Conversion Rate: Is It The Most Important Metric to Focus On?

Conversion Rate

Conversion Rate

It is every marketers’ dream to convert each and every possible lead to their website. However, this dream is far from reach, caused by the limitations of the business or customer. It could be due to the lengthy checkout process that breaks the customer’s patience, or just that the customer is not ready to make the purchase. All these reasons that may or may not be in our control makes the conversion rate metric so interesting to look at. Marketers are addicted to exploring the magic behind conversions, and working on the best optimisations to increase conversion rates ever so slightly.

Monitoring your site’s conversion rate is an important element that marketers look into when optimising websites with their sales or lead generation strategies. But before you go ahead and make it your number 1 priority, you might want to read this article to better understand what you may be missing about conversion rate.


The Basics of Conversion Rate

So, what exactly is “Conversion Rate”? We say there is “conversion” when a visitor to your website performs an action that you want them to do. Having someone click on your call-to-action link, creating an account or filling out your email sign up form are few examples of conversion or actions that you want to measure and optimise.

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Conversion rate is the percentage of visitors that goes to your site that resulted from a conversion. You can compute it this way:

Conversion Rate

This means that if your online store has 100 total visitors and 10 of them ended in a sale, then you have a conversion rate of 10%.

Conversion Rate

Conversion is one of the most significant component of your paid search campaign. If you’re not converting your visitors into customers at an optimal rate, then you’re not making the most out of your advertising budget.

To obtain more registrations and sales, marketers apply conversion rate optimisation to create the best landing pages. Many have achieved outstanding results with it, but is it the only metric you should be obsessed about? The realistic answer is NO.  

In the long run, any marketer can deliver exceptional conversion rates. But they may still fail to understand its relationship with other metrics to make any authentic impact to the business.  Let me give you a rundown of the reasons why you should not put too much focus on conversion rate alone.


Why It’s Pointless to Focus Solely on Conversion Rate


1. Not all visitors can be converted

This question gets asked always: “Can you optimise all your visitors to your website for conversion?”. Sadly, it is impossible because consumer behaviour is affected by many factors that goes beyond our control.

For example, first-time visitors will most likely not purchase anything from you compared to long-time loyal customers. Furthermore, regular visitors and customers will not simply convert due to some conversion optimisation that you have done with the page. No matter how understanding you are of the consumer behaviour, you will never be able to convert every single customer.

There are other visitors such as link builders, job seekers, competitors and passive lurkers who are on your site for different reasons other than placing an order or fulfilling a goal conversion.


2. Conversion rate can be a misleading metric to use

Keep in mind the two essential metrics that shape revenue are: number of transactions and average order value

The conversion rate has a lower impact on revenue because it does not take into account the average order value in the calculation. It also has no impact on optimising cost.

When used individually, a higher conversion rate doesn’t necessarily mean that your business is doing much better:

Conversion Comparison

Let’s assume that average revenue per sales is the same. Looking at conversion rate alone, anyone would say that Option A is better. However, when you compare the actual sales between Option A & B (300 vs 500), Option B is definitely the better choice. Business owners are more interested in the money earned than the actual conversion rate. Conversion rate is still important; but it will only pull its weight when you use it with other metrics.


How to Use Conversion Rates More Meaningfully for your Business

Even with all these limitations, conversion rate is still a powerful tool. Here are some ways to use conversion rates more meaningfully and drive you to take relevant actions for improved results.


1. Pay attention to the right metrics

The goal of conversion rate optimisation is not about generating small wins like generating more account registrations or leads. The real goal here is to generate a huge impact on business which is measured according to money-related metrics. At the end of the day, it’s all about the money.

So to better optimise your CRO, don’t just focus on conversion rate. Look at other metrics such as increasing the number of transactions and average order value for each of your product categories, market segment and other outcome.


2. A/B testing to find the best converting page design

Now that you’ve learned conversion rate is not the ultimate metric, focus your efforts on A/B testing to test conversion optimisation on your page. Simple changes to the Call-to-Action button, layout and design of the landing page may just help your conversion rates.

A:B Testing


3. Break conversion rate according to channels

Conversion rates will become more useful when you break it down according to different visitor types with different purpose and relationship to the merchant. Average order values and conversion rates can be segmented based on different audiences to know how to increase the quality of traffic. Some examples here:

  • Search type – organic or paid search, generic or long-tail
  • Referring channels – social media, affiliate sites,  paid or organic search
  • Visitor type – first-time or repeat customers


4. Segment conversion rate by specific tasks

If you website features different key tasks such as sales, leads, customer support, account registration, treat each of them as different conversion tasks. If you think they are important,  you can divide the tasks and track them to grow conversion rates individually.


Final Thought

While conversion rate optimisation can be useful at some point, there’s no guarantee that it will elevate business performance. What we can recommend is for Ecommerce enterprise to embrace a holistic view of your business goals rather focus on a single metric to do all the work.


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