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Vertical industries are spending more than $209 billion per year on digital ads. And, on average, companies convert only 2% to 4% of these leads into sales. This low-conversion problem is caused by the explosion of touchpoints in the digital world, the number of unintegrated software tools used, and the operating silos that make it extremely difficult to ensure the completion of the buyer’s journey.
Analysts estimate that 70% to 80% of buyers who are engaged abandon the journey. Companies spend all this money engaging prospects only to have them abandon the buyer’s journey because business responses are too slow, journeys are too disconnected, or salespeople are too busy managing their tools to focus on the business outcome.
New Essentials to Maximize Conversions
To improve conversion rates and empower employees to sell more, all industries need to master three areas.
Reduce Points of Friction
In banking, customers are selected as credit-worthy and then they officially request their loan at the quoted rate. But it takes time for banks to collect and validate the necessary information, write the loans and get on with a successful buyers journey. These points of friction cause slowdowns and create opportunities for customers to go elsewhere. Since 2010, buyer journey abandonment like this has gotten worse across all industries—from 65% to 75%. According to the Baymard Institute, these are the most common reasons:
Together, these points of friction negatively impact sales, and they must be reduced to improve conversion rates.
Frictionless Business is Possible
Recently, I was searching for a particular brand of skis. I found the cheapest vendor online, but then I needed to get the bindings mounted to the skis. I phoned a local ski shop and the proprietor also offered to match the price of the skis I found online—even though it probably killed his profit margin. When I went into the store, I bought many related items from him. He definitely earned his profit margin and he gained a happy customer.
It worked because I was proactive. But if this retailer had made the same offer online at the right time, he could have done it at scale with many others who weren’t as proactive. If he had seen that customers were about to leave his site, he could have engaged with them in real time via chat, or even offer a widget for them to do price matching for a subset of the shopping cart.
The question is how to fix the problem of buyer journey abandonment.
Get the Right Mix of Spend
In most businesses, the CMO and the head of sales or a general manager have a budget for digital ads and marketing technology (martech) to drive a certain amount of leads and convert a portion of those leads to closed deals. In financial services, the average marketing budget is 3.7% of total expenses.
One large regional bank in Ireland dedicated 25% of the marketing budget, or $79.2 million, to paid media. They drive 73,000 leads and convert only 2% to customers or 1,455 deals. Given that their budget is fixed, they’ll never do more deals than this unless they increase their conversion rate. If they increase their conversion rate by resolving the points of friction during the buyer’s journey to an industry benchmark average of 10%, they’ll have 7,300 deals. If the deal is worth $700 annually, it will drive an additional $4 million annually to the top line. When those customers remain for 30 years, it’s worth another $120 million to the bank.
To drive more revenue, you must increase the conversion rate—not just spend on digital media.
However, unlike sales teams, many marketers are compensated on the pipeline, not conversions. When sales and marketing departments share common metrics, together they can focus on finding the proper balance between digital ad spend and marketing technology to drive down abandonment rates and maximize revenue. Like my local ski shop, in the short-term, they might risk losing their profit margin. But they’ll gain the opportunity to cross-sell complementary products—and build long-term customer relationships.
Check out the eBook Drive More Sales through Your Website.
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