Why relentless focus on web conversions may not be good for organizations

In today’s connected world, online sales are ruling the commerce market - thanks to the increasing penetration of mobile and tablets. Based on a recent survey conducted by a research house, 98% of online visitors in an ecommerce portal are anonymous web browsers with their cart abandonment rate over 70%. And therefore it is quite natural for organizations to focus not just in strengthening their online presence but most importantly on ‘conversions’.

There are lot of conversations and approaches on how to increase conversions on e-commerce portals. While considering conversions as an end goal is good, there are many factors that organizations tend to lose sight of, while focusing on conversions.

Many organizations are resorting to huge marketing spend in order to boost traffic to their portals, enticing visitors with huge discounts, coupons and personalized offers to increase conversions. The focus of organizations is more on ‘sales’ than ‘margin’and more often than not, the overall pricing is ignored.

Discounts take a big chunk of every organization’s profitability. To tempt price sensitive customers’, organizations offer discounts and coupons to convert a prospect into a make a purchase. In this process, they end up giving huge discounts even to those customers, who anyway would have converted without the offer owing to their high purchase intent. Discounts and coupons to persuade audience’ certainly is a good approach in terms of driving volume sales, however, what about those customers whose purchase intent is already high?

A perfect analogy to this would be a person visiting a restaurant. Offering discounts to a hungry customer often backfires since his/ her purchase intent is anyway high. The result of such situations is a loss for the organization; precisely - a hit on their margins. Ironically for this conversion, organization will give credit to marketing team for their prowess to come up with coupon offers

Therefore the question arises on how to find customers’ purchase intent/ behavior at particular moments to serve them with appropriate offers with right price.

The underlying approach for cross-channel offer recommendation systems are the same – that is, providing the right offer to the right customer at the right time but with the customer context in mind. Strategically this sounds correct but to make it a functional reality is a time consuming task. Understanding customer emotions, intentions, perceptions, and leveraging them to personalize each interaction across different POS should form the backbone of your pricing and offers management system.

The appropriate discount should be offered to ensure that there is healthy balance between sales and margin without Impacting organizational profitability. The need of the hour is to build intelligent recommendations which not only capture customers’ context, but also their purchase intent at each stage in the purchase lifecycle, along with perceived value of product.

Being a customer facing organization, what are your thoughts on this? Please share your comments below.

About the Author

Manish Mahendiratta Manish Mahendiratta is a Digital Marketing consultant with Wipro Limited. He brings 10+ years of rich experience in digital marketing, pre-sales, marketing communication and consulting assignments. He is an MBA from K.J.Somaiya institute of Management Studies and Research with an engineering background.

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