What's the average conversion rate in your industry?
After a month of back-to-back conferences, I'm tired but ready to report something of interest to you. I always ask attendees several questions throughout a presentation. The first is the primary objective of their site: to sell stuff, drive leads, offer self-service, or offer information? Responses used to favor selling stuff, but lately driving leads has reached parity. There are also a few self-service and media companies around. Each has unique key performance indicators (KPIs), but they all have conversion rate in common.
Conversion Rate: The Most Important Metric?
Some would argue conversion rate should not be the main measure. To a point, I agree. It's only one of many metrics we focus on with clients.
Conversion rate is like taking your temperature when you're sick. It won't tell you what's wrong, it can only indicate you're too hot or cold. Roughly, conversion rates are the number of visitors who took the action you wanted on your site divided by the total number of visitors.
Therefore, conversion rate is a measure of your ability to persuade visitors to take the action you want them to take. It's a reflection of your effectiveness and customer satisfaction. For you to achieve your goals, visitors must first achieve theirs.
The second question I ask when I speak at conferences is, How many people know what their conversion rate is?
Do You Know Your Conversion Rate?
This informal questioning is similar to a recent study from the e-tailing group. It found 58 percent of retailers rank conversion rate as being of prime importance for understanding how well a Web site performs. But 19 percent of respondents don't know their own conversion rate. What I find most troubling is people running lead-generation or self-service sites are even less aware of their conversion rate than average. At least retailers are accustomed to tracking these numbers.
Of course, the audience always asks me two questions back: What's an average conversion rate? How do I know if I'm doing well enough?
Average Conversion Rates by Industry Vertical
The only way to get accurate data about average conversion rates is to have access to Web analytics. Many self-reported industry surveys seem suspect. It's not that they're too high. I'm suspicious because in my experience, most companies aren't measuring correctly, many don't have their analytics set up properly, and reporting isn't standardized.
Below, the latest conversion rates from the Fireclick Index (made available to its clients). They're aggregated from Fireclick's actual Web analytics retail customers, spanning December 1, 2003, to March 1, 2004:
|Home and furnishing||2.0|
|Source: Fireclick Index|
I've always said catalogers do it best. Knowing how to sell something in an intangible environment is half the battle. Sadly, many sit smugly at the top of this chart and fail to exploit all the advantages the new medium offers. They just apply the same direct marketing principles they learned offline. Traditionally, catalogers are constrained by space and mailing costs. Neither issue is the same in the online environment. Yet we can learn from what catalogers do right.
Many retailers measure shopping cart abandonment. Lead-generation sites should measure form abandonment. The E-tailing group's survey reports 47 percent of retailers don't know their shopping cart abandonment rate. Fireclick's data shows an average 70 percent shopping cart abandonment rate. There are so many ways to improve shopping cart abandonment.
Segmenting Your Conversion Rate
The most interesting data usually shows up when you start segmenting conversion rates. If you work with us, we'll want to know things like conversion rate of new visitors versus that of repeat visitors and conversion rates of visitors who use your internal search engine versus that of visitors who browse.
We've found significant differences in conversion rates by search engine. Last year, in a report titled "What Converts Search Engine Traffic" (for WebSideStory's StatMarket), we found AOL (3.49 percent) and MSN (2.35 percent) to be the top major search engines for overall conversion rates. When we looked at this report segmented by electronics retailers, we found CNET (1.64 percent) and AOL (1.28 percent) to be the top engines. In fashion, AOL (1.87 percent) and Google (1.68 percent) were the leaders.
Unfortunately, the same type of data isn't readily available for lead-generation and self-service sites. I suspect these numbers would be all over the place, based on type of lead, cost of product or service sold, and marketing efforts. When you sell "stuff" online, it's much easier to compare apples to apples. It's not the same when dealing with lead-generation or self-service, but that's another column.
Are you measuring and segmenting your conversion rates? Let me know.
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Bryan Eisenberg is co-founder and chief marketing officer (CMO) of IdealSpot. He is co-author of the Wall Street Journal, Amazon, BusinessWeek, and New York Times best-selling books Call to Action, Waiting For Your Cat to Bark?, and Always Be Testing, and Buyer Legends. Bryan is a keynote speaker and has keynoted conferences globally such as Gultaggen, Shop.org, Direct Marketing Association, MarketingSherpa, Econsultancy, Webcom, the Canadian Marketing Association, and others for the past 10 years. Bryan was named a winner of the Marketing Edge's Rising Stars Awards, recognized by eConsultancy members as one of the top 10 User Experience Gurus, selected as one of the inaugural iMedia Top 25 Marketers, and has been recognized as most influential in PPC, Social Selling, OmniChannel Retail. Bryan serves as an advisory board member of several venture capital backed companies such as Sightly, UserTesting, Monetate, ChatID, Nomi, and BazaarVoice. He works with his co-author and brother Jeffrey Eisenberg. You can find them at BryanEisenberg.com.
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