• 31 quick points to instantly understand online conversion

    Confused

    I learned the hard way that I make too many assumptions when talking to prospects as I was going through a presentation for a website conversion optimization project. Part of the presentation dealt with the math behind site conversion. Nothing too complex, just the basics, or at least that is what I thought. The puzzled look on the faces of the two managers was funny as well as thought provoking. On the negative side, I do not think that client will sign up with our services. On the positive side, the experience gave me a topic for my next blog.

    Before you can improve your site conversion rate, it’s important to understand some of the essential concepts behind online conversion. I really need to sit down and explain them through a blog so I can get through to my clients more effectively! Some might find the concepts covered here simple, others hopefully will find them extremely helpful.

    What is your site goal?

    Are you an e-commerce site that is trying to sell a customer online? Or are you a lead generation site trying to get visitor information so that your sales staff will close the sale offline?

    too many goals?1. Start with a clear goal for the site. That will be your conversion goal. Once you have the goal in mind, you must consider the unique page(s) on your site that is only reached when a conversion takes place. Why? Because you will be able to recognize that a conversion took place only when this page is displayed: it is called the conversion goal page. For a B2C site, the conversion goal page might be the thank you page that is displayed after an order is submitted. On a lead generation site, the conversion goal page is the page displayed for the user after submitting a contact form.

    2. Choose reasonable conversion goals for your site. Some businesses lend themselves to e-commerce, others do not. Let’s say that you are a consulting company that specializes in site usability assessment. Having a shopping cart and hoping clients will order a usability assessment online is not reasonable goal to expect.

    3. Your site can have multiple conversion goals; you just need to make sure that you can identify each of these goals clearly and distinctly.

    4. If you are going to have multiple conversion goals, you need to have separate conversion pages for each of these goals. If a single page is reached when two different goals are achieved, you will never know which route your site visitor followed to get to that page thus making it impossible to track the results effectively.

    Primary vs. Secondary website conversion goals

    5. It is very important to recognize that while you can have multiple conversion goals, you should have only one primary conversion goal for the site. Other goals should be secondary to your main goal. This is probably one of the points that many clients struggle with. The rationale behind this should be obvious. Site structure, design, elements, and navigation all should support your primary conversion goal. A primary conversion goal will force certain elements to appear in certain places. If you have multiple primary goals, you will end by losing focus. When you lose focus, your conversion rate will drop. It is that simple.

    Walking the path: holes and rest stops

    6. The path users follow to reach that conversion goal is called the “conversion funnel”. Sort of makes sense. The funnel pushes the user to a final goal. As your users navigate through the funnel, they might decide to leave the site. That means you have a hole or multiple holes in your funnel; making it impossible to reach the end goal.

    7. Pages on the site can be divided into:

    • Landing pages: these are the entry points to your site. If you are running a PPC or ad campaign, you get to choose and design the landing page(s) for the campaign. However, if a user searches for a term on a search engine and lands on a page as a result (a blog page, your services page, etc.), you can’t do much about it since you have little control over which page they might land on first.
    • Resolution pages: these are the pages on the site that answer any questions or fears a visitor may have.
    • Waypoint pages: are pages that support the sales process.
    • Conversion entry pages, these are entry points to your conversion funnel.

    8. Let’s sum it all together. Let say that you have B2C site. When a user arrives at your site, he is arriving at a landing page. As he or she starts navigating through the site, he will have land at a products page. Let’s say he has questions about shipping policies, contact numbers, and how to use a product. All of these questions will be answered in your resolution pages. As the user views a product page, he might have some questions about volume discounts or questions revolving around the sales process. These will be answered by some of your waypoint pages. When the user adds an item on a shopping cart, he is taking to a conversion entry. The conversion entry page is where the checkout process starts. When the user completes the final sale, he is taken to the “thank you page” or the conversion goal page.

    9. Have you seen those ugly, long pages (where the text goes on forever)? They are long copy (long sales letter like) pages and they can become your landing page, resolution point and a waypoint at the same time. I don’t really like them but they do work!

    Holes are evil: Do they hate me?

    Your fault?

    10. Remember Users leave the site for millions of reasons. Sometimes you have to take the blame for it, other times you do not.

    11. You should blame yourself if a site visitor needs your product and services but does not convert. You haven’t give them the confidence to move forward with the decision.

    Track your visitors

    12. Having a website is good; having a website with tracking software is great. There are a variety of tools that will tell you a ton of information about your visitors. Forget about the standard tools you have available from your hosting company. Do yourself a favor and install Google Analytics , it’s FREE.

    Calculating your site conversion rate

    13. Your basic conversion rate is equal to the total number of visitors your site receives in a certain time period divided by the total number of conversions for that same period. So, if you receive 2,000 visitors in one month and you get 100 orders in that month, then your conversion rate is = 100/2000 = 5%

    The value of a conversion

    14. How much profit do you make per order is important when evaluating your marketing budget for a site. In our example, let’s say that after you pay all your expenses, you make $50 profit per order. So, if you are getting 100 orders, then you are making $50 * 100 orders = $5,000.

    How much should you spend on a PPC campaign?

    15. It very much depends on the value of conversion we demonstrated above. In our example, you got 2,000 visitors which at the end gave you $5,000 profit. How much should you be spending to get these 2,000 visitors? Most sites will spend about 20% of their profit on getting new customers. That means, you will be willing to spend $5000 * 20% = $1000 per month. Of course some sites will set the budget to less than 20%; whereas others will be more aggressive and set the budget to much higher percentage.

    How much should you spend per click?

    16. We figured out that you can spend $1000 on marketing the site per month. Remember the profit came after 2,000 people visited your site. So, how much should you be paying to acquire that traffic? Simple, divide your marketing acquisition budget by your total number of acquired visitors: $1000 / 2000= 0.50 per visitor. So, if you are bidding on a PPC campaign, your average bid should not be more than 0.50 per click.

    Total number of visitors

    2,000 visitors

    Pay per visit

    $0.50

    Your PPC spending is 2000 * 0.50

    $1000

    Number of orders you get

    100 orders

    Profit per order

    $50

    Total profit from 100 orders (100*50)

    $5,000

    Less the money you spend on campaign

    $1,000

    Total profit ($5000-$1000)

    $4000

    What if I am spending more for a click?

    17. Let’s say that you are in a competitive market, and the average bid per click is $1. So, to get 2,000 visitors you will have to pay $2000. let’s redo the math:

    Total number of visitors

    2,000 visitors

    Pay per visit

    $1

    Your PPC spending is 2000 * $1

    $2000

    Number of orders you get

    100 orders

    Profit per order

    $50

    Total profit from 100 orders (100*50)

    $5,000

    Less the money you spend on campaign

    $2,000

    Total profit ($5000-$2000)

    $3000

    But how come my competitors are spending a lot more per click?

    Here are the reasons for that:

    18. Either your competitor did not do the math and eventually they will get to it,

    19. Or your competitors are able increase the amount of profit they make per order to offsite the higher bid,

    20. Or competition is including future orders and repeat business from a customer into their calculations.

    Huh, what was that last thing? Customer acquisition vs. Order acquisition

    21. You always hope that you will see multiple orders from a customer. In our calculation until now, we used the profit from a single order to decide how much money you make. Instead of single order, you can use the average number of orders you get from a customer to do your profit analysis. . To do this calculation, look at the average number of orders you receive per customer. Let’s say, a customer on average will place 3 orders with you in a year. Future orders from a customer will not come through a PPC campaign. The customer already knows your business and will come to your site directly. If you normally make $50 per order, then you, you will be making $150 profit per customer in a year time. Remember you only spent $1 to get the first order from the customer. Let’s redo the math:

    Total number of visitors

    2,000 visitors

    Pay per visit

    $1

    Your PPC spending is 2000 * 0.50

    $2000

    Number of orders you get

    100 orders

    Profit per order

    $50

    Average number of order from a customer

    3 orders

    Profit per customer

    $150

    Total profit from 100 customers (100*150)

    $15,000

    Less the money you spend on campaign

    $2,000

    Total profit ($15000-$2000)

    $3000

    22. So on a positive note, you will be willing to spend a lot more to run your PPC campaigns. On a negative note, you are basing the number of order you receive from a customer on assumptions and predictions is a risk. Predictions are great in helping you compete but they are just predictions!

    The ugly side of lead generation sites

    23. Things are not as straight forward with lead generation sites. Let’s take the same example above, except now we are not selling online. We are merely trying to get people to give us their email address and telephone number. In this case, our conversion numbers look a lot like this:

    Total number of visitors

    2,000 visitors

    Pay per visit

    $0.50

    Your PPC spending is 2000 * 0.50

    $1,000

    Number of emails/telephones you get

    100 leads

    24. The challenge for a lead generation site is that sales are closed offline. That means, a sales rep has to actually make the call to close the sale. So, how many of these 100 prospects who contacted via a website you think can actually close on? Most site owners report that they can close on about 10%. That means, they are only able to convert 10 of the 2000 visitors into actual clients. So, if we redo the math, then:

    Total number of visitors

    2,000 visitors

    Pay per visit

    $0.50

    3M Results
    Your PPC spending is 2000 * 0.50

    $1000

    Number of emails/telephones you get

    100 leads

    How many leads turn into customers

    10 customers

    Number of orders

    10 orders

    Total profit from 10 orders (10 * 50)

    $500

    Less the money you spend on campaign

    $1000

    Total profit (500-1000)

    ($500)

    Ouch! Most lead generation sites of course make a lot more money per order to start with. However, keep in mind online vs. offline conversion can affect your bottom line.

    The difference between bounce and exit rates

    25. Bounce rate is the percentage of visitors who arrive at a landing page on a site, but leave without navigating deeper into the site. Bounce rate can be calculated per page, or for the overall site. Bounce rates tells you how well your site or landing pages work for the spontaneous type personalities. These are the guys who will not spend more than 3 seconds on a site. You either give them what they are looking for or they are out of here to the next site.

    26. Exit rate is the percentage of visitors who leave your site after navigating around the site for more than one page.

    27. Some people like to start optimizing pages with the highest exit rates others start with pages with highest bounce rates. Before you can make the right decision look at your site entry points. These normally are most visited pages usually on the site.

    • Are any of these pages also on your list of pages with the highest bounce rate? If yes, then start with that page.
    • If no, then look at your highest exit pages and start with those.

    More rates to keep in mind when looking at your stats:

    28. Average time per session is the time a site visitor spends on each visit to the site. Of course you want to see visitors spending more time per visit on your site. Generally, more time is equal to more interest.

    29. For each of your site traffic sources, examine how well the traffic is converting compared to traffic from other sources. Sometimes traffic from Google converts better than traffic from MSN. I hear that AOL traffic is great for B2C sites. If a search engine traffic converts better than others, then it might be worth while to increase PPC spending with that engine.

    30. For each of your site traffic sources, examine the average time visitors are spending on your site compared to traffic from other sources. Remember that higher average time means higher interest. If traffic from Google is spending twice as much time as traffic from yahoo, then they are definitely more interested in your product or service.

    31. For each of your site traffic sources, examine the bounce rates. Higher bounce rates for a source of traffic compared to other sources means that your landing page is not matching the type of customers coming from that source.

    Let me give this scenario:

    Google

    Yahoo

    MSN

    stop CRO frustrations
    Conversion rate

    1.2%

    2.3%

    %0.40

    Average time on site

    7:33

    9:12

    12:01

    Bounce rate

    22%

    26%

    39%

    In this example, MSN is the worst engine in converting traffic. Most companies would actually decide not to spend any money on PPC if they see that. However, you should also examine the average time a visitor from MSN is spending on the site. You will notice that MSN visitors are spending significantly more time on your site. But how come they are not converting? Somehow your site is not giving visitors from MSN what they are looking for. But these visitors are still willing to spend the time. Also notice that MSN has the highest bounce rate. That means spontaneous visitors from MSN are not able to find what they are looking for immediately on your site. That is the reason they leave the site after one page. More spontaneous visitors from Yahoo and Google are finding what they are looking for. Conclusion, your landing page, is not matching the type of spontaneous visitors from MSN.

    Well, I hope this helps someone! Did I clarify message enough? Tell me what you think.

    Is your conversion rate less than 10%?

    • Do you need help increasing your campaign or site conversion rates?
    • Do you need landing page optimization services?
    • Is your ecommerce website generating all the sales it should be generating?
    • Is your site generating all the leads it can?

Khalid Saleh

Khalid Saleh is CEO and co-founder of Invesp. He is the co-author of Amazon.com bestselling book: "Conversion Optimization: The Art and Science of Converting Visitors into Customers." Khalid is an in-demand speaker who has presented at such industry events as SMX, SES, PubCon, Emetrics, ACCM and DMA, among others.

View All Posts By Khalid Saleh
Khalid Saleh

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