KPI Series: Conversion Rate Edition

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There’s a gossip in the data universe and his name is Your Conversion Rate. Everyone knows he’s a real wild card.  At his best he can be brutally honest and at his worst full of dirty lies, and he’s been cavorting around whispering secrets about your website performance for years.

Today, we end his reign of confusion by teaching you how to separate his murmured sweet nothings from valuable insights that can clarify your understanding of your online presence.

Recap: What is a conversion rate? Simply put, your conversion rate is the amount of users who complete some sort of “goal” on your website (e.g. subscribing to a newsletter, making a purchase, or filling out a lead form) in relation to total number of site visits, or outcome/visitors. Your conversion rate indicates how effective your online presence is in spurring viewers to engage in any of those activities.

The average commercial website conversion rate isn’t very impressive- it’s about 2%.  However, the devil lies in the details which is why it’s so important to understand that whatever your actual conversion rate is, this KPI has limits and can potentially be misleading.

Limitations First and foremost, the value you place on your conversion rate should depend on what sort of business you are in. No KPI is one size-fits-all - since a KPI is essentially a way to measure your progress against your objectives, you have to figure out if your conversion rate is even relevant to the objectives of your online presence.

If you’re

B2B… Your goal is to generate leads through a sign-up or fill-in-your-request box. This means that your website design and content will be paramount to enticing your customer. You need your design to be interesting and functional (think fast, easy navigation, sleek design) with content that lends you credibility and inspires feelings of trust. If your customers puke and bounce after one look at your website, then your conversion rate (and bounce rate) will certainly show it.

On the Contrary…it’s possible that your website is just too awesome. A low conversion rate doesn’t necessarily mean you suck. It could mean that your website is just too much fun for people to get off of. If you have a blog attached to your website that you update every couple of days, then your loyal fan following could be upping your views and diluting your conversion rate.

Not All Viewers are Created Equal Some viewers don’t have the potential to convert. They may be checking out your contact information, looking at your Jobs section, or checking on the status of their order. It doesn’t mean that they don’t love you, it just means that they don’t want to buy from you.

Your Conversion Rate Doesn’t Measure Absolute Success If you’re talking about conversions as sales/visits then take a closer look because your numbers might not be what they seem. If, for example, you’re in the midst of a campaign and have 1000 visits and 50 sales, you have a 5% conversion rate. On a less active day, you may have 500 visits and 40 sales, which is an 8% conversion rate. Despite what your conversion rate implies, the first day was actually more successful in terms of sales. Conversion rate measures sales in relation to site visits. It isn’t an absolute measure of success but rather a relative measure of success in relation to a specific metric that measures the effectiveness of your website in generating a lead or a sale.

Google Analytics is your BFF You can use Google Analytics to see if some of your online activity is actually translating to offline conversions. You can consider visitors who navigate straight to your “Store Location” or “Contact Us- Phone Number” pages as visitors who display offline intent, and in that case your rate of online conversions could be grossly understated.

In conclusion, it's dangerously easy to fall into the trap of assuming that “popular” KPIs like Conversion Rate hold the secrets to improving your business. In reality, a KPI's effectiveness really depends on your company’s activities and objectives, and it can be quite misleading if you don’t understand how its measurement directly pertains to your company.

Now the next time that your Conversion Rate nods, winks, and beckons you over, you’ll have your bullshit filter in hand and be ready extract the value from the frothy numbers.


Yours Until the End of Time Spent,

Captain Dash