‘Good Enough’ Conversion Rates?

A reader called me last week. He was trying to sell his company’s services through its Web site and asked us two simple-sounding questions: “What is your other clients’ experience?” and “What is the average number of visitors it takes to make one sale?”

I advised him to ignore other people’s experiences; they’ll prove worthless. Every Web site is different, and nobody is selling exactly the same thing in the same way to the same audience. We’ve found over 1,100 variables that affect conversion rates (number of visitors taking a desired action) on a Web site, and those variables can be broken down into even more detail.

Thousands of such variables exist on every Web site. Some have major impact; some only incremental. Ones that work for your widget business may not work for your friend’s whatzit business. Sometimes a change will move your conversion rate only a bit. That doesn’t mean your choice of variable had no impact. It could mean your choice of solution had no impact. Always identify the variables. Systematically measure, test, and optimize.

The reader who called told me his conversion rate is now 2.31 percent, and he was proud of himself. He had invested a year in following the suggestions of this and other ClickZ columns. Working on it himself, he improved conversions by nearly 20 percent. I told him to use that as his baseline and focus on improving it.

I told him his conversion rate was fairly typical, and by industry standards many might consider it to be good enough. I was sincerely paying him a compliment for his initiative and focus. Nevertheless, this morning he called to say we wouldn’t be working together. His boss felt the conversion rate was good enough already and they would be using their budget for more pay-per-click listings.

A red alert goes off whenever I hear “good enough.” Good enough shields the status quo. Good enough masks mediocrity and rewards the unmotivated and lazy. But don’t be fooled by those who say, “It’s not good enough yet.” That’s often the procrastinator’s mantra. Sometimes good enough is good enough, such as when refinement will only delay — but not significantly improve — or when deadlines don’t allow for better.

To clarify, let’s contrast two recent pieces of news :

  • TeaLeaf Technology, provider of systems to measure the availability of Web content, commissioned a new study from Business Internet Group of San Francisco. The study found nearly two-thirds of e-tailers (representatives of the Keynote E-Commerce Transaction Index) still present users with some kind of error that interferes with or prevents the completion of a purchase. Each failure is estimated to cost an e-tailer as much as $278.

    The study is no fluke. A similar study released earlier this year found a failure rate of 72.5 percent. Some of the errors found were: inability to purchase after comparing products, blank pages, wrong pages, incorrect items, and an assortment of technical errors.

  • comScore Networks reported online retail spending for the week ending August 10, 2003, grew to $969 million from $762 million the same week a year ago, a 27 percent increase. In the first half of the year, online spending grew at a 15 percent clip; it expanded to 25 percent or better each week in the second half.

A rising tide lifts all ships. Many companies have finally broken through and are making money online. They are congratulating themselves for having “figured it out” and singing the praises of following best practices.

Yet have they truly figured it out? In April I wrote about a survey indicating 66 percent of respondents don’t even know their own conversion rates, much less how to improve them.

Sam Decker, senior manager of Dell’s Consumer eBusiness told me:

One of Dell’s foundational principles is constant improvement of our customer experience and to our business. We have many measures — especially from our Web site — and anything that can be measured can be improved. So we are constantly testing, analyzing, and improving; managing a portfolio of small and large site improvements. The cycle never ends, and it never should. Besides, it’s fun that way.

Decker is among those responsible for increasing not only traffic and sales but also conversion rate year after year. Dell’s online consumer business does over $3 billion a year in sales and doesn’t think that’s good enough.

I’m only impressed by conversion rates greater than 10 percent. They’re not unheard of, and some major sites report conversion rates from the low teens to over 30 percent. Failing to convert most of your traffic is largely accepted as good enough. What would happen to your conversion rate if you looked at every visitor who didn’t convert as an error that needs correcting?

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