What is a Good Conversion Rate?

July 12th, 2010 by Patrick Hare

In the world of web design, “conversion rate” is defined as the percentage of site visitors who visit a website and perform a desired action. This action can be different things to different people. In most cases, the site owner wants to make a sale or generate leads, but in most cases you will experience scores of visitors for every one that buys something, fills out a form, or makes a phone call. When it comes to website conversion rates, most people would consider an ideal rate to be one that makes the most money, or at least turns a profit.

Quite a few factors go into website conversions, and they can be very interdependent. For instance, if you have a lot of “junk” traffic coming to your site, your conversion rate could be very low regardless of the user experience. Likewise, you could have a trickle of traffic coming in and still make money if you can turn your visitors into buyers. Naturally, most people want a lot of good traffic with good conversion. On the search engine optimization side, you can afford a low conversion rate as long as enough “free” traffic comes in to justify your SEO expenses. For traffic generated by way of Pay-Per-Click (PPC) you want to watch you clicks a lot more carefully.

Most experts will tell you that an ideal ecommerce conversion rate is about 2.5%. For lead generation sites, conversion rates can be ten times higher if you’re just collecting names and phone numbers. If you’re buying ecommerce traffic with PPC, it can sometimes be difficult to justify a significant ad spend if the cost per click is too high. For example, if you are spending $1 per click, and make 1 sale for every $40 you spend (one hundred $1 clicks divided by 2.5% conversion rate), then you’d better be making more than $40 on a sale. In some cases, you can factor in lifetime customer value to make your numbers work, but in these cases it pays to have senior management on board to ensure that your numbers don’t look like a recipe for bankruptcy.

There are a lot of ways to increase your conversion rate over time. Many of these involve testing keywords and site design changes. This is because some keywords can have a 10% conversion rate or higher, though they are usually few and far between. Website design changes are often the primary way of turning clicks into buyers, and tools like Google Website Optimizer are ideal for testing different variations on landing pages to see which one works the best. Sometimes a small or seemingly subconscious change will create a trust factor in your customer’s brain that makes the sale go through.

Speaking of trust factors, it pays to make a site that looks trustworthy. Previously, webmasters could get away with shopping processes that were very different from those of other sites. Today, it pays to mimic the shopping experience that people have learned from other transactions. Credit card logos, endorsements (like the BBB logo), security seals, and streamlined shopping pages all contribute to better conversion rates.

PPC conversion rates are often the most addressed because real dollars are lost when a conversion rate is bad. Making sure to have conversion counters in place (and goal counters if you use analytics programs) is one way to understand which keywords are worth keeping. With some keywords, it is often hard to separate buyers from window shoppers, or information seekers from active purchasers. PPC programs have ways of filtering out keywords that are not sufficiently relevant, but with a pay-per-click campaign it takes time to understand how people react to your site and its content, so it pays to start slow. If you can afford to spend a lot of money on your PPC campaign, then you may be able to write off the first few weeks as an information gathering expense. Nonetheless, PPC is one part of your business where continuous improvement is critical.

Understanding how customers convert is imperative for large and small companies alike. There are too many individual factors to define a perfect conversion rate for the web, but for your own ROI the conversion rate will normally depend on your ability to convert the visitor. If you generate leads, the online conversion rate is the first step to creating a real sale through follow-up. For e-commerce sites, the conversion may well depend upon a series of visits, after which the customer makes a decision to buy. Either way, and more so with PPC than SEO, continuous tweaking of your site pages may be necessary to make sure that your users are seeing all of the things they want to see.

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