Offline Conversion Tracking: The Missing Metric
“I know that half of my advertising dollars are wasted…I just don’t know which half.” It’s not a joke: it’s an astute observation from pioneer marketer John Wanamaker. John was a Philadelphia businessman who conceptualized the department store in the early 1900s. Today, 100 years later, we share the same problem Wanamaker faced of identifying which advertising works and which doesn’t.
The challenge is compounded by the need for better accountability of our advertising dollars. The days of unlimited online marketing budgets with no responsibility are over. CMOs, CFOs, CEOs, and other C-level managers are demanding to know whether their advertising dollars are bringing an acceptable return.
The struggle we have as online marketers is to find ways to measure the effectiveness of advertising, including those elusive offline conversions. Offline conversions are simply sales that start online but are completed offline—either by way of a phone call or a visit to a physical store. The challenge is tracking that customer behavior after customers leave their computers.
With more competitors entering the online arena and pay-per-click (PPC) bid prices soaring, the ability to optimize and streamline PPC and other campaigns is going to be increasingly important in the future.
Online analytics programs do a decent job of collecting online conversion data. However, when the subject of offline conversion tracking comes up in a business meeting, it’s usually accompanied by loud sighs, groans and looks of despair. Measuring offline conversions and proving on paper that the online marketing triggered the offline conversion is difficult, because you can’t often directly measure the process from start to conversion.
Online search drives offline sales
In March 2006, comScore conducted a study for Google that showed 63% of purchases by consumers who conducted online searches were made offline. This means consumers called or went to their local stores rather than purchasing an item from a web site.
With the holiday season fast approaching, small and local businesses should sit up and take notice. History repeats itself in marketing, just as in life, so there’s a good chance this upcoming holiday season will produce similar statistics as previous years.
The comScore study found some extraordinarily high offline conversions in several areas. For example, the video games and consoles category showed a whopping 93% of buyers converting offline! These were buyers who started an online search then left their PCs to purchase in store. The study is a compelling story showing the influence of online search driving offline sales.
Why are so many purchases made offline? For many companies, offline conversion is the preferred mode. B2B companies and companies with long, drawn-out or complicated sales processes prefer to speak directly with customers to provide clarification, create higher persuasion environments, etc. Their lead-generation strategies may purposefully direct online prospects to offline channels for conversion.
Local search behavior dictates purchase method
A Neilsen//NetRatings and WebVisible local search study revealed some interesting insights on local search behavior. The study found that consumers using a search engine to find a local service shopped very differently from a searcher on Amazon or eBay where the transaction occurred online.
According to the study, the local searcher would find a local business via search, but then use the phone 68% of the time to make contact with and/or purchase from the business.
The results of this study send two loud and clear messages: if you’re a local company that is not advertising online, you should. And secondly, if you are advertising online and your company completes much of its transactions offline, you need to track offline conversions to get a complete picture of your marketing performance. And just which methods are proven to offer accurate offline tracking?
Methods of tracking offline conversions
Here are a few methods used to track conversions offline. I’ve grouped these methods in increasing order of sophistication and cost.
1. Simple Methods for Offline Conversion Tracking
The easiest technique is to make an assumption based on a change in sales. If sales go up after an online advertising campaign, then you can assume it’s due to that campaign. This method isn’t so much of a method as a practice.
Another example of a simple method is using anecdotal data to gather statistics. Here you might ask your salesman or call center to inquire of customers how they learned about your products. You can also use in-store surveys to ask customers how they located your products.
The obvious problem with these simple techniques is that, although they are easy to implement, they are VERY imprecise.
2. Intermediate Methods of Offline Tracking
Most small businesses lack the infrastructure or resources to spend on higher-end methods. So one intermediate method for tracking offline sales is by gathering some data in a trial program and then extrapolating it to future sales or a larger campaign.
For example, we ran a trial PPC campaign for a client who had businesses in many locations across the country and wanted offline information but didn’t have the resources to continually track offline conversions. We built a short-term campaign targeting a mini-site with a custom 800 number as well as an online reservation form.
At the end of the pilot test, we calculated an online to offline conversion ratio that we were then able to apply to a much wider PPC campaign targeting multiple sites. This allowed us to have a real-world estimate of the online to offline conversion ratio even though the client could not continue to dedicate the resources to track the offline conversions directly over the long term.
Other options that give offline accountability include the tried-and-true coupon code or special offer codes. This method relies on the customer entering a special identifier that both gives them a discount and also allows you to track where the customer came from.
A more subtle approach is to configure your site to generate a special price based on the source of the traffic. While this does not require giving a discount (other than a few cents off to achieve the special price), it does cause possible confusion for both the customer and your sales staff due to the variability of the pricing.
3. Advanced Offline Conversion Tracking Techniques
Now let’s look at some higher end techniques.
Customer tagging is one method used especially by companies who have loyalty or frequent buyer programs. To implement customer tagging, the customer needs to be uniquely identified on the site, usually through a log in, a customer ID or an order ID. The customer starts the purchasing process online, then comes in or calls the store to complete the transaction. The ID can then be used to tie the offline sale to the online behavior.
Unique phone numbers for referrers. Another advanced method for tracking offline conversions is the use of persistent unique phone numbers based on referrers.
Pay-per-call. Commercial pay per call services can work with your paid advertising campaigns to track conversion performance across different search engines. These vary in sophistication, but basically they work by generating a phone number for the visitor based on the source of the traffic. In addition, they track the call performance using their proprietary systems, so you can get call length, conversion, and other information without the need to dedicate a phone number to that particular campaign.
4. Graduate level offline conversion tracking
One of the advantages of pay-per-click advertising from an online conversion perspective is the ability to track a conversion back to the specific keyword phrase that brought the visitor to the site. If you know a specific keyword brings in converting visitors, you may allocate more of your budget for that keyword.
Call tracking of keyword-driven traffic. Sophisticated call tracking tools provide the ability to track offline conversions with a similar high level of detail as online analytics. Obviously, asking a customer what search phrase they used to find your site online won’t likely be effective. An automated service is the best approach if you need that fine-grain concentration of detail when tracking conversions.
This is a level of service that would be difficult to achieve by a site owner on his own. Tracking offline conversions down to the keyword level requires the dedication of perhaps hundreds of toll-free numbers, and would then still require a lot of back-end integration with your phone system to capture all the conversion information.
Online Metrics Are Not Enough
James Lamberti, the VP of Marketing Solutions at comScore captures the problem that search marketers face today in the following quote. “Web-only metrics such as click-through rates and online conversions don’t provide a full picture of search campaigns. The ROI being realized here is significantly higher than the analytics packages can pick up.”
We may be doing a great job as marketers driving qualified leads and great traffic to a site, but our web-only metrics don’t show the real value. The ROI realized is significantly higher than the analytics packages can pick up.
I totally agree with Jim and I’ll show you an example of what he’s talking about from my own experience with one client.
The chart below is from a popular analytics package called Omniture SiteCatalyst that we use with many of our clients. Here we are looking at a conversion funnel for a client. You’ll notice that in this snapshot of time we acquired a large number of visitors (over 200,000 visitors), but only seven online conversions according to the web analytics.
Picture shows Omniture Conversion Funnel for client who prefers offline conversions.
If you saw this chart and didn’t know the background on this client, you might be alarmed. This fallout report could be highlighting a couple of things: Something may be seriously broken on the site causing people to bail, or maybe the persuasive flow of the site isn’t working well.
Or—as was the case here—the preferred method for conversion was the phone. This particular client does over 90% of its business by direct phone calls driven from their web site, but none of that is captured in their online analytics.
If we didn’t have a way to measure offline conversions we’d be in trouble with this client. Fortunately at KeyRelevance we use an in-house solution to track unique phone numbers and are able to trace the offline purchases back to their online sources. Because we were able to show the client that his online campaigns were driving the offline sales he was delighted instead of being upset.
Offline conversion tracking gives you the information you need to make better marketing decisions and to better allocate your advertising resources. If your company is using web-only analytics, and is not doing offline conversion tracking, you are missing an important piece of the marketing puzzle.
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