Everyone loves conversion rates, but without greater context, it's not nearly as important as some marketers think.
Conversion rate is an important metric, but it’s not the be all end all of KPIs. The fact is that growing your site will likely decrease conversion rates – and that’s not necessarily a bad thing.
Despite its limitations, conversion rate is still a powerful metric that works very well for measuring specific tasks – things like building individual landing pages around conversion and email marketing.
Here’s an example, with two alternative tables of numbers for a site bringing in £565k in revenue over a given period:
We can see that most channels convert between 1% and 3%, but direct visits to the site and visits via email are far more likely to result in a sale (25% chance and 14% chance, respectively).
On its face, the answer seems obvious: invest more in the high-converting channels. But, that misses the point, and is exactly why focusing solely on conversion rate can be detrimental. Channels like search and social certainly support conversion through awareness and visibility, even if users aren’t directly converting through those channels.
For argument’s sake, let’s cut investment in low-conversion channels:
The overall conversion rate has more than doubled, revenue is the same, and we've spent less on advertising.
That all looks fantastic at first glance. But, we've turned off most of the growth channels of the site. Look at the second table again and ask, "In a year's time, will we still be able to squeeze out new sales from our same old email list?" Or, "Will we be able to win back the customers our competitors have grabbed from us through their PPC and affiliate campaigns?"
Measure Conversion Rates Effectively
Break your conversion rate down by channel:
Break conversion rate down by visitor type:
Break it down by task:
Focus on microconversions:
Of course, the best way to make conversion rate meaningful is to measure it relative to more KPIs and tie it to an overall marketing ROI assessment. For more on exactly how to do that, get in touch.