10th May 2022
2 minute read
“What gets measured gets managed — even when it’s pointless to measure and manage it, and even if it harms the purpose of the organization to do so.” Peter Drucker
What’s a conversion rate and why are you optimising it? This may seem a silly question – your conversion rate is the proportion of visitors to your website who convert to customers and so increasing that percentage means more customers, and more money.Right? Well… kind of.The problem with CRO, or Conversion Rate Optimisation as an idea, is that it implies that the only thing of interest is the conversion rate and making it as high as possible. To illustrate how this isn’t necessarily correct, let’s think about a couple of scenarios and how they will impact on your conversion rate.
In (1) above, your conversion rate will certainly reduce. Much more traffic will be driven to your site, but the proportion of people who will buy as opposed to just browse whilst in front of the telly will be low, so your CR will decrease. Sales though will go through the roof – a smaller percentage of a much higher number is a bigger number than a high percentage of a small number.
In (2) your conversion rate will increase – 50% off sales will do that.
Which one of the above scenarios would you prefer?
To look at this more subtly, the thing you currently refer to as your conversion rate is probably a blended rate across all devices, desktop and mobile, and you’ll probably find that mobile has around 70-80% of visits, but a much lower conversion rate. If you’re just reporting on the blended rate then increasing the conversion rate on mobile by 20% won’t nudge that blended rate up much. But sales will increase a lot.
What you need to concentrate on are the metrics that really matter; things like:
Your average order value and the number of transactions. The conversion of one-off customers/visitors to product subscribers. (How can you increase this? The interesting thing about this metric is that if you’re only measuring conversion rate, your subscribers will only count once. Your conversion rate might be decreasing because your subscribers are going up!)
The retention of subscribers (if someone signs up then cancels after one month, they’re just here for the discount. In which case, are you losing potential profits with that discount? Perhaps there’s a better way of approaching a subscription offering?)
Click through rates of your newsletter, and the average value of each subscriber(is it higher than your acquisition value?)
Taking the time to understand the correct metrics will then mean you can understand better what levers you should be pulling on your site to improve your business and in turn, your profits.
A clear example – we recently worked on a site where the number of purchases went down after our work. Profits though, increased dramatically, as customers were buying one much more profitable product than three less profitable ones. In fact the sales volume at least doubled per customer, in some cases tripling. It was an easy change to do, but if we’d only focused on improving her conversion rate this wouldn’t have done it.
Rob Dobson has been working in digital and building websites for 20 years. From designing and developing the world’s first internet bank in 1999 (smile.co.uk), he founded Northern Comfort in 2010.
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