Thursday, 24 September 2009

Understanding the Buying Cycle

In my previous post about making money online, I mentioned that I had turned off my feed. To the gurus this may seem like heresy. How are you to make money online without faithful readers?

The answer is simple. I'll get my visitors from the search engines. All the money I've made online has come from search engine visitors. They are the most lucrative type of reader. To understand why, you need to understand the Buying Cycle.

What is the Buying Cycle? It's a sequence of thoughts and actions that a customer goes through before they purchase a product.

The first stage of the Buying Cycle is triggered either by need or by interest. The prospect has some sort of problem they need to solve, or they've heard about a product and would like to find out more. A woman who has suddenly discovered an ant infestation in her house, and a middle aged man whose nostalgia has been triggered by the launch of the Beatles Rock Band game are both at this initial stage of the buying cycle. This "Interest" stage is usually triggered either by an urgent problem or by interest stoked by television advertising, product launch buzz or social conversation and excitement about something new.

The next stage is the "Research" Stage. This is when the prospect decides to find out more about how they can solve their problem, or find out more about the item that has triggered their interest. In the past people went into showrooms to browse or window-shop or puchased Which magazine to read the reviews. Now they type the problem or the product into Google to see what comes up. They will typically use words such as "How to..", "Review of..", "Remedy for..", "Cure for..." in the string of words they type into the search engine.

The final point in the cycle is the "Buying" Stage. This is when the prospect has made their decision and are ready to buy. In the past people would wait till payday and then go to the shops and make the purchase. Now they go online to make the purchase, often using credit cards, though some wait till payday. They will either type in the product name directly into the search engine or type in "Buy ..." or "Purchase ..."

As you can see, the scatter gun of television advertising is aimed at people at the start of the buying cycle. Demographic based advertising on platforms such as Facebook also hits people at the start of the buying cycle. And feedburner readers to your site will view ads on it with the "Interest" of the first stage of the buying cycle. Same goes for visitors from the social bookmarking sites.

However search engine users are usually either at the second or at the final stage of the cycle. This is why the Return on Investment for ads on search pages is so much better than traditional ads on television or on newspapers. Your ads are only shown to people actively searching for your niche. The customer is coming to you, you are not having to go out and get them.

Unless you are launching a brand new product and thus need to create Interest and Buzz to trigger the buying cycle in the first place, it makes no sense to focus on social visitors. If you are selling existing established products, you need to concentrate instead on search visitors. And let's be honest, most people making money online are selling existing products, they arn't Apple launching a new version of the iPhone.

Please note I'm not knocking social media. There is value in it (which I'll explain later), it's just the value doesn't lie in making money unless you are launching a product.

The next lessons in this series will cover how search engines work and how to perform search engine optimization on your site.

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