So you have worked so hard in order to get users to your website, now what? What is it specifically that you want those users to do once they get to your site? Getting users to  operating specific goals is referred to as your “Marketing Funnel” because, much like a regular funnel you have every web page hit at the top, and only a certain percentage of users ultimately end up completing the action(s) you want them to.

An important aspect to remember when deciding how your users will interact with your goal is that each layer, or step that you add for the visitor to do, the greater the probability there is that they will “abandon” your funnel for either more content or worst case scenario even leave your website entirely.

Goals

Before you get rolling, you need to decide what exactly you want your users to be doing on your website. More complex sites can have multiple channels for their users to start down individual funnels, but for this example let’s assume you only have one primary objective to achieve with your users; what is it?

Tracking

Once you have decided what needs to be happening to create value from your users on the site, trace the path that a user would need to take from landing on your home page to completing the intended action. Each click or decision should count as a “checkpoint” for this funnel in order to track where you need to improve the process.

Action

What action is worth value to you as a site owner/operator? If you are an ecommerce site you would be wanting customers to purchase a product. What about content sites? Maybe your funnel includes getting that user to sign up for a newsletter, or other action that makes them more ‘sticky’ to your site to ultimately improve pageview counts, conversions into affiliate programs etc.

One you have nailed down this action, along with critical checkpoints along the way you will be able to start testing conversion rates and generate a value that each customer is worth. Start with trying to improve abandonment rates (i.e. reduce the number of users ditching your funnel at each step). A great tool for this is Google website optimizer, however it does have a bit of a delay on the data that will force you to take a little time in order to make the right decision.

Lead Value vs. Lead Cost

This is one of the last, but probably the most critical portion of your business that you need to understand. How much money is each lead worth to you after they have been pushed through the funnel at your best possible conversion rate? It is actually pretty simple to figure this out by taking the total amount of revenue calculated against your conversion rate.

For example:

If I had a funnel that starts with 100,000 leads that initiate the funnel with a 6% conversion ratio (to funnel completion) and that generates a total profit of $20,000; this would mean that as long as I spend less than 20 cents per lead I should be making money.

Now you may be thinking, “But I can easily just calculate what I am making per lead without knowing the conversion rate, why do I care?”. This is a valid point, but it is key to understand your conversion rate because this will be the most cost effective item to change in order to boost your profitability per lead and be more capable to scale your business. With a 6% conversion rate and $20,000 in profit as stated in the above example this would mean that for each per who converted was worth $3.33 cents in profit. Imagine if you could boost your conversion rate to 12%? Then you would be able to spend 40 cents in order to obtain a lead and still be profitable which puts you above the average costs for highly targeted PPC advertising and thus allows you scale more feasibly.

So now that you know the basics of a funnel, how to optimize them and what numbers should be driving your business building decisions, start figuring out how you can implement these steps as soon as possible so you are more effectively managing your business and producing results.

1. Go to Google.com.
2. Once it loads, enter this code into your web browser’s URL address field (as one whole string):

{Broken into 3 parts due to blog width}

Part 1

javascript:void(document.cookie=”PREF=ID=20b6e4c2f44943bb:U=

Part 2

4bf292d46faad806:TM=1249677602:LM=1257919388:S=odm0Ys-

Part 3

53ZueXfZG;path=/; domain=.google.com”);

There shouldn’t be any http://google.com in front of that. Just that code.

3. Hit enter.
4. Reload the page or open a new tab with Google.com and you will have access to the new user interface.

Gizmodo

The goal is simple, make the “cost” of the user switching higher every year (regardless of if it is a free service or not) and try to add value in the process. The value usually comes in the terms of additional services (like GMail, YouTube, Picasa). These services not only offer a value to the customer, but the strategy is to get them using a unified login for each service which solidifies their core use and in Google’s case the driver of their business; Search Queries. This value can be quantified as the perceived value by the user, with a funnel of all the additional services leading into the core product.

In the case of Google’s closest competitor, Microsoft the core business is their Operating System and Office Suite which drive the bulk of their revenues. Therefore their products that compete with Google can be seen as ancillary arms to their core sets of software. Illustrated below however is what Google is betting on for customer loyalty and perceived cost of switching to other cloud platforms. Google also hopes to extend this cost of user switching into the handset market and Netbooks with both their Android and Chrome OS, both of which will serve as terminals for their cloud computing offerings.

Facebook is able to offer additional value and raise the end user cost by implementing an ecosystem culture with their applications, and becoming more pervasive with tools such as Facebook Connect that allow users to only have one login across several websites. This single login allows for comments, use of services (like Chegg) and if the user so desires push the activity back into their newsfeed as a flare to their friends without having to directly tell them about it. This all plays into the “social graph” which is Mark Zuckerbergs description of our seemingly real connections and information sharing with other people online through our Facebook accounts. These snowball of information sharing and ease of access is what is keeping users plugged in, driving pageviews and referring more people to sign up for the service. Many users have simply migrating their photo sharing etc. to the platform and all those requesting to see that type of personal content are often times told by their friends and family to migrate to Facebook because “it’s just easier”.

So how do you decide which advertising strategies will work best for your brand? The decision is highly dependent on the type of product that you sell, or if you provide a service. One of the basic rules that you will learn in any promotional management class is that you do not stretch your promotional budget to meet your objective, you make your objective fit your budget. So with an emphasis on startups, here is the generalized breakdown for promotional strategies.

Affiliate

The biggest draw for startups towards an affiliate model is that it requires little to no upfront cost to start moving products, or gathering clients. The most involved part of this model is setting up the program and adding to the catalog.

Affiliate systems work by have a vendor or service provider sharing either a set dollar amount, or percentage of their sale (also pay per lead is considered affiliate). This usually works out for the vendor because it hedges the amount of money they need to spend in order to gain additional sales and grow their customer base. Affiliate marketers also like these kinds of programs because they are typically very in tune with what type of traffic they can channel and at what cost. For the marketer, these programs are essentially arbitrage.

{A great way to start your own affiliate program for free is through Has Offers [link] }

Pay Per Click {PPC}

PPC advertising is a great way to get traffic as quickly as possible, especially if you are using a major search engine to deliver the ad inventory. The idea behind PPC is that you create ad copy, select keywords to bid on, and pay each time somebody clicks on the link to go to your website etc. Click fraud is a known problem that many ad networks are combating daily, however if you know how to leverage the metrics that decide your cost per click, PPC can be a great way to drive sales.

{Google AdWords is certainly the market leader right now, and has the highest search volume thanks to Google}

Cost Per Thousand Impressions {CPM}

Impression based advertising is more for the major brands, or for particularly large promotions where a firm wants to raise awareness of their product or service (typically a particular line within a series). This type of advertising usually yields lower returns on investment for direct sales; however this type of advertisement can be attention grabbing if you have a great designer. The goal here is to really reach the magical 3 real impressions per user so the message sticks with them.

{Yahoo! has a very dynamic impression based network, at least until Bing replaces Yahoo! search[link] }

Cost Per Day: Take Over

Arguably one of the most effective forms of advertisements, cost per day also carries the highest ticket price. From a consumer perspective, these ads typically “take over” an entire website, or an entire category (often home page) in order to saturate the advertising impression with the customer. I feel that this is better for the consumer because while you can’t escape the message at hand, the ads are often thought out to much more detail, more creative and reduce overall clutter on the affected website.

The advertisers like these take overs because they know that each and every person visiting that page will see their promotional message and often times has the value added ability to make large portions of the site clickable for the consumer to find out more information. A great example of this is illustrated above from dictionary.com using its backsplash as a type of digital billboard.

MG Siegler from TechCrunch finds this approach appalling stating that is “God-awful” and “greedy”. What he is missing is that these condensed take overs result in a cleaner advertising experience for the consumer and a higher quality experience for both parties. {article}

The bigger the firm, the more diversified your promotional strategy can be, but while you are still small you should be focusing on narrow casted promotion with affiliate and ppc promotion. It isn’t until your firm requires large scale brand recognition (read outside of your local area) that cpm and take over’s are a logical step within your promotion.

What do you think about large scale take over advertisements from both perspectives? Is MG Siegler from TechCrunch.com correct in describing these digital billboards cancer to the internet?

Definition {Arbitrage}: Profiting off of the imbalance within two markets.

Example {Arbitrage}: It costs me an average of $15 to produce a buying customer to site X using my e-mail lists. Site X value’s each paying customer at more than $20, and therefore pays out an affiliate commission of $20 per new lead. The arbitrage in this case would a market imbalance of $5.

How do you reach your audience, block the spammers and escape calls to your cell phone on a late weekend night, or during a vacation? Google acquired Grand Central technology a few years ago and has been rolling out (by invite only) their rebranded Google Voice product, and while it still feels like a true beta product; it has the potential to rock your startup world.

Number Management:

Do you have a mobile device, home phone & work phone? Do you want only particular people (by #’s) to reach your cell phone, and others to be directed straight to voicemail? What about “turning off” your public number temporarily while you are on vacation, so only the closest of people really know how to reach you? All these things are possible under a single management tool of Google Voice.

Transcription:

Voice to text has been around for a while, but frankly most of the “out of the box” products have been quite terrible in their accuracy. Are you in a meeting where it would be inappropriate to listen to your voicemail or take a call? Google voice has the ability to transcribe your voice mails into an e-mail so that you can read through ~ or even better search through the information left for you! This is hands down the best voicemail feature I have ever seen, and the more you use, the more utility you will also see in it.

Just like when GMail first came out, having access to this product will give your customers the impression of being technology advance over your other small business peers which only stands to reinforce a positive brand attitude (assuming you back up their reason to believe so).

So if you haven’t checked out Google Voice, go apply for an invitation today! (GV)

Everybody seems to have the golden answer for how Twitter could potentially monetize it’s service, and co-founder Biz Stone has shot down many of them as detracting from the user experience that is helping Twitter achieve it’s break neck growth. A number of celebrities (both through media and the web) have been monetizing Twitter through sponsored tweets from such places as Izea’s http://sponsoredtweets.com which connects brands with publishers, although only those with large follower bases seem to able to make this profitable enough for their time.

The real question to ask is not what Twitter should do in order to monetize the traffic and user base that they have, but rather where the greatest value lies (assuming they don’t go for saturation). The common school of thought is that Twitter should just tap into the gold mine of standard advertisements placed into feeds that would inject the community with sponsored information but would ultimately dilute their brand. Biz Stone and others have greatly discounted this as a viable, long-term solution and have rather stated that adding layers of value for power and business users would be the key to long term success and profitability of the business.

So you may be asking, “But if Twitter is offering tools to power users and businesses, wouldn’t those tools just be ways to monetize their feeds?”. The answer is not quite so simple because it all depends on what types of value Twitter would be adding in which they could charge accounts for. These businesses and power users need to see a positive ROI for their monthly investment, however this return could be in the form of user engagement with their brand, metrics for measuring the level of engagement, as well as tools to seek out the squeaky wheels in their clientele to retain their brand image.

Most “power users” of Twitter would love to see Twitter opening up a marketplace to completely displace Izea’s Sponsored Tweets and other third party solutions providers. However, while this would offer short term gains for the company I think that their long term relevance lies in providing tools to boost brand engagement, tracking and mediation.

This does not exclude the possibility of a very powerful Twitter advertising network to come out and temporarily dominant the market (assuming they take a small cut of the advertiser/consumer relationship) and force Twitters hand into buying out said network to maintain control of their brand and how the community is effected from a usability standpoint.

How do you think Sponsored Tweet’s and other networks like it are going to effect the Twitter brand and consumer usability? Are followers going to lose the strong trust and high conversion value that they currently posses due to a dilution of Tweet authenticity?

Google is obviously betting heavily on web applications as being the future of computing as we know it, which ironically brings us nearly full circle to the “dumb terminals” of years past. This bet however is not without it’s caveats which Google will gladly ignore right now, but is ramping up production on solutions.

In order for web applications to truly become a wide success they need to be easily upgradable (much as WordPress is with dedicated hosts now), and that the data is synced across multiple machines while maintaining efficiency across the network (read: push). The new developer version of Chrome has the ability to sync bookmarks and is supposedly building in support for the aforementioned requirements for mass consumption.

However, their latest ad campaign would suggest to the consumer that using Google Apps and all of their services will be comprehensively risk/annoyance free. While Google does do a good job they are far from being the shining star in web application history. From lost and/or corrupt data stemming from a back end security hole, to delayed product support (ZoHo was using Google Gears for offline support before GMail et al were!).

So what are your thoughts in the direction of applications? Are we still a ways off from true web applications that only sync in the browser? Is the Microsoft approach with Office 2010 still the most relevant answer for our needs by offering a synced version of the completely installed suite? Leave your thoughts in the comments or Tweet reply @collegestartups about the direction you think the industry is going and how you plan on using, or even developing entirely new solutions.