Why do we accept low conversion rates?
by DazzlinDonna
Today’s post is from a guest blogger, Khalid Hajsaleh, Thanks, Khalid!
Regardless of the type of website you have, when your site visitor takes the action you designed for them to take, a conversion occurs. In the case of an e-commerce website, a conversion happens when a customer places an order. On a lead generation website, the conversion happens when the customer fills a contact form. When a visitor subscribes to an RSS feed on a blog, a conversion happens.
But let’s face it, if you have operated a website for any amount of time then you must have faced the problem of low online conversion rates.
According to data published in May of 2007, the average ecommerce website converts on average about 2% of its visitors. Your average B2C, electronics website converts less than 0.5% of its traffic. So for every 200 visitors, only one will actually place an order. Contrast that to the offline conversion rates. Although there is no published data on the average store conversion rate for offline stores that I can find, informal surveys show that most offline stores convert around 25% of their in-store traffic into actual orders. When a store runs a large discount, those conversion rates shoot up even more significantly. Think back to the last black Friday. Were you one of the thousand of customers, standing in endless lines in front of the local department stores or best buys? How much do you think that store converted in that one day?
The question that begs an answer is why do most websites seem content with these low conversion rates? In my experience, it is one of the three reasons:
Conversion data is difficult to track: In the case of a stand alone ecommerce website where the company does not operate a traditional store, calculating conversion is clear. The line is not so clear in the case of a mixed website, where the company sells both offline and online. Many websites that have a brick and mortar operation report that offline sales increases as a result of their online presence. Although more and more people are getting online, data shows that many are still comfortable with completing a purchase offline. In that case, consumers complete the research online but the actual purchase (conversion) takes place in the physical store. So although the reported online conversion rate is low, the overall conversion rate for the company is actually higher.
Traffic was cheap: Acquiring leads, whether organically or via PPC campaigns, “was” cheap. So it wasn’t burdening these companies to ignore their low conversion rates. Of course, this is no longer the case. Organic optimization including link building requires more time, effort and money. PPC bids between $3 and $5 per keyword are typical in many industries. It is not unheard of to pay more than $10 in certain competitive markets. As traffic gets more expensive, more website owners will look for ways to maximize the ROI on the current traffic they are getting.
Increasing conversion is tricky: Increasing online conversion is part science, part art. It is the intersection of creative, marketing and the analytical disciplines. I know most people would like to hear that there is a simple formula you can apply to increase your conversion rate. And yes, there might be few tweaks to increase it a little but it takes time and patience to move from 2% conversion rate to double digits.
So, tell me what you think? Why do most websites focus on increasing traffic as opposed to converting that traffic?
Khalid Hajsaleh is the Co-founder and President of INVESP consulting, a marketing consulting company that helps clients increase site conversion rates. Khalid has over 10 years of software industry and consulting experience. He was a lead consultant and architect on several major ecommerce sites for companies such as Motorola, Levolor, American Express, and Frontier.
If it ain’t broke, don’t fix it. If something is working, I tend to not bother to do the work I should and make it better…
P.S. Your digg badge does not work – I clicked on the badge to digg this post and digg said that it appeared to be an invalid url…
I think there’s a tendency to see more traffic as the cure all. I’ve seen a lot of people not want to accept that their site could use improvements. It’s much easier to think that if only search engines sent more traffic everything would be ok.
The truth though is most sites need a lot less traffic than the think to be profitable. Instead if they focused on getting traffic predisposed to wanting what they have to offer and then doing what they can to convert that traffic they’d be a lot better off than indiscriminately bringing in more traffic from anywhere and everywhere.
Steven,
you bring up a very good point. How much traffic is enough before we should start paying attention to conversion rates. There is a statistical model that can answer this question. But I think if a site is getting around 500 hits on keyword and they are not converting or their conversion rate is low, then they have a problem with the site. If they are only getting 10 hits on a particular keyword then I will not worry about conversion in that case.
I throw the number 500 because I heard someone mention that at some point but I might be wrong.
In my experience, anyone even remotely successful on the web with a little experience under their belt focuses on conversion as the most important measure of success. Even for people with little to no experience in the technical matters of Internet Marketing, it is easy for them to understand and relate to their site generating orders or leads. They are used to logging into their cart and seeing orders and are used to seeing leads fall into their inbox, so the more the better.
The biggest element I have seen clients struggle with is their rankings. Every number having to do with the success of their web site could be increasing as a result of our efforts, but if their rankings fluctuate they get nervous and angry.
As far as accepting low conversion rates as compared to offline shoppers, it’s a totally different scenario and totally different client. People behave very differently when they are behind a keyboard, much the same way they behave differently when behind the wheel of a car…
You said it yourself, 2% is the average for e-commerce. That may be low as compared to people shopping in store, but web conversion rates can’t be compared to offline conversion rates – apples and oranges….
Brian,
I actually think we should compare the two rates. I have seen clients go from 0.5% conversion rate to 12% conversion rate by implementing certain elements on their site. They are already getting the traffic so why not convert more of it? And as we continue to tweak the site, the rate goes up for the most part
Adam, hehehe I guess that depends on your definition of broke!
Khalid,
I wholeheartedly agree that constantly trying to increase conversion rates is the single most important strategy of an effective Internet Marketing campaign. However, I definitely disagree that one should compare conversion rates with in-store traffic.
That’s almost like a race car driver comparing lap times on different tracks… Sure he should always try to improve his lap time, but he needs to make that comparison based on the track he is racing on. The Internet racetrack and the brick and mortar Retail race track are totally different courses.
2% seems extremely low. I am sitting on about a 8% conversion and Im dying, because others in my industry are at 21%, but the caveat mentioned above about the industry being a determining factor does make sense. We also have specific on page graphic factors that make a difference in conversions.
Hi,
I find this article interesting. Well with comparing the 2 is not like comparing apples and oranges.
The only thing with websites is customers could get info a lot faster then in the store. Have you ever ran around the store for a sales associate and just gave up. Or some counter person that rather talk to a friend on the phone then actually do there jobs.
Also James how would you know that they get 21% because they say so?
I personally rather increase conversation a lot cheaper and longer lasting.