Calculate Your Online Conversion Rate
How to determine the natural online conversion rate for any product.
How to determine the natural online conversion rate for any product.
How do you determine the natural online conversion rate for any product?
We’ve developed a formula to calculate this, as well as other key performance indicators. We won’t divulge the formula, but here are the factors we consider when making calculations.
Common logic is to set a site profitability goal while striving to achieve a conversion rate equal to or greater than the “universal average.” Yet in our experience, this formula leaves dollars on the table.
In every case we’ve observed, this approach results in conversion goals that are far too low to realize a product’s potential or even to inspire a Web development team. Another undesired result is other critical top-line metric goals are typically left undetermined or, at best, very vague. There’s simply no greater enemy of business than unclear goals and objectives. When you don’t know where you’re going, as the Cheshire Cat told Alice, “it doesn’t matter which way you go.”
The purpose of setting a baseline conversion rate is to maximize a product’s income and potential. There’s no way to accomplish this other than to evaluate every possible factor that affects conversion rate and to score each. Doing so will provide a big-picture, realistic overview of what level a Web site can be expected to perform at.
Factors fall into three primary categories: confidence and intent; the personal experience factor (PEF); and environmental and conditional factors.
Confidence and Intent
These factors occur before a visitor lands on your site and measure the confidence buildup that occurs prior to that event:
PEF
This is the actual experience a visitor has during and after a visit to your site. The following factors contribute to a site’s PEF:
Environmental and Conditional Factors
These factors exist largely outside of a company’s immediate control:
Each of these factors must taken into account and individually scored. Our formula also calculates the effect each factor may have on another one.
For example, all factors being equal, a Web site with strong brand confidence might expect the same conversion rate as a lesser-known site with a stronger PEF score.
When Citrix Online introduced a new product, GoToMeeting, we scored these factors using lessons gleaned from our experience with its more established GoToMyPC site. Being able to compare and contrast made some factors easier to measure. Others, like market potential, required more research. Finally, we determined a natural baseline for conversion that will allow Citrix to realistically project the site’s performance.
An added benefit of the formula is it reveals potential weaknesses in a product offering and serves as a guide for recommending improvements. Think about these factors. They’ll help with your planning.