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Conversion Optimization by Ayat Shukairy, Khalid Saleh

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Conversion Rates

Whether you are trying to measure the health of your website, the success of your paid advertising, or the ROI in an online marketing campaign, you’ll often discuss conversion rates. The term conversion rate has many definitions. For the purposes of this book, we define conversion rate as the percentage of visitors exposed to a campaign who take the desired action of that campaign. Since there are different goals and ways to measure conversion, this definition should be general enough to use with different media.

There are hundreds of millions of business websites, most of which fall into one of these categories:

Ecommerce websites

Mirror their physical store counterparts by offering products to their visitors. A conversion on an ecommerce store happens when a visitor places an order with the site.

Lead generation websites

Are not designed for consumers to place orders on them, but rather are designed to capture leads. The actual conversion process takes place offline. Many professional services firms such as consulting companies and law firms rely on their website to drive leads for their business. A conversion on a lead generation website takes place when a visitor successfully fills out a contact form and submits it online.

Content-based websites

Rely on publishing content to drive visitors to the site. Content sites usually sell advertising to generate revenue. A conversion on a content-based website is more difficult to quantify compared to a conversion on an ecommerce or lead generation website. These sites charge their advertisers based on the number of monthly views and visitors to the site. So, having more visitors or more page views will lead to higher advertising revenue. Thus, a conversion might take place when a visitor views more articles, spends more time on the site, visits the site regularly, or even subscribes to a newsletter.

Brand websites

Are designed to increase brand reach and awareness within a certain market. Although other types of websites can define measurable conversion goals, brand websites have vague notions of what a conversion is.

Social media websites

Are designed to help different audiences connect and communicate with each other. Examples of these websites include blogs, Facebook, and LinkedIn. Social websites introduce a new challenge in redefining what a conversion is within a social network.

Of course, a website does not always fit into a single mold. Although ecommerce companies sell products to customers, which is their main conversion goal, they still have other website conversion goals, such as increasing brand awareness or getting visitors to subscribe to a mailing list. A content website that relies on online advertising—such as an online magazine—might also sell paid subscriptions to access premium content on the site.

The discussion in the book will focus primarily on ecommerce and lead generation websites, although you can easily apply the same concepts to other kinds of websites.

Calculating Conversion Rates

The primary goal of an ecommerce website is to sell products to consumers. The conversion rate for an ecommerce website in a particular period is the total number of orders the site receives divided by the number of visitors to the site. If a website gets 10,000 visitors in one month, and of those only 120 visitors place an order, the conversion rate for that site is 1.2%:

Conversion rate = 120 / 10,000 = 1.2%

Of course, a conversion on an ecommerce website does not happen in one step; it is a multistep process. Let’s say you want to buy a copy of The Tipping Point, so you go online and search for the book in Google. Figure 1-7 shows the many search results for “The Tipping Point.” Data tells us that the first listing among organic results gets the highest number of clicks on a search results page, which is usually around 45%. Figure 1-8 shows “The Tipping Point” product page at Amazon.com, which you would land on if you click on the first search result.

Although product pages on an ecommerce website can have different goals, the main goal is to get visitors to click on the “add to cart” button. Of course, clicking on this button does not translate into a sale. Website visitors have many options after clicking on it. For example, they might get a phone call and forget about purchasing The Tipping Point. They might become distracted and navigate to other products. Or they might want the book enough to actually click on the “checkout” button to start the order. Of course, they still have to go through the different steps of the checkout process, with each step getting them closer to the final goal of placing an order. Only when a visitor clicks on the “Place your order” button in Figure 1-9, the final step in the Amazon.com checkout process, has Amazon.com secured an order and a conversion.

Google search results for “The Tipping Point”

Figure 1-7. Google search results for “The Tipping Point”

“The Tipping Point” product page at Amazon.com

Figure 1-8. “The Tipping Point” product page at Amazon.com

The final step in the Amazon.com checkout process

Figure 1-9. The final step in the Amazon.com checkout process

Figures Figure 1-7 through Figure 1-9 show a typical “order funnel” for many ecommerce web-sites. This funnel might start with visitors arriving at different pages (landing pages) in the website. Although an ecommerce website may or may not have full control over where a visitor lands initially on the site, it does have control over the design of the order funnel, such as the checkout process. Each step toward the final order page is a micro conversion. Small victories build toward the final, ultimate victory: a visitor placing an order, or a macro conversion. A macro conversion will only take place if the ecommerce store is able to convert the visitor at each micro conversion.

An online order funnel is very similar to a physical sales funnel. Think of a company that is looking to purchase an expensive piece of software. Evaluating the different software packages is similar to looking at a category page with different products listed in it. Narrowing the options to a particular software package mirrors looking at the product pages in an ecommerce store. Then there is the physical-world “checkout,” finally executing the agreement. The only time you reach a deal is when each step in the process successfully leads to the next step.

Tip

DON’T FORGET!

A conversion rate is the percentage of visitors exposed to a campaign who take the desired action of that campaign.

Conversion Rate Averages

Online conversion rates have been on the decline since companies started tracking them. Although we used to talk to our clients about average site conversion rates of around 5%, these figures no longer hold true. Most websites struggle to convert visitors into clients, and the numbers aren’t improving. Table 1-2 shows the Fireclick Index average conversion rate based on the industry in June 2007 and June 2008. Most (though not all) categories report a decline in conversion rates.

Table 1-2. Fireclick Index average conversion rate by industry in June 2007 and June 2008

Type of site

Conversion rate in June 2007

Conversion rate in June 2008

Catalog

5.80%

4.60%

Software

3.90%

3.30%

Fashion and Apparel

2.30%

2.20%

Specialty

1.70%

2.30%

Electronics

0.50%

0.70%

Outdoor and Sports

0.40%

2.40%

On the other end of the spectrum, some ecommerce sites report double-digit conversion rates. Table 1-3 shows the top converting ecommerce websites according to Nielsen’s MegaView Online Retail report in June 2007.[9] Next to each top converting website we included the industry averages as reported by the Fireclick Index.[10] Table 1-4 shows the top converting ecommerce websites according to Nielsen’s MegaView Online Retail report in March 2010,[11] as well as the industry averages.[12]

Table 1-3. Top converting websites in June 2007 compared to industry averages

Type of site

Conversion rate

Industry average

Lane Bryant Catalog

24.7%

2.3%

QVC

16.7%

5.8%

Oriental Trading Company

15.2%

5.8%

Blair.com

14.5%

2.3%

Jessicalondon.com

13.7%

2.3%

Symantec

13.5%

3.9%

Roamans

13.5%

2.3%

The Sportsman’s Guide

12.2%

0.4%

Christianbook.com

11.9%

5.8%

Lillian Vernon

11.8%

1.7%

Table 1-4. Top converting websites in March 2010 compared to industry averages

Type of site

Conversion rate

Industry average

Schwan’s

40.6%

2.1%

Woman Within

25.3%

1.7%

Blair.com

20.4%

1.7%

1800petmeds.com

17.7%

2.1%

Vitacost.com

16.4%

2.1%

QVC

16.0%

5.2%

ProFlowers

15.8%

2.1%

Office Depot

15.4%

5.2%

Oriental Trading Company

14.9%

2.1%

Roamans

14.4%

1.7%

Although most online retailers are able to convert 2.3% of their visitors into customers, retailers such as Lane Bryant convert 24% of their visitors into customers. Yes, some online retailers are able to capture 10 times as much business compared to their competitors. Some even sustain that rate over years.

Tip

DON’T FORGET!

Conversion optimization is ultimately about lost sales, helping you to get back some of the money you are leaving on the table.

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