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Friday, Sep. 11, 2009 at 8:11 am

What Is Your True Conversion Rate?

By Bryan Eisenberg
September 11th, 2009

lookthroughIncreasingly more people are joining the optimization crowd. Savvy marketers need to do more with less budget. Others just want to beat their competitors. No matter the motivation, optimizing your conversion rate is a no-brainer.

What seems more difficult is deciding where and what to optimize. All of us have our plates full already. Adding optimization to the heap seems uncomfortable, even painful.

It doesn’t have to be.

It may not be easy, but very little that is worthwhile ever is.

When no clear starting line exists, most marketers will optimize in an ad hoc manner with no clear plan. Often companies will:

  • Start with their newest campaign
  • Start with their pet campaign
  • Optimize their least favorite campaigns
  • Optimize the easiest campaigns
  • Optimize everything they can just a little, but never develop a method to get maximum results
  • Start with the boss’ favorite campaign, least favorite campaign, and so forth

None of these are bad places to start. A little bit of optimization even in a less optimal place is better than no optimization. Still, if you’re looking for a more effective means to get rolling toward results sooner rather than later, here are a few tips.

Preface: Understand Your True Conversion Rate

While your average conversion rate is the total number of unique visitors divided by the number of unique visitors that take a conversion action, your true conversion rate is the number of people who take the action you want them to take divided by the total number of potential people who could have taken that action. Your true conversion rate takes into account how qualified the visitor is and gives you a better indication of how well your site is performing.

Look at Your Marketing Efforts

How are you bringing these people who take action to your Web site? Do they all come by directly typing your URL in their browser’s address bar? Do some search for your brand? Do some search for your category? Or your products? Do others come from organic search? Paid search? E-mails? Affiliates? Do these people come from different Web sites: Google? Bing? Yahoo? Wikipedia? Twitter? Facebook?

Define Your Prospects

You are likely targeting different audiences based on personas or demographics. You might have different efforts for each segment, maybe several efforts per segment. Each segment that was brought in by an individual marketing effort has different, sometimes intersecting, occasionally opposing scenarios (persuasion paths) based on needs, motivation, knowledge, purchase preferences, or some combination thereof.

For example, you sell Web conferencing and buy the keyword “online web conferencing.” You’ve identified three prospect segments: small office/home office, education, and marketing/sales. They all share a keyword and a landing page that gives them the content each segment needs. You might also buy more targeted keywords that send them to more segment-specific content, but they all share the same sign-up process.

Each one of these is an effort that may need to be optimized. A don’t forget your banner ads and offline media efforts, either.

Create Goals and Micro-Funnels

You cannot succeed online unless you plan for it. Specifically, you need to plan conversion goals for each effort. What actions do they want to take based on where they are in the purchase cycle? How are you going to measure them?

Again, if you sold Web conferencing, your early-buying stage goals may be to have visitors sign up for a trial or download a case study. Late-stage buyers would have paid sign up as a goal. Often, optimization means starting by adding efforts for early or middle stage. There are clearly too many businesses that expect to convert you all the way on the first visit. This may be unreasonable, depending on the audience segment and the complexity of the sale.

Each segment brought in by an individual marketing effort that navigates through their scenarios (persuasion paths) is a micro-funnel that needs to be optimized. Prioritize them!

The 80/20 Rule

The Pareto Principle is a good place to start thinking about prioritizing your optimization. It is highly likely that if you have 1,000 different efforts, about 20 percent are pulling their weight. Those 200 efforts need persistent and vigilant optimization.

Here are a few more places to start:

  • Optimize your top-performing efforts, figuring out how to make them better.
  • Optimize your most expensive but low-converting keywords (each one or several related terms in a group in individual marketing efforts).
  • Sort out your top 200 campaigns and optimize those that are within a few percentage points of performing like a top-200 effort, then move on to your next 200.
  • If you have very few efforts that perform respectably (over 10 percent true conversion rate), you may need to look at the potential market and create persuasion paths by paying attention to your market segments’ needs or your prospects’ needs at different buying stages.
  • Optimize your top 20 exit pages.
  • Optimize the bottom of your registration or checkout funnel and work your way up the funnel.

Your conversion rate is nothing more than the sum of the thousands of efforts and paths that prospects take through your site. Beware of averages. There is no such thing as an average person. That is why your average conversion rate is a rough indicator but virtually worthless as a way to focus your conversion optimization.

You have lots of segments that come to your Web site. They differ by demographics, psychographics, behavior, or marketing effort.

Are you optimizing by effort or by average? Tell me which and I’ll tell you what kind of success you’re having.

Add Your Comments

Comments (61)

  1. I love this 80/20 rule. You can use it on everything.

    And if people where focusing more of their effort on the part of their business, which where generating 80 % of the income – then it could increase to maybe 90 % instead…

  2. This is sooo very helpful. Thank you, thank you.

  3. “Optimize your most expensive but low-converting keywords (each one or several related terms in a group in individual marketing efforts).” – hmm, something to think about. Thanks!

  4. Thanks for the great tips.

  5. You’ve cited useful insight. Indeed, people only need to focus more on their effort to increase their potential income. No need of more complicated stuffs.

  6. Honestly i am impressed with these tips written in this article and i certainly hope it benefits others too.

  7. Since every business is different, and because it’s difficult to get industry metrics on competitors, would you say that benchmarking competitors on “true conversion rate” is worth the effort?

  8. These tips are very helpful. I’ve read a lot of blogs and most of them aren’t as detailed as yours with the tips.

  9. How do we know the possible number of peoples who may have done the conversion?

  10. Your discussion and application of the Pareto Principle is very informative. Thank you for these tips

  11. Another tip is doing more of a recent improvement.

    So if new copy has just improved your landing pages then look at other places to improve copy.

    Or if better product shots have helped one category, then get better shots in other categories – or even better and multiple shots in the already improved category.

    This is reinforcing success – instead of speculative risky efforts like trying to sell submersible hydraulics on facebook.

  12. Ok, so benchmarking our competitors is important. But how exactly are we supposed to know what there rates are?

  13. @Athira

    You can use the “Goal” function in Google Analytics.

  14. That is omething I need to learn how to use… any ideas where there is some good online tutorials?

  15. Nice article..all the campaign are best place to starts.
    Thanks.

  16. Don’t forget the long tail…

  17. Very very thorough analysis. I have always thought of conversion rates in a relative frame of mind. Returns on Investment depend on the returns you seek…and they all can’t be financially minded. We all want to make money, but sometimes you have convert web-searchers to readers, or bloggers to friends. Optimization and conversion is all relative.

  18. [...] post is geïnspireerd op een recent artikel van Bryan Eisenberg, what is your true conversion rate Sla op bij favorieten of deel dit [...]

  19. Good old Pareto principle, never lets you down ;-) SY

  20. I have to say that recently my conversions have taken a steep nose dive since i lost ranking for one of my top key-phrases. The majority of my traffic does not seem to convert at all. Back to the drawing board i guess.

  21. Thanks for sharing nice tips, these are helpful for us.

  22. @Movers and Moving

    “Since every business is different, and because it’s difficult to get industry metrics on competitors, would you say that benchmarking competitors on “true conversion rate” is worth the effort?”

    In short – no. Every site measures conversion rate slightly differently so comparison with industry or even competitive benchmarks are largely meaningless at a single point in time. Try setting the start of your funnel a bit higher, or lower, and you’ll see dramatic swings in your own rate.

    Tracking your own changes in conversion rate over time is much more useful, and if you can get the data, tracking your conversion rate relative to your competitors over time can add some value. Note here it is the relative change that is interesting, not the absolute value.

    We track conversion rates across a large number of companies, but always focus any benchmarking efforts on relative changes rather than a single point in time.

  23. If you’re trying to convince management to buy into optimization as a core function for your organization, pick your first effort VERY carefully. Organizations tend to have very short-sighted institutional memories- if the first project is a dog, people will remember it for years to come.

    So how do you do that? Look for a project with a reasonable amount of traffic, an abysmal conversion rates, and that violates multiple rules for conversion that you would apply. That should provided you with enough data to show some results, enough room for improvement, and enough important variables to test.

    Violate this set of rules at your own peril! :-)

  24. @Charles Nicholls

    Thank you very much for the thoughtful reply on benchmarking competitors- very much appreciated!

  25. Wonderful advice as usual. I am a great fan of optimizing the top exit pages. Even if these are thank you pages these should be optimized too in order to keep your visitor on your site a little longer. Offering links to other related campaigns or interesting blog articles, RSS feeds etc.

  26. The 80/20 Pareto Rule is something i strongly believ in, and im glad it has a prominant place in your post!

  27. Thanks for these helpful hints!

    Alex,
    Vom Bullenfeld German Rottweilers

  28. Thanks for these helpful hints!

    hotddl,

  29. [...] but eventually you should take a good look at really understanding your conversion rate – by reading the what is your true conversion rate written by Bryan Eisenberg, well known for good analytics [...]

  30. Thanks for sharing helpful tips. …

  31. Thanks.

    Never heard of the Pareto Principle before

  32. If you don’t know by now that Conversion rate = money then you are WAY behind the eight ball!!!!

  33. [...] Source:What Is Your True Conversion Rate? Share and Enjoy: [...]

  34. Thanks for sharing – very helpful

  35. Thank for sharing.

  36. i would rather take a traffic hit than a drop in ratios any day

  37. I agree with idea. And hope that it will be useful in the days ahead.

  38. i can’t agree you more.
    there is no doubt that these rules are useful.
    the Conversion Rate really plays a role in a business.

  39. Thank you so much for this post, it was very insightful!

  40. Great information to help you find out your true conversion rate.

  41. Love the specifics on where to start. Logical and clear steps.

  42. Thanks for sharing nice tips, these are helpful for us.

  43. Thanks for this valueable article hope in future .

  44. But i think its much good article for learn saving

  45. Conversion rate is what rules! Good article. Very informative.

  46. I have to agree. Very good article and understandable for a newbie like me. Regards.

  47. i have focused in getting more traffic in the past now I’ll focus on improving my conversion

  48. Nice to see a tutorial website that realizes good design. Thank you so much for everything you do to improve our creative.

  49. Rate is just sometimes base on something..
    Geldkarte Sperren

  50. hmmm pretty interesting tips about optimization…thanks its really helpful

    snowboarding guy

  51. Its very important to optimize the top exit pages. That can be the easiest way to get better conversion rate.

  52. That’s an interesting tip.. I never thought about the conversion rates from this perspective.

  53. Great post about CRO – so often the wrong metrics are measured or interpreted and every time this happens, it magnifies inconclusive and incorrect data.

  54. For whatever reason each time I click on a link on the web site, it brings up a download box trying to get me to download something marked as “naked.exe” – not really sure if you are aware of this?

  55. This is a good post, however just one-half of it seems to be displaying – it cuts off mid-sentance, any ideas what has happened?

  56. For sure difficult to measure even with google analytics is difficult to understand and compare user behaviour

  57. Really good point about the 80/20 rule, this can be applied to just about every area in life.

  58. I agree that the Pareto Principle can be applied everywhere. By example, most people who work online can’t define exactly these 20% and set their goals properly.

  59. You are SO right about the True Conversion Rate!

  60. I was wondering what the optimal structure is to deliver on these for a large organisation is. Should responsibility be split between a centralised area that acts as the optimisation hub of excellence and the localised guys nearer the action?

  61. It really depends on your business model. With proper tracking you should be able to give credit to those responsible.

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Bryan Eisenberg, founder of FutureNow, is a professional marketing speaker and the co-author of New York Times and Wall Street Journal bestselling books Call to Action and Waiting For Your Cat to Bark and Always Be Testing. You can friend him on Facebook or Twitter.

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