Practical Ecommerce

Rethinking Conversion Rates

When I’m not writing for Practical eCommerce, I spend my professional life running a “boutique” web-consulting firm. As a result, I get involved in numerous sales meetings. I’ve noticed something of a trend recently with companies evaluating our services asking for third-party “research” or “proof” concerning conversion best practices.

Landing page vs. home page

Unfortunately, we have to disappoint these companies because the concept of “conversion” as a methodology is new enough that any “proof” is virtually nonexistent. In addition, any research or best practices that do exist have the possibility of being based on a flawed foundation of assumptions that just aren’t true. For example, the debate in our office lately has been lively concerning the concept of landing pages and to what extent does a landing page replace a home page? To what extent does a landing page mimic a home page? Is a product-detail page the same as a landing page for that particular product? These questions (with no answers) illustrate the point that our collective thinking about the web may be founded on questionable assumptions.

As another example, let’s take the idea of commonly accepted conversion rates. You have probably read that “typical” conversion rates for ecommerce sites are about 1 percent to 2 percent and “good” conversion rates are in the high single digits. So, presumably, if you have an 8 percent conversion rate, you just sit back and commend yourself on a job well done. But is it really acceptable that 92 percent of visitors leave without making a purchase? Is that really the best you can do? It seems unlikely that your site cannot be improved in any way.

As a fluid and evolving medium, the Internet is constantly changing, and the conversion concept is one of the growing areas of focus for many companies and gurus alike. About four years ago, Seth Godin published The Big Red Fez: How to Make Any Website Better. It was essentially a brief review of about 50 different websites, spotlighting some element that each site did poorly or well, to impact conversion. It was, perhaps, the first look at the web from the perspective of the direct marketer. Since then, there have certainly been more books (and many more articles and white papers), but the conversion concept is still very new and mostly unsolved.

One thing is for sure

Which brings me to my point. The only thing that you know for sure is that your conversion rate is far below its potential. How far below? No one knows. Imagine a “perfect” search engine that matched what the user was looking for with 100 percent accuracy (perhaps using some form of mind reading rather than keywords). What percentage of “perfect” visitors would your site convert? Then imagine that you design a new page for each perfect visitor type. What percentage would convert then? I’ll wager that you could do a great deal better than 8 percent. What about 20 percent, 50 percent or even 80 percent?

Now, our experience with other types of marketing would lead us to believe that an 80 percent conversion rate is unrealistic, but I wonder how much of that thinking is flawed. Perhaps our goal as web marketers ought to be “a perfect visitor and a perfect landing page.” Sure, we may never reach the goal, but any progress we make toward it is an improvement. My simple point is this — whatever you think you know about the potential of the Internet is probably wrong. The possibilities are yet to be determined. The only thing that you know for sure is that your conversion rate is far below its potential.

Mat Greenfield

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  1. Legacy User June 21, 2007 Reply

    Some excellent points raised here, at last. We've been having this debate at my site for some time. I look at it this way: If a web retailer opened a storefront at a mall and only converted 2% of the people who walked through the door, they'd be out of business in three months.

    — *Derek Gerry*

  2. Legacy User January 11, 2008 Reply

    Our brick and mortar teacher supply store has an average 86% conversion rate, which is very good, but we are happy with 2% online. Why? Because so many of our online visitors aren't out to buy. They're looking for ideas or their classrooms, or thinking about lesson plans, or clicking through from the blog. Not that we wouldn't like a higher conversion rate, of course — that's how I ended up here! but I don't think we can compare physical world stores' conversion rates to online ones.

    — *Rebecca*

  3. Legacy User February 25, 2008 Reply

    In an ideal world, every business would be looking at a 100% conversion rate. But is this possible? Also if a website has just a conversion rate of 2% and you can make it 3%, in effect the revenuews are going up by 50%. And considering the fact that it is much more economical to run an online store when compared to one that is offline, the e-trader should be feeling great when he can enhance the revenues by 50%. But yes, the possibilities of an ever higher conversion rate remain.

    — *Niladri*