuable information here. First, is the Global Monthly Search Volume. This will show you how effective you are currently at getting folks searching for a given CKWP to your website. We’d like to put that on our spreadsheet too. If you only have a few CKWP with greater than 2 actions on your list then this is probably best done by hand. Otherwise, at the bottom of the results is the option to export all of the results to an Excel spreadsheet. It would then be necessary to merge the two. That is beyond the scope of this discussion (go find that smart kid again.)
ConclusionsHere’s an overview of what we’ve discussed in this section:
- How to find the converting keyword phrases (CKWP) for your yahoo store
- How to group CKWP into keyword buckets for action
- How to use a spreadsheet to mine Revenue Per Visitor (RPV) from CKWP
- How to use Google Adwords to identify traffic volume for a CKWP
This is barely the tip of the iceberg! But knowing this will make the rest of what you need to learn more manageable.