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Successful Conversion Rates
UK-Netmarketing Weekly Round-up - January 26, 2001

Working on a new website, or testing a new marketing tactic is always a tad nerve-wracking, especially when you don't have any previous results to compare your campaign against. There are so many factors involved in successfully converting a passing browser into an interested party, a benchmark for a 'successful' site can be a real help in working out whether you're on the right track.

Ben Rooney asked the list, "Anyone have a rough rule-of-thumb guide or meaningful comparison for the ratio of casual browsers to registered users on a site. I seem to remember reading that Lastminute had 8 squillion visitors but only Ms Lane Fox's grandmother once bought a return ticket to Cowes... Seriously (and for the benefit of LM's lawyers) I need some idea for a 'typical' site what a reasonable conversion ratio would be."

Robin Edwards responded, "But your perceptive comment about LMC would imply that simply having someone as a registered visitor is no guarantee of anything other than having some contact details that they may have requested you not to use for marketing purposes. Fills up your database nicely and allows you to create wild valuations for a company though. Perhaps it is a conspiracy between accountants and hard disk manufacturers?"

Neil McIntosh added, "I would imagine it varies, depending on what the site is selling and also on whether you mean registered users to be people who have simply given over some personal details, or who have actually parted with cash. If in the latter category, I got a press release from Autobytel the other day, titled 'Autobytel's success to date revealed' which said they had 900,000 unique visitors since August, and had generated 1,700 car purchase orders in that time. Even assuming all those orders go through to completion, my dodgy arithmetic makes that a browser to customer rate of 0.18%... would many folk on the list regard this as success?"

Is 0.18% a decent conversion rate? Presumably, it depends what you're selling and the margins you're making. The conversion rate could also be lowered by a 'dirty' database i.e. one with lots of duplicated or bad entries, as Martin Lloyd discovered, "I remember reading a report on a US e-commerce store who initially claimed 800 000 registered members. Following various challenges as to their definition of 'active' and 'member' the number dropped to 300 000 with similarly devastating results for their share price...Sadly I can't remember my source for this, but I seem to recall the article as being pretty clued up analysis wise."

Robin Edwards did the maths "If we make some assumptions then:

Cost to generate visitor = $1.00
Conversion rate = 0.18%
Cost per sale = $555.00

If the margins are more than $555.00 then you're onto a winner. In reality, I suspect the cost to generate each visitor was higher than $1.00 given the amount of money poured into marketing the site. If it was $2.00 per visitor things don't look so good. Of course they can up/cross/whatever sell them insurance, servicing, accessories and, hopefully, their next car. Is it true that boo.com had a conversion rate of 0.2%? What's the margin on a pair of trainers?"

Anna Perrin emailed, "There is no question that to deliver better results, B2C players are going to have to focus on delivering a better user experience. This does not have to be rocket science. How about clearly marked checkout buttons and a clean checkout process for a start? Buystream have been tracking this sort of thing for B2C clients and the kind money being left on the table is eye-popping. Their preliminary findings in this area indicated that between 53% and 66% of shoppers who actually begin the checkout process actually complete a purchase. These people wanted to buy something but were prevented by a poorly-designed checkout process."

There are so many factors involved in a visitor to a site actually completing a purchase. If the shopping cart system on the website is impenetrable, it's going to have a major effect on purchases. Or is it? Ian Collingwood wrote, "Whilst I have no doubt that usability is a factor in at least *some* failed purchases, making this leap is like saying that the piles of dumped 'impulse' purchases that always seem to litter the aisles around IKEA's checkouts on a Saturday are a result of people being unable to work out how to load their purchases onto the conveyor belt. Surely they just changed their minds?"

John Handelaar disagreed, writing, "Of course, there's more than one reason that poor usability might be to blame. Most shopping sites I visit won't give me a VAT-and-shipping-included price until I take the process through to the checkout. I'd suggest a fair proportion of 'failed' transactions were never intended to be transactions in the first place, just price comparisons."

It's taken many years to get anything approaching effective measurement of traditional media, so it's not surprising that measuring new media campaigns is still complicated. The renewed focus on profitability will undoubtedly provide the necessary boot up the behind to make this happen more quickly.

The Rules

Mat Morrison posted his 'rules' to the list asking for comments. What do you think? He added, "These are not all original, but (on the whole) those that aren't are frequently ignored. Some are merely significant guidelines". The responses are interspersed...

Open systems, good; closed systems, bad

It's all about support and easy of enhancement. Open systems are fine provided you have or can afford the staff or consultants to support them. If you don't have much money and can live with a standard look and feel closed systems will probably be fine. But don't modify the system too much as you will introduce problem or encounter bugs they never thought people would see (and I've seen some real beauties (both very recently and in the past). (Ben Thompson)

If you want to sell it, it should fit through the letterbox

Hmm, only works for small cheap items where delivery does not require a signature. Personally I think Amazon have the sub £25 market virtually sewn up. Otherwise remember everyone likes a discount (even if its not really one). (Ben Thompson)

Take the product to the customer, don't bring the customer to the product

Except a customer coming to your product should be more likely to buy. (Robin Edwards)

Frames restrict access

Frames sites will restrict access for a number of people - visually impaired users browsing with a text reader, for example. (Melanie Beech)

Commercial communities aren't.

Communities are what their members want them to be. Motley Fool is a commercial entity but it is very much a community. The book reviews in Amazon could be called a community. (Ben Thompson)

All splash screens are evil

Depends on the context. If it helps to make the sale by exciting the customer then it is worth it, especially for a product that they don't know anything about (a new model of car, for example). Eye candy and ego enhancing intros don't fit into this. (Robin Edwards)

The last thing people want is more websites.

In the same way that the last thing people want is more shops, magazines, books etc? The last thing people want is more crap websites. (David Burrows)

What counts is traffic through your server, not traffic through your web site.

Does traffic count anymore? It's about the bottom line at the end of the day, no matter how much traffic you have. (David Burrows)

A website is just one way of letting people play with your information.

Absolutely. Multi-channel, if done properly and cohesively, will win. (David Burrows)

Online, brand is a function of utility

...the usual methods of branding (TV adverts, radio...) are far to expensive for a discount cheap medium. The land grab has finished and it appears that AOL, Yahoo and Amazon have won. (Ben Thompson)

Interactive games aren't.

Don't agree. Same old argument about Flash/Javascript/JAVA/Shockwave blah blah. Bad implementations lead to bad results. BTW, how many games are passive? (Robin Edwards)

The online equivalent of space is time. Don't waste people's time.

Equivalent of space is time - But time is money and they are still interchangeable. The 1995 ideal that shopbots and other agents would destroy the economic theories on cost of information hasn't come to pass. People still have to spend time searching for information. Granted certain pieces of information are now easier and cheaper to find but obscure areas still take as long to find (and cost as much to find) as they used to do. (Ben Thompson)

Don't be big brother.

Do onto others as you would have done onto you. (Ben Thompson)

Our business is people, not demographics

Demographics hide trends. However people are too random and small. Groups are easier to deal with. (Ben Thompson)

Ben Thompson's added his own final thought, "Everything I've learnt online comes from the porn industry", which reinforces the notion that necessity really is the mother of invention.

LINKS OF NOTE:
A quick round up of interesting, funny, useful and other links gleaned from the uk-netmarketing list, office gossip and other nefarious sources...we take no responsibility should you chose to click...basically, it's not our fault. Enjoy:

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