Why You Should NOT Focus On The Conversion Rate

By in Conversion Optimization

Keeping track of your conversion rate is important, but before you make it your end-all-be-all of success metrics, here’s my advice to you:

Do NOT focus on the conversion rate alone when optimizing your website. Click To Tweet

You might think I’m crazy for saying that. I’ve made my living the last few years optimizing websites and apps for companies. But any good conversion optimizer will tell you that the conversion rate is a horrible metric to focus on alone to improve your website.

And with that, most of you are like:

When The Conversion Rate Becomes a Vanity Metric

At face value, conversion rate is a just the percentage of visitors on a website that “converted.” Conversion is typically a sale (for e-commerce), sign up (for B2C) or lead (for B2B).

The problem with focusing only on the conversion rate is just that… it’s a rate. It’s only a small picture to the bigger story.

Let me give you an example. Here are the stats for 2 days of activity on an ecommerce site:

  • Day 1: 4% conversion rate.
  • Day 2: 10% conversion rate.

Which day did better?

If you just look at the conversion rate, you might think it’s Day 2. Now here’s what number of unique visitors and sales look like for both days:

  • Day 1: 4% conversion rate. (5000 unique visits, 200 sales)
  • Day 2: 10% conversion rate. (1000 unique visits, 100 sales)

Upon closer inspection of the total sales and number of unique visitors, Day 1 actually performed better (assuming all the costs were the same). There were two times more sales than the second day.

This is a perfect example of how people can be duped by rates. You can’t take the conversion rate just by itself. If you do, you’re just fooling yourself with another form of vanity metric.

Focusing on the conversion rate alone is just another vanity metric. Click To Tweet

Not All Conversion Rates Are The Same

To make matters more confusing, not all conversion rates are the same. If you segment your visitors, your conversion rate can vary by customer segment, traffic source and even city.

The folks at Smart Insights highlighted how much conversion rates vary by referrer with one of their projects:

Conversion Rates

(On a side note, I find it fascinating that they found AOL search brought them the highest converting traffic for this project.)

The point is that as smart, data-driven marketers, we need to go beyond the headline conversion rate and review conversion rates by different segments.

Go beyond the headline conversion rate and review conversion rates by different segments. Click To Tweet

I would go further and review it by 10 other segments in Google Analytics:

  1. Referrer / Traffic source
  2. Visitor
  3. Location / Geography
  4. Content Viewed
  5. Landing Page Type
  6. Action Taken
  7. Value
  8. Demographics
  9. Engagement
  10. Technology Platform

(Just a plug for myself, if you need help setting this up in Google Analytics, schedule a free 30-min call with me.)

Maybe A Lower Conversion Rate is What You Want

Here’s something to think about: what if in some cases you WANT a lower conversion rate.

You’re reaction would probably be this guy:

Huh?

Yeah, you heard that right. Let me give you an example.

I was helping out a luxury retail ecommerce company. They wanted me to find out what the effect of increasing their prices were. So I set up a split test with the original prices and significantly higher prices.

Surprise, surprise. The shopping cart conversion rate dropped with the higher prices.

BUT, after doing some number crunching, I found that although the conversion rate was lower, the higher price led to significantly higher profit over the life of the experiment.

Despite the lower conversion rate, I advised the company to increase their prices. Maintaining a high price not only increased short term profit, but supported the company’s luxury brand status for the long term.

How To Use The Conversion Rate In A More Meaningful Way

By now, you’re probably wondering what good the conversion rate is. I think despite all of its limitation, the conversion rate is a powerful tool. Here are five of my suggestions to make the conversion rate a more meaningful metric:

1. Use the conversion rate as part of the larger business story.

In the example above, conversion rate was not the only metric that determined the success of the campaign. The conversion rate is just one piece within the overall business performance.

I use the conversion rate to probe deeper. If someone told me their conversion rates went up from 4% to 10%, I would ask:

  • Why did it go up?
  • Was it because you found a channel or launched a campaign that drove more ready-to-buy visitors to your website?
  • Did you achieve your sales/leads/sign ups goal with that conversion rate?

2. Always take the conversion rate alongside the overall business goal.

It’s important to take the conversion rate alongside the overall business goal. An increase in conversion rate can result in lower sales. On the other hand, a decrease in conversion rate could result in an increase in profits.

3. Break down your conversion rate by traffic source.

Do NOT take your overall website’s conversion rate at face value. Segment out your conversion rates by channels to figure out which conversion rate will impact your business goal the most. Is your conversion rate from email doing better than paid channels? Then, maybe run experiments on increasing your conversion rates from email.

4. Break down your conversion rate by visitor type.

Segment your traffic by “new visitors” and “returning visitors.” Remember that superficial changes on your website are more likely to affect the conversion rate of new visitors than returning visitors. Returning visitors most likely care more about customer service, product quality and branding. New visitors are more likely swayed by perception.

5. Look at your micro-conversions.

Instead of looking at your website’s headline conversion rate, focus on the typical website visitor journey from home page to conversion. Look at optimizing the conversion rate of those who click from the home page to the product page, from the product page to the pricing page, from pricing page to shopping cart, etc.

See the Forest Through The Trees

While useful in many cases, optimizing for conversion rate is not guaranteed to improve business performance. Instead, data-driven marketers should adopt a holistic point of view for optimizing business performance. Remember: there are no silver bullet to starting and growing a company.

Don’t focus so much on the trees that you lose sight of the forest. The key takeaway is to NOT optimize for conversion rate, but instead optimize for business performance.

Do NOT optimize for conversion rate, but instead optimize for business performance. Click To Tweet

 


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Growth Marketing Leader + Educator | VP of Growth and Co-Founder at Idea 51 Agency | Marketing Professor at Centennial College | Digital Marketing instructor at RED Academy | University of Waterloo B.Math and Ivey MBA alum

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