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Conversion as a Service (CaaS)

Overview

In the e-commerce industry, Conversion as a Service is a method of online conversion optimization that is a customized intersection of art and technology that combines analytics, behavioral targeting, software, style, and unique business rules to exact success. As opposed to a laser focused approach on one aspect of the conversion cycle, this approach advocates a holistic approach to achieve a significant improvement in online conversion. With this approach companies can target the right person at the right time with the right message to deliver significant increases in conversion.

Conversion as a Service (Caas) allows clients to take advantage of the expertise a vendor accumulates over years or decades, rather than either developing and maintaining the expertise in-house or outsourcing the expertise through a third-party services firm. Opting for vendor expertise ensures an enduring knowledge base for the lifetime of the relationship and real-time program optimization as industry best practices evolve.

Key Characteristics

Pay-For-Performance Models

Key to the notion of Conversion as a Service is the use of outcomes to measure performance. In pay-for-performance models, the success or failure of a solution is not based on whether providers successfully deploy software, but on whether or not the solution delivers desired measurable results. In this model, providers and clients forge a relationship which aligns their efforts to meet a set of agreed-upon metrics that determine whether or not the relationship is valuable.

In most cases, the metrics used in online commerce revolve around gains in incremental revenue directly attributable to a solution provider. The specific metric can vary, whether it is an increase in average order value, up-sell, or customer satisfaction or a decrease in cart abandonment or call center traffic, the solution provider must be able to clearly demonstrate that an increase in revenue can be tied to the presence of their solution.

Goals

There are three goals for clarity in Pay-For-Performance Models:

Transparency: Pay-for-performance models require a level of transparency on the part of the vendor to share with clients both the process for collecting the data and for measuring the results. Also, the calculations should be kept simple and the ability to inspect the data readily available.

Alignment: Organizations often use metrics to define success for groups and individuals, to guide their activities, and to grade their performance. Similarly, vendors should be committed to meet the business objectives of an organization through goals. In most pay-for-performance models, vendors define the metrics by which they will be graded. While this model forces vendors to perform, it does not guarantee that success will directly align with business needs. The models result from negotiations between vendors and clients to define the metrics and describe success.

Value: The goal of most online business is to generate revenue. If the system for measurement is transparent and the vendor goals are clearly aligned with client objectives, then the amount of incremental revenue generated by a vendor becomes the final metric for success.