The Four Types of Traffic
Not all traffic is equal. Big boosts in traffic don't always lead to big boosts in sales. The numbers obsessed among us (of which I admit I'm one) know this instinctively, but it's not always easy convincing others of this truth. Let's take a look at the lifecycle of a sample product & the four types of traffic and how they convert.
At the start of this chart, traffic is high, but conversion is pretty low. Traffic rises & falls in September and sales follow. The conversion rate on 9/7 is the same as on 9/21. Fast forward to mid October and we see traffic has plummeted by 71% from September, but sales are only down by 31%.
This is normal. I had excel figure out the correlation of traffic to sales for this chart and it spat out 0.2. That's a 5:1 relationship between increased traffic and increased sales. If traffic increases 5 fold, we experienced a 1x increase in sales. This 5:1 relationship is a pretty good benchmark. Obviously there are times when the numbers will be far, far from this, but if you're doing the "shot in the dark" projections so many of us are called on to do, this is a good an estimate as any.
Now let's look at November and December. In the 45 day period from November 17 through the end of the year, traffic is just over double (2.2x) what it was in the previous 45 day period, but sales have quintupled to 5x and stayed there throughout the holiday season.
We're selling gift items, so during the holiday season we were seeing more motivated buyers. We've tweaked the site to increase conversions, but this isn't the only thing I attribute the change to.
When we first launched our product in August - just a few weeks before the beginning of this chart, we hit a lot of the "best of the web" type blogs that talk about what's new & hot, and this sent us quite a bit of traffic. But it was unfocused traffic. During October, we were getting traffic from sites that were small, but highly targeted to our audience. Then during the holidays, we were on some highly targeted and high traffic sites.
I break websites & the traffic they send into 4 categories. High Traffic vs. Low Traffic and High Converting vs. Low Converting.
In September we got a lot of traffic from High Traffic / Low Converting sites. These are generalist sites like Digg, Reddit, Coolhunting, etc.
In October, when traffic was low, we got most of our traffic from Low Traffic / High Converting sites. These were individual blogs that don't have very large audiences, but the audiences really liked our products.
Finally, in November & December when traffic AND conversions spiked, we got a lot of traffic from High Traffic / High Converting sites. These are high profile blogs & sites, usually with a celebrity name attached (and which often have offline components, such as magazines & TV shows) that hit our target demographic.
When we launched this product we brainstormed who our target audience would be & conducted some focus groups. While the exact percentages weren't clear, we did know who our target audiences would be (gift givers, designers, crafter), and we started targeting the LT + HC blogs that related to each of these groups. We also targeted (but put less effort into) the HT + LC blogs that would send us lots of traffic, and many of them picked us up on their own. These sites are pretty content hungry and many of them mimic content from each other, so being on one big site can lead to a fairly sustained period of high traffic (a few weeks).
The coveted HT + HC sites for our demographic were long lead publications (magazines & TV shows that have 2-3 month production schedules) so we knew we'd hit them just in time for the holidays, and when we did, we did so in a big way. They sent less traffic than the big generalist blogs, but the demographic was much more targeted to our product and conversions went through the roof.
By February we were back to our LT + HC sites and beginning to think about the product lineup for the next season.
Ultimately, you'll have to figure out for yourself whether or not the HT + LC and LT + HC sites are worth the time, money, and effort you put into them. For the right set of products, they could be the type of audience builder you need to build a profitable enterprise.
April 23, 2010
© Mark Wieczorek