Online marketers have embraced conversion rates of 2 to 3 percent when they should be aiming higher. Here's why.
According to "American Heritage Dictionary," a "myth" is "a popular belief or story that has become associated with a person, institution, or occurrence, especially one considered to illustrate a cultural ideal." Sometimes a myth is used to inspire. So is the average conversion rate, the percentage of site visitors who make a purchase or some other transaction, reality, a myth, or a nightmare?
Dr. Pete (a.k.a. Peter Meyers) recently posted the following in response to something I wrote about conversion rates:Whenever people talk about conversion rates, they all seem to quote an average of 2-3%. The problem is that, over time, I've noticed another phenomenon: no one ever seems to back this up with data. Ultimately, 2-3% conversion seems to be a bit like Bigfoot or, at best, a friend-of-a-friend statistic: "my cousin's sister's hairdresser said she read in Business Week that the average website gets 2-3% conversion."
Here's some of my response to Dr. Pete:Let me address a couple of your points. First the 2-3% average conversion rate comes from a few different sources. The one I typically quote comes from Shop.org that releases their annual benchmark of all their affiliated members. This one is a bit harder to be sure they all are measuring in the exact same way. However, another publicly available source is the FireClick index (here every retailer is being measured with the same software and methodology). Last week, the average global conversion rate was 2.4%. This is also consistent with other non published benchmarks I have seen through out the years such as data from WebSideStory's StatMarket, CoreMetrics Benchmarks and my 10+ years of experience optimizing website conversion rates. I can't agree that this 2-3% is mythical.
Dr. Pete concludes the discussion by making a valid argument for other key performance indicators (KPIs) and correctly states that even a small increase in conversion rate can mean substantial top-line increases for certain businesses. He also seems to suggest that some businesses may be aiming too high even when striving for the average 2 to 3 percent conversion rate. Sadly, this is true.
Why, then, is 2 to 3 percent a mythical conversion rate for some? Have we set our sights on a nightmare?
Aiming for the Gutter?
As far as I can tell, the willingness to embrace the average 2 to 3 percent conversion rate as a good benchmark of site performance is likely rooted in average direct mail response rates, as these marketers were early online adopters. From Gaebler Ventures:One company we've worked with is an office supplies company. They get a 1% response rate when mailing to prospects. When they target current customers, their response rate doubles to 2%.
Direct mail is a long-established marketing practice and shouldn't be compared to online marketing. Almost all direct mail is implicit. It's a push-marketing method.
Online, the game's completely different. Almost all online actions are explicit, and each action reveals some degree of the intent of the person taking that action. When someone arrives at your site with a need you can fulfill, she comes with a degree of intent and is more than likely somewhere in the buying process for what you sell. Even if you factor out accidental traffic, the percentage of convertible traffic should convert at a much higher rate than 2 to 3 percent on average.
The sites that should convert 2 to 3 percent of their traffic are the exception, not the rule. I've long stated that sites that convert less than 10 percent should be concerned. Consider this along with the rising cost of online traffic, and the concern becomes a nightmare. Too many online marketers are spending too much money and time throwing too much unqualified traffic at their sites, then tweaking their traffic quality trying to reach the 2 to 3 percent mythical conversion rate.
If more online marketers focused their efforts on studying visitor intent and site optimization, instead of just driving traffic, their average conversion rates would be much, much higher. Many sites are wildly successful using this strategy:
|Retailer||Conversion rate (%)|
In short, most sites shouldn't be satisfied with the industry average. Are you aiming for the gutter, or are you inspired by those that have moved well beyond the average?
Let me know how you've pushed passed the myth.
Meet Bryan at SES London February 19-21.
This Year's Premier Digital Marketing Event is #CZLSF
ClickZ Live San Francisco (Aug 11-14) brings together the industry's leading practitioners and marketing strategists to deliver 4 days of educational sessions and training workshops. From Data-Driven Marketing to Social, Mobile, Display, Search and Email, this year's comprehensive agenda will help you maximize your marketing efforts and ROI. Register today!
Bryan Eisenberg is coauthor of the Wall Street Journal, Amazon, BusinessWeek, and New York Times bestselling books "Call to Action," "Waiting For Your Cat to Bark?," and "Always Be Testing." Bryan is a professional marketing speaker and has keynoted conferences globally such as SES, Shop.org, Direct Marketing Association, MarketingSherpa, Econsultancy, Webcom, SEM Konferansen Norway, the Canadian Marketing Association, and others. In 2010, Bryan was named a winner of the Direct Marketing Educational Foundation's Rising Stars Awards, which recognizes the most talented professionals 40 years of age or younger in the field of direct/interactive marketing. He is also cofounder and chairman emeritus of the Web Analytics Association. Bryan serves as an advisory board member of SES Conference & Expo, the eMetrics Marketing Optimization Summit, and several venture capital backed companies. He works with his coauthor and brother Jeffrey Eisenberg. You can find them at BryanEisenberg.com.
The Marketer's Guide to Customer Loyalty
Customer loyalty is imperative to success, but fostering and maintaining loyalty takes a lot of work. This guide is here to help marketers build, execute, and maintain a successful loyalty initiative.
The Multiplier Effect of Integrating Search & Social Advertising
Latest research reveals 68% higher revenue per conversion for marketers who integrate their search & social advertising. In addition to the research results, this whitepaper also outlines 5 strategies and 15 tactics you can use to better integrate your search and social campaigns.