In the book, “Web Analytics 2.0,” conversion rates are described as “Outcomes divided by Unique Visitors (or Visits)” (Kaushik, 2010). Expressed as a percentage, the conversion rate helps companies analyze how well they are getting visitors going on to their website to complete a goal. This goal could be purchases, downloads, sign-ups, registrations or a particular action on their website. For example, an ecommerce retailer may see conversions as sales of their product, while a non-ecommerce company may see it as a webinar registration.
In his blog, “Occam’s Razor,” Avinash Kaushik states, “Measuring Conversion Rate is usually the cornerstone, if not the king, queen, and jester of the court, of any web analytics program. It is perhaps the very first “KPI” that is measured by any good analyst and we can’t seem to get enough of it” (Kaushik, 2006).
With the conversion rate for websites in most industries being between 2-4%, this analytics metric is one that companies need to pay close attention to in order to improve their business goals (Mark, 2017). Even a small percentage of increase in this data can mean huge profits for a company. “After all why would you not, the logic is: your conversion rate is 2.2% (shop.org study Q2 2006 for retail sites) and if you improve it by 0.01% you will make a million bucks (replace that with a really high number for your company)” (Kaushik, 2006).
The below graphic shows the steps in the conversion tunnel and shows how the customer potential decreases closer to a conversion.
Source: https://www.giveawayservice.com/blog/ways-to-optimize-your-conversion-funnel
By monitoring conversion rates, companies can also map out customer behavior and pinpoint any issues that may be causing a customer to not complete a goal. A drop in conversion rates can be the indicator that there is an issue with your website or there is a step missing in the conversion funnel.
A real-world example of this can be found with the company The North Face. The company, founded in 1968, is an active wear and outdoor gear retailer. While looking at the analytics for their website, The North Face noticed that customers were getting to their website, adding items to their carts, but not completing the checkout process.
“We couldn’t understand why so many visitors were reaching the final stages but not clicking the Checkout button in the Shopping Cart,” said Bei He, Business Analyst, The North Face. “We turned to Clicktale’s Heatmaps, Session Playback and Conversion Funnels to figure out what they were looking at in the cart and where they were going.” (Clicktale Case Study)
By using the technology, they were able to figure out that customers were getting confused by a rewards program banner that was located directly above the checkout button. The banner was redirecting the customer away from the final goal of purchase. Based on this information, The North Face decided to run A/B tests for the position of the checkout button and the reward program banner. “With the checkout button above the banner, there was a 21 percent increase in the click-through rate to checkout. Conversion rates increased from 45 percent to 63 percent, a notable gain” (Lamont, 2016).
Source: (Clicktale Case Study)
With the help of conversion rate analytics, The North Face was able to adequately identify, diagnose, and solve an issue with their website. Click here to download the full case study from Clicktale.
While conversion rates are an important analytic to monitor, remember that most companies are only seeing 2-4% conversion rates. The reason for this is because only a “minority of visitors that come to any website come to buy” (Kaushik, 2006). What are they doing then? They are researching your product, learning more about your company, seeking help with an issue or reasons we just don’t know. This is where it is important to observe other metrics to see where micro-conversions may be happening that may be just as important to your company.
“In the end, when the dust settles, it is about creating satisfied site visitors no matter why they come to your website and secondarily it is about short term revenue” (Kaushik, 2006).
References:
Kaushik, A. (2010). Web analytics 2.0: The art of online accountability & science of customer centricity.Indianapolis, IN: Wiley Publishing.
Kaushik, A. (2006, July 23). Stop obsessing about conversion rate. [Blog Post] Retrieved from https://www.kaushik.net/avinash/stop-obsessing-about-conversion-rate/
Lamont, J. (2016). Web analytics: insights into the customer journey. KMWorld. Retrieved from http://www.kmworld.com/Articles/Editorial/Features/Web-analytics-insights-into-the-customer-journey-114316.aspx.
Mark, J. (2017). Five tactics to drive return visits and move users further down the funnel. Forbes. Retrieved from https://www.forbes.com/sites/forbescommunicationscouncil/2017/08/16/five-tactics-to-drive-return-visits-and-move-users-further-down-the-funnel/#470e7a421e3d
The North Face strikes gold with customer experience insight. [Case Study] Clicktale. Retrieved from https://www.clicktale.com/resources/monetizing-conversion/the-north-face-strikes-gold-with-customer-experience-insight/.
Unique topic. And also interesting.
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