Alok Kejriwal: The 2% of Everything

Alok Kejriwal talks of the 2% rule and shows you how to skirt it when it comes to converting e-commerce sites’ visitors into buyers

By Alok Kejriwal

When I started my first digital entrepreneurial venture — contests2win. com in 1998, I was an innocent fool. Coming from a wealthy Marwari family business that made hosiery (a polite word for socks), I had assumed that things happened simply by asking. If asking didn’t work, they did by requesting. And if requesting didn’t work, then I got my way by demanding!

In my avatar as digital entrepreneur, as I began to pitch to large MNCs in India to use my free ‘Internet contesting’ site, I learnt a bitter lesson. My asking, requesting and demanding yielded no results. And that, considering I was offering a free service! After a bitter start, I learnt a rule that has always stayed with me. It was the rule of 2%.

In the first year, I coldcalled 500 clients. About 300 came on the phone. Of these, 150 agreed to meet. Of the 150 meetings, 100 asked for a proposal. Out of the 100 proposals, 10 finally agreed to do business with me (free of cost). I closed 10 clients out of 500. That was a success rate of 2%.

Here are some more 2% related statistics
1. Out of 100 visitors to e-commerce sites, about 2% convert to buying customers.

2. In the stone-age of advertising (think Mad Men), glossy envelopes mailed to targeted databases elicited a 2% response rate (think a reply or a mail order).

3. In the highly cluttered world of internet advertising, a 2% CTR (click through rate) on a rich, well designed, interactive banner is considered to be supreme!

4. Zynga (a befallen gaming company) was able to sell virtual sheep, tractors, farmhouses and trees in a free virtual game to only about 2% of all its players. That game was called Farmville and the 2% made Zynga a multi-billion dollar company. For the record, the rest of the 98% (who didn’t pay) spammed their friends on Facebook and killed the social networking site’s game notifications forever.

5. And yes, only 2% of folks playing Candy Crush actually pay for more levels and power ups. The rest of them c well, they spam us all.

6. The famous 2% rule amongst stock traders states that no trader will ever bet more than 2% of his worth on any trade. Clearly, there is a fascinating 2% rule that pervades the operating plan of this planet. And, it operates in real life too. Think how many people do you randomly meet in a flight whose first name (that’s important) you can recall? About 3. That’s 2% of a flight of 150 passengers.

  Now, what does 2% mean? Sadly, very little. It’s the 98% that slips away, that robs us of our profits. I mean think of how amazing it would be if 98% bought stuff on e-com sites or clicked on banners!

But the hard truth is that the 2% of everything exists. Now, if you accept it as it is, you’re toast. But if you find ways around it, you can be king!

The Upseller: When only 2% of women bought virtual sheep in Farmville, Zynga did not fret. It leveraged that tiny 2% via the art of upselling. While most consumers bought 1 item of 0.99 cents in typical games, Zynga (using rocket science analytics), drove a typical 0.99 cents purchase up to US $9.99 and in some cases even US $99.99!

Zyngawas so phenomenal in its upsell to the 2%, that they more than made up for the 98% population that wanted ‘free ka maal’.

The Stalker: In this very newspaper, I cribbed about the menace of retargeting. However annoying, e-com websites hound the 98% ‘non-buyers’ by using cookies and chase them all over the web with ads of the sites they abandoned. Data proves that of the stalked, 18% converted to buy what they had left behind. 

The Hypnotist: Have you bought a domain on godaddy.com? I bet that only 2% of visitors who look for a domain land up buying one. Now, once you have bought a domain, godaddy injects the fear of God into you.

Even as you proceed to check out (which takes forever), the site scares you about security, spam hosting, fraud, etc And keeps selling you services you didn’t know you want for your newly acquired website. Godaddy hypnotises the 2% and makes them leave their wallets behind!

So, if you have a 2% situation, think of a clever way out of it. But for heaven’s sake, do not send spam mails to your friends and clients saying, “I am the rich Nigerian widow of a Colonel who has $3 million stashed away and need you to help me siphon it out of the country. All I need is…”

The famous ‘Nigerian Scam’ too has a 2% success rate, but that’s a method I would seriously recommend you skip!

Alok ’Rodinhood’ Kejriwal is a serial digital entrepreneur based in Mumbai and is currently the CEO and Co-founder of Games2win – his fourth company. Outside of work, Alok is a passionate blogger, an avid Art of Living practitioner and meditator. He is the founder of India’s only social network for entrepreneurs called therodinhoods.com. He can be contacted at [email protected]

(The article first appeared in the Economic Times and has been republished with the permission of the author)

Cover image courtesy Politicshome.com