Today's post is from a guest blogger, Khalid Hajsaleh, Thanks, Khalid!
Regardless of the type of website you have, when your site visitor takes the action you designed for them to take, a conversion occurs. In the case of an e-commerce website, a conversion happens when a customer places an order. On a lead generation website, the conversion happens when the customer fills a contact form. When a visitor subscribes to an RSS feed on a blog, a conversion happens.
But let's face it, if you have operated a website for any amount of time then you must have faced the problem of low online conversion rates.
According to data published in May of 2007, the average ecommerce website converts on average about 2% of its visitors. Your average B2C, electronics website converts less than 0.5% of its traffic. So for every 200 visitors, only one will actually place an order. Contrast that to the offline conversion rates. Although there is no published data on the average store conversion rate for offline stores that I can find, informal surveys show that most offline stores convert around 25% of their in-store traffic into actual orders. When a store runs a large discount, those conversion rates shoot up even more significantly. Think back to the last black Friday. Were you one of the thousand of customers, standing in endless lines in front of the local department stores or best buys? How much do you think that store converted in that one day?
The question that begs an answer is why do most websites seem content with these low conversion rates? In my experience, it is one of the three reasons:
Conversion data is difficult to track: In the case of a stand alone ecommerce website where the company does not operate a traditional store, calculating conversion is clear. The line is not so clear in the case of a mixed website, where the company sells both offline and online. Many websites that have a brick and mortar operation report that offline sales increases as a result of their online presence. Although more and more people are getting online, data shows that many are still comfortable with completing a purchase offline. In that case, consumers complete the research online but the actual purchase (conversion) takes place in the physical store. So although the reported online conversion rate is low, the overall conversion rate for the company is actually higher.
Traffic was cheap: Acquiring leads, whether organically or via PPC campaigns, "was" cheap. So it wasn't burdening these companies to ignore their low conversion rates. Of course, this is no longer the case. Organic optimization including link building requires more time, effort and money. PPC bids between $3 and $5 per keyword are typical in many industries. It is not unheard of to pay more than $10 in certain competitive markets. As traffic gets more expensive, more website owners will look for ways to maximize the ROI on the current traffic they are getting.
Increasing conversion is tricky: Increasing online conversion is part science, part art. It is the intersection of creative, marketing and the analytical disciplines. I know most people would like to hear that there is a simple formula you can apply to increase your conversion rate. And yes, there might be few tweaks to increase it a little but it takes time and patience to move from 2% conversion rate to double digits.
So, tell me what you think? Why do most websites focus on increasing traffic as opposed to converting that traffic?
Khalid Hajsaleh is the Co-founder and President of INVESP consulting, a marketing consulting company that helps clients increase site conversion rates. Khalid has over 10 years of software industry and consulting experience. He was a lead consultant and architect on several major ecommerce sites for companies such as Motorola, Levolor, American Express, and Frontier.