What is happening with my conversion rate?

This is the question I received recently at an emetrics conference.  The web analyst was getting questioned by his management why their conversion rate was dropping.  After all, his boss kept reading about the importance of conversion rate.  I hear this question a fair amount.  Recently I heard this from a senior exec at a multi-channel retailer.  Their online sales were soaring, so was their traffic.  And customer satisfaction was also increasing. But conversion rate was dropping.  They wondered why?  Well, let's take a closer look. 

As we looked at the data we found a couple of interesting things going on.  Their traffic was soaring for two reasons.  A good percentage of the growth was the result of a very effective SEM campaign reaching out to new customers.  New visitors were converting at a lower rate then the normal site traffic.  Not a surprise, we expect to see new visitors convert at a lower rate then returning visitors.

Another strong contributing factor of the growth was a significant increase in visitors doing research for purchases in the store.  This segment of the audience will also convert at a lower rate then traffic that is  looking to purchase online.

Now, the reality is that everything this retailer was experiencing was positive, yet it was driving conversion rate down.  Conversion rate can be an important metric, but only when used properly.  I find that most sites are using it incorrectly.  Conversion rate at an aggregate level is a great example of a misleading metric.

Be careful that the metrics you use measure success, not simply measure what you can count!

Comments

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In internet marketing, conversion rate is the ratio of visitors who convert casual content views or website visits into desired actions based on subtle or direct requests from marketers, advertisers, and content creators. The Conversion rate is defined as follows: number of goal achievements/visits.

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On a SEM campaign the initial research phase is one of the most important parts of any campaign. A successful SEM campaign can fend off competitors and keep your company at the top of the results for years.

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