Startup Marketing Part 2: Why Focusing on Traffic Can Kill Your Startup

Here’s an interesting exercise: find a startup or microISV founder and ask the following:

What are the top 3 approaches you use to find customers?

The most common responses will involve search engine optimization, AdWords, blogging, podcasting, and perhaps social media. And this is good – these methods can drive substantial traffic to your website.

Then ask about the next step in the process:

Once you have traffic coming to your site, how will you turn prospects into customers?

This is where you’ll be greeted by open-eyed stares, head tilts and puzzled smiles. Most startup founders think about driving traffic to their website. Almost no one thinks about improving conversion rates. Why is this?

Good Marketing Looks Easy
The most likely reason is that good marketing, as with good design, looks easy. So easy it’s virtually invisible.

When you are smitten by a marketing message enough to plunk down your hard-earned coin it’s almost certain that you have no idea how they convinced you to pull out your credit card. If you did, you wouldn’t have pulled it out in the first place.

No, good marketing doesn’t typically look like marketing. I’ve been reading Joel on Software for eight years and I’ve been a paying user of FogBugz for nearly four. But I’ve never felt marketed to because Joel’s marketing is the best kind: well executed. So well executed it’s darn near invisible to the naked eye.

What this means is that most of us think that good marketing is easy. Just like when you look at an incredible website design it seems so simple – totally stripped down. You often think “I could do that – it’s just some text in a particular font and a plus sign.” Only, it’s not.

The designer likely started with a more complex design and whittled his way down for hours to arrive at the simple look. A look that was actually very difficult to create.

To create your own highly converting website you have to realize the effort and the process behind putting one together and not assume that putting up a website is going to automatically convince people to buy your product.

Popularity
Another reason people focus on traffic instead of conversions is because that’s what everyone talks about. For every 50 books or blogs on search engine optimization or AdWords there is one on improving conversions.

And with that much discussion on the subjects of driving traffic it’s no wonder people naturally put a lot of importance on it.

Traffic is Fun. Conversion, Not So Much.
Traffic is actually fun to generate. I realize this sounds sick and wrong, but getting good at generating traffic is not only enjoyable, but instantly rewarding.

Traffic is reasonably easy to generate and measure. Using tactics described in the 50 books/blogs on any given traffic generating strategy you can move hundreds of visitors to your website in no time. And you can witness the fruits of your labor rather quickly through your friendly neighborhood analytics package. It’s instant gratification.

But conversions suck. It takes forever to run an A/B test, and even longer to run enough A/B tests to substantially improve conversions. Improving conversions requires patience, long-term thinking, and an attention span longer than your typical YouTube video. Something most people don’t have.

As an aside, if you don’t have experience improving conversion rates using A/B testing, I recommend Google’s Website Optimizer. I recorded a screencast that shows you how to setup an A/B test in under 4 minutes here. For more info on A/B testing check out this link.

So What’s the Answer?
As I’ve launched and revamped websites the process has become almost formulaic.

Every website starts with no traffic. Then you do some marketing and you get traffic, but your conversions are terrible. You never nail conversions from the start. If you can do this dinner is on me when you come to Fresno.

So you have some traffic and few sales, what do you do next? Most founders think: drive more traffic! Wrong.

The right answer is to work on improving your conversion rates before spending more time and money driving traffic.

In un-optimized sales websites I typically see conversions in the 0.1% to 0.5% range. You have to drive a lot of traffic to make a profit with conversion rates that low. Compare that to optimized sites, which should have conversion rates between 0.7% and 4% (depending on the price point and quality of traffic).

So you have a choice: you can double traffic, or double your conversion rate. I’ve been doing this a long time, and I assure you that doubling your conversion rate is far cheaper and will yield many more sales in the long-run than doubling traffic. Especially with a completely un-optimized sales website, which is the easiest kind to improve.

But almost no one takes this approach.

In fact, I take it a step further. I typically stop all active traffic generating activities on websites that are not converting well until I can improve conversion rates through A/B testing.

I find the typical traffic/conversion process goes as follows:

  1. Build some traffic. A few hundred visitors per month, maybe a thousand.
  2. Improve the conversion rate.
  3. Send more traffic.
  4. Improve the conversion rate some more.
  5. Send more traffic.
  6. Retire to the Bahamas

Note: I haven’t made it to step 6 yet. But I have seen conversions increase up to 10x through A/B testing.

As you drive more and more traffic to a website over its lifetime this can mean the difference between generating enough money each month for a car payment…and a house payment.

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9 comments ↓

#1 Al Tenhundfeld on 12.09.09 at 12:14 pm

I’m more of a back-end guy and very ignorant about this realm. In a future post, I’d love for you to elaborate more on this sentence:

“Especially with a completely un-optimized sales website, which is the easiest kind to improve.”

What exactly does un-optimized mean? I assume you generally mean a user experience not optimized for conversion. But specifically do you mean design, information architecture, user registration, etc.?

Or you if you could just recommend some existing books or articles, that would be helpful too.

Thanks.

#2 Rob on 12.09.09 at 12:28 pm

> What exactly does un-optimized mean?

I simply mean a website or sales funnel that has never been A/B tested for improvements. With this kind of virgin territory it’s reasonable to expect 50-100% improvements in conversion rates fairly quickly.

Of course, this depends on a number of factors including the strength of your initial design, the strength of the new design, the quality of your traffic, etc.

But once you’ve done a few rounds of optimization it gets harder and harder each time to beat improvements from the previous round.

Always Be Testing is a good resource for getting started with A/B testing.

#3 Ray Wenderlich on 12.09.09 at 1:00 pm

Wow great point – I bet I would have fallen into the “traffic, traffic, traffic!” mindset without reading this article. Thanks for sharing!

For others who are reading this – I’d recommend you check out Rob’s links to additional info on A/B testing, he has a great screencast that shows how easy it is to get started with Google Web Optimizer.

#4 Daniel Kuperman on 12.09.09 at 10:46 pm

Rob,

Your comment about good marketing being invisible is right on target. How to arrive at “invisible” is a tricky thing. Very few can do that. We’ll keep trying!

Great post.

#5 Startup Marketing Mistake: Losing People Through the Bottom of Your Funnel | Software by Rob on 12.15.09 at 7:32 am

[...] ← Why Focusing on Traffic Can Kill Your Startup [...]

#6 Startup Marketing: The Nine Levels of Traffic Quality | Software by Rob on 01.12.10 at 4:43 pm

[...] Startups By now we’ve discussed the fact that you should first plug your funnel, then improve conversion rates, then work on sending as much traffic as possible to your [...]

#7 Chris Waldron on 02.01.10 at 4:43 pm

Often early on we focused on traffic then realized it was only a fraction of our funnel. As a subscription service we don’t worry about the size of our traffic but the growth of our profits. Great post here.

#8 Why You Should Start Marketing the Day You Start Coding | Software by Rob on 10.16.10 at 12:28 am

[...] startup marketing. The first 6 (not required before you read this one) are available here: part 1, part 2, part 3, part 4, part 5, part [...]

#9 Brett Miller on 11.11.10 at 10:37 pm

Great article. You can’t “Spend” your traffic or twitter followers. At least my mortgage company will not take them as payment.

You need to split your marketing time between increasing traffic and converting that traffic.