Primer on split testing and cost per orderBy Andrew Neitlich
Mrsmiley in last blog asks what split testing is, as well as important question about measuring results. You need to know this stuff as a web developer/designer if your market involves helping people convert visitors to customers.
A split test is a way to statistically test two different offers and see which is better. Here’s how it works:
1. Create two different URLs for the same product (e.g. www.URL.com/1 and www.URL.com/2).
2. Have one difference between version 1 and 2 (in practice, you might test a few small things at once). Test big things, like price or payment terms or design.
3. In your advertising, send people to both sites.
4. See which ones gets better conversion.
Note that direct marketers and folks with huge volume routinely create much more complicated matrices, in which they test lots of different offers on lots of different URLs.
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Now, onto conversion and cost per order. Mrsmiley asks why I care if one site costs $10 to get a customer and another costs $100. Aren’t both sites different? Well, yes and no.
In my case, my sites cost about the same — $45 per quarter. And let’s say that most subscribers stick around for 3 quarters, generating $45 X 3, or $135 in revenue for me. So I can pay $45 X 3, or $135 for a customer to break even (assuming there are no variable costs once the software is developed).. If it costs me $10 per customer for one site (e.g. www.attractnewclients.com), and $100 per customer for a second category (e.g. www.commonsenseparentingonline.com), I am going to market both since both are profitable over the life of a customer. But I am going to invest heavily in the $10 per customer site, since that customer is profitable right up front, on first payment of $45.
BTW, the above numbers are not real, just illustrative.
Too many web designers are focused on SEO and getting people to a site. That’s easy compared to converting visitors to a sale. It is MUCH more important to know how to convert customers.
I hope this helps!