Conversion Rates Revisited – The One Percent Solution April 30, 2008

Download the Conversion Rate Calculator

In my last post, I noted that Coremetrics has begun releasing benchmark data collected from their ~300 clients. A couple of the stats really caught my attention:

• The typical conversion rate is 3.29%
• Conversions Where Site Search Was Used – 14.84% of consumers used site search during their visits – conversion rate 5.60%
• The shopping cart abandonment rate is 68.42%.

Wow….think about it….

• out of 100 people, only 3 of them actually complete the desired action. AND
• out of 100 people that begin a shopping cart, only 32-33 of them complete the transaction and buy something (through the website – we don’t know if they walked in the store later and concluded the sale there); AND
• of the people that use internal search, they convert at a much higher rate than the ones that do not.

While some of my esteemed colleagues have decided that it’s not about conversions, it’s really about engagement (I’m not naming names, you know who you are ), it really is about conversions. That’s the bottom line. For every small improvement a site owner makes to improve their conversion rate or reduce their abandonment rate, they get repaid many times over. The philosophical diversion into “engagement” is really code for “we know people are leaving the site and completing the sale offline, we just don’t have a way to tie all the data together”. When that day comes, conversion will come back into vogue in a huge way.

Take this rate that Coremetrics has given us as a benchmark. If this conversion rate of 3.29% can be improved by one percent, sales would increase by 30%. That translates to real money. Similarly, 68 of 100 people walking out of your virtual store when they have things in their basket that they abandon in the last aisle represents real money that didn’t make it into the till. Everything that can be done to chip away at that represents real money.

So, how do you identify those improvements? Strip it back to its basic elements; look at what you’ve created – how usable is it, how findable is it, how free of defects, does it respect the visitor’s privacy, is it accessible to all potential customers? Are the key pages that lead people to the conversion event optimized? Do they have the right stuff in the right places with the right call to action to propel people forward and keep them moving forward to completion? You’ll notice these questions don’t have anything to do with studying how people have reacted to your site; rather they have everything to do with understanding deeply what you’ve given people to interact with. Traffic is a measure after the fact – it’s forensics. Evaluating traffic is great for understanding what people did; it is not a predictor of what they would do if things were different.

To help you visualize the impact that small improvements in conversion rates and abandonment rates can have, I’ve created a “conversion rate calculator”. I am not an accountant or finance expert. This is not complex econometric modeling. This is just a simple way for you to plug in some numbers that are meaningful to you to see that the impact over time is real and measurable. Have fun, dream big, and see what it might mean

Here’s the link to the Coremetrics Benchmark page.