I have been accepting Bitcoins for seven days and now have some Analytics stats to go on. My web monkeys usually run campaigns for at least a month before drawing any conclusions but we'll work with what we have. Much of this comes from the marketing people I work with, and the conclusions from professionals who advise me- but they've served me pretty well over the years and I share their conclusions.
First off- since adding Bitcoin overall sales dropped roughly 20% ±5 from normal deviation over three years. Wait- before any knee jerk Bitcoin defense read why.
In retrospect we saw that sales dropped for some good reasons and it illustrates the need for serous multi-variant market testing with Bitcoin- because at the moment there is simply no data to go on.
I have a fairly well tuned text pitch on pricing, multi-variant tested over about 15 generations. For non-merchant types in it's simplest form this means running "Just $90" "Only $90" and "Price: $90" in rotation for a few hundred sales, then picking the one that performed best (made the most money) and refining it further. The results can often be surprising, guesses as to what will make people buy often wrong. Multi-varient testing is pretty much the most powerful tool in the marketing toolbox due to the Kaizen principle and...yawn. Anyway multi-variant testing = good.
So I have this well refined, high conversion cost pitch there now, and I got the web monkey to plaster in below it:
"We offer a 10% discount for sessions paid in advance with Bitcoins.
(except "Bitcoins" opened the video in a lightbox)
This is a good, honest offer- but it is totally unmarket-tested. There are any number of reasons it could detract from gross sales- customers see that others are getting a discount so resent paying full price, 10% sounds like too little compared to "$20 discount", or even "Just 9 Bitcoins", too many
pricing tiers (we already have several) and sales crash because it looks like am upsell scam. Could be any one of dozens of things- the problem is not inherent with Bitcoin- it's inherent in trying to market something new without any data to base it on or any existing, large successful merchants to take a hint from.
There already a pretty large body of published data on effective copywriting using dollars, credit cards etc. I can hire a decent copywriter online in an instant to do that. Not so much so with Bitcoin- the marketing language has not be written yet. We can start with logical fallacies to get a starting point for potential lines of attack- but there is still the need for high volume, long term multi-variant testing.
This is actually *good* news as it creates what Warren Buffett refers to as a "moat"- raises the barriers for entry for our competitors. Based on what
I am seeing, Bitcoin is not going to just be something any e-commerce site can profitably "drop in" anytime soon, it's not just about exchange rates.
Should Bitcoin stay viable, the process of learning how to market, process and fulfill in Bitcoin will represent intellectual property that the merchant owns, that will give him a lead over competitors who come to the game later. Obviously this lead will last only so long as the basic body of information stays out of the public domain, but it is promising for smaller merchants.
I understand that much of the above will be denied by the dogmatic, but I'm not trying to dissuade potential merchants. I'm trying to say that for an established business it's not simply a matter of adding a currency conversion script and if they buy with bitcoin- bonus, if not then no harm done. It's more complicated than that.
As far as traffic goes. Having a link to my website in my Bitcoin.org signature resulted in about 90 visitors the first day, then leveled off to about 4-5 a day with active posting. The Average Time on Site from Bitcoin.org traffic was 3:14, 40% less than the overall site average of 5:28. This indicates they were most likely simply curious and not prospective customers. This is consistent with the Bitcoin.org audience of 18-34 year old men, versus my sites 35-54 year old crowd (Alexa).
No directory I submitted to, including my listing in the Bitcoin Wiki, sent any traffic. I offer a niche service in a single city and the Bitcoin community is still small so this is hardly surprising. I think eventually, if Bitcoin is successful online directories could end up being very lucrative. Bitcoin equivalents of Eros-Guide.com and Backpage.com that were equally Adult service provider friendly could represent a potential goldmine.
For the time being, brick and mortar merchants should not expect any sudden influx of customers- we are talking hard stats not wishful thinking. For B&M businesses the advantages Bitcoin has to offer will largely only be realized by evangelizing the currency to their existing client base.
Simply put, if you are accepting Bitcoin, you are marketing Bitcoin. Most established Bitcoin users are holding their currency at the moment- they have every incentive to hold Bitcoin and buy goods and services with USD- and that's what most are doing. The Bitcoin market right now is largely about exchange and speculation- purchases are still a novelty for most. So if your business accepts Bitcoin and you actually want to get Bitcoin rather than just have a sign in the window- you will have to be an evangelist and market the concept of Bitcoin to your existing customers.
Evangelizing Bitcoin is a bit of a tricky topic and there are other threads on the potential pitfalls of advertising Bitcoin. I linked directly to weusecoins.com- a wonderful site that in my mind represents the face that Bitcoin should be presenting the the public. I've not had a single potential Bitcoin customer stop there, they start digging, they read more- we all know how fascinating it is. Unfortunately that's where things get messy and I've had a mix of positive and very negative feedback, when honestly I'd rather not piss any of my customers off.
As I said, the issue of the politics of Bitcoin is being addressed in other threads- just be aware that as a merchant your customers will, in all likelihood see your decision to accept Bitcoin as a political statement and respond accordingly.
I sat down with my lawyer, a few other people and discussed the overall benefits and risks. With the Bitcoin community focused on their political message over attracting established businesses it is unlikely that any merchant coming to the currency will have opportunity for knowledge sharing and collective problem solving- thus more labor and higher entry costs. This is reflected the the structure that has been chosen for Bitcoin.org with Political and Off-topic forums, but not a single Vendors or Merchants forum. Vendors are not a priority at the moment and should not anticipate any particular support simple by virtue of adopting the currency.
My own state of New York is the home state of the Senators whom are seeking to outlaw Bitcoin. The combination of marketing hurdles, low demand for Bitcoin services, potential illegality, unwanted political affiliation, and limited community support, make in my opinion openly advertising the use of Bitcoin a poor decision at this time for any brick and mortar business.
I have removed Bitcoin from my site. I, and the people I go to for advice could be wrong- but I don't see a lot of established brick and mortar vendors lining up under the current conditions.
That being said I'm not all doom and gloom on Bitcoins- that would be foolish. The above is just an account of my experience and impressions of Bitcoin as a fairly average small businesswoman. Crypto-currency is here to stay in one form or another but like physical coinage it will be subject to revision and improvement. Currently Bitcoin is carrying a lot of unneeded baggage which it is going to need to shed if it wants to see mainstream adoption. If it does not, then we can all look forward to having an edge when it successor comes along based on our experience as early adopters here.