Comments to Quantifying Conversion Funnel Opportunities2007-11-09T21:35:44-07:00Practical Ecommerceinfo@practicalecommerce.comhttp://www.practicalecommerce.com/Copyright 2007 Confluence Publishing DBA Practical EcommerceRafe VanDenBerghttp://www.practicalecommerce.com/articles/563/Quantifying-Conversion-Funnel-Opportunities/#comment40622007-11-09T21:35:44-07:00Hi Justin --- Good questions, but I think we're talking about different things...
Checkout-starts-to-completed-orders is a different ratio than the cart abandonment ratios cited in industry reports. Whereas cart abandonment is just the ratio of carts that don't complete an order, the "checkout start" is further down the funnel --- measuring not just carts, but the carts that actually begin the checkout process.
In other words, we break the cart abandonment ratio into two ratios --- cart-to-checkout-start (60%) and checkout-start-to-completed-order (75%). This allows us to see where the real issue is --- a problem in the cart-to-checkout-start ratio points to very different root-causes than a problem in the checkout-start-to-completed order ratio. When taken together, these two ratios are somewhat similar to reported industry averages for cart abandonment.
But keep in mind that industry averages include both the good and the bad. And as an e-commerce optimization firm, we help...Justinhttp://www.practicalecommerce.com/articles/563/Quantifying-Conversion-Funnel-Opportunities/#comment39892007-10-31T14:31:03-07:00Rafe, Thank you for replying to my message. I very much agree with you regarding the point that milestones in the cart and elsewhere on the site need to be monitored to determine where to "raise eyebrows". My trouble lies in the term "excessive fallout".
I am still questioning the 75% cart-starts-to-completed-orders info. According to Marketing Sherpa, the industry average for cart abandonment is 59.8%. How then is >25% fallout a "raised eyebrow moment"?
Thanks again.Rafe VanDenBerghttp://www.practicalecommerce.com/articles/563/Quantifying-Conversion-Funnel-Opportunities/#comment39662007-10-29T18:10:39-07:00Hi Justin,
The diagnostic process we're talking about here shouldn't be taken to imply a linear shopping process. The funnel points we measure are simply milestones that must be passed through in order to complete a purchase. Regardless of all the bouncing around a shopper will most certainly do, they have to pass through certain milestones.
Whether or not prospects are reaching these milestones in adequate ratios is what we're looking for --- excessive fallout in different areas of the funnel points to different underlying strategic and tactical root-causes.
Shoppers who reach the lowest portion of the funnel, regardless of purchase price, have self-qualified to much greater degree than general site visitors and have demonstrated a high-degree of purchase intent --- more than 25% fallout at this lowest level should indeed raise eyebrows.
Rafe VanDenBerg
www.bdxi.comJustinhttp://www.practicalecommerce.com/articles/563/Quantifying-Conversion-Funnel-Opportunities/#comment39262007-10-22T22:39:38-07:00I don't agree with having hard and fast benchmarks as a catch-all for everyone's cart health. It is a very slippery slope. The author states that checkout "Starts-to-Completed Orders" ratios under 75% are a big problem. That may be true if you are selling a $2.00 item, but how about more considered purchases like a TV or computer? Your cart completion ratio will probably be much smaller because people need to shop, do their research, and then buy. Also, while the funnel does provide an easily understandable view of your cart, it doesn't take into acount anyone who isn't shopping in a linear fashion (most of us). Don't get me wrong, I appreciate commentary on how cart funnels can be a part of the analytic picture, but I worry when it is used as the end all source for how your cart is performing. Rafe VanDenBerghttp://www.practicalecommerce.com/articles/563/Quantifying-Conversion-Funnel-Opportunities/#comment36862007-09-18T23:14:40-07:00Hello Beate,
To answer your question, the reported industry averages are, well, averages. And the lower-end of the distribution really pulls those numbers down in a big way. The benchmarks we use for diagnostic purposes are based on our optimization work and they strive to balance conversion efficiency across the funnel with profitability considerations.
Granted, our clients are likely very motivated and probably not reflective of the average in this respect. But for those interested in above-average performance, these benchmarks are achievable aims.
Is it possible to go much higher? Certainly. There are more and more e-commerce companies focusing hard on their conversion funnels and achieving very high ratios as a result. But in our experience, higher is not always better.
When we see overall conversion going much north of 10-12% for a company with relatively "normal" margins, that's a big red-flag for us --- it's usually a sign of sub-optimal pricing or targeting...Béate Vervaeckehttp://www.practicalecommerce.com/articles/563/Quantifying-Conversion-Funnel-Opportunities/#comment36632007-09-16T16:09:03-07:00Hi Rafé,
Great posts!
Just a short question on how to compare the 8% order to conversion rate (100*0,6*0,3*0,6*0,75) with the 2%-4% conversion rate that is generally taken as average?Rafe VanDenBerghttp://www.practicalecommerce.com/articles/563/Quantifying-Conversion-Funnel-Opportunities/#comment36612007-09-15T17:21:01-07:00Hi Wes,
While not directly related to conversion funnel analysis, I think I understand where you're going with your question...
Without knowing how demand breaks out between specific products within a product category, it's extremely difficult to know how the company's product spread is going to affect the performance of SEO efforts.
But it's certainly possible to understand the results that are required just to cover the expense --- i.e. calculating the amount of business, orders, or customers that will need to be generated to break-even on the incremental expense, given the company's margins and transaction costs.
From here, qualitative judgements can help gauge the likelihood of achieving those results. For example, if the product category keywords are very general and the company is really only competitive on a handful of products within that category, it's likely that there'd be a tremendous amount of waste in the campaign. If, however, the company's offerings align...Weshttp://www.practicalecommerce.com/articles/563/Quantifying-Conversion-Funnel-Opportunities/#comment36522007-09-14T05:51:54-07:00Wouldn't the number of products that a retailer (for example) carries be a determining factor of conversion rate if you were using product categories as keywords? For instance, one of my clients is considering hiring an SEO company to help rank 15 keywords/phrases.
They'll be using product categories as the keywords/phrases. The SEO company charges a monthly rate and guarantees that each keyword/phrase will be in the top 3 pages of one of the 3 search engines (Yahoo, MSN, and Google).
Is there a way to guesstimate how many products per category they would need in order to (at first) just cover the monthly rate?eCreamery.comhttp://www.practicalecommerce.com/articles/563/Quantifying-Conversion-Funnel-Opportunities/#comment36332007-09-13T09:08:48-07:00Thank you, the concrete application examples are extremely helpful.