Is There Life After Conversion?
Don't worry; this isn't a post about how I found religion. I've just been thinking a lot lately about conversion (the website performance metric, that is) and how we've come to regard it as the Holy Grail of metrics. Now, don't get me wrong: measuring conversion is incredibly useful, and has been a huge boon to website testing and optimization. The problem is, we're starting to take it a bit for granted, in exactly the same way we have every metric before it.A Brief History of Metrics
A very, very brief history. If you look at website metrics in general, you'll see an evolution in the past decade or so that goes something like this:Hits > Page Views > Visitors > Unique Visitors > Conversions
Interestingly, the online advertising industry has seen a similar evolution:Impressions > Click-throughs (CTR) > Conversions
In each case, we realized that something about the previous metric was misleading or simply lacking. Ironically, though, in each case we started to view the new favored metric as being the perfect measurement (until someone showed us a better one).Limitations of Conversion
So, how is conversion lacking? First of all, like any metric, conversion is relative and depends on how you measure it. Is a 10% conversion rate good? Not if your conversion was 15% last year. More importantly, it doesn't reveal the full picture. Like all of the metrics before it, improving conversion is generally a good thing, but not necessarily.Take this example: let's say you have an e-commerce site and you sell Product A and Product B. Currently, your site gets a 3% conversion rate. You decide to test a major change to the site and your results show a 6% conversion rate. Great news, right? Maybe not. What if Product A has a profit margin of $1, and Product B has a margin of $100. Prior to testing, 90% of the conversions were purchases of Product B. The new version of your website completely shifted the balance, and Product A accounts for 90% of the purchases. Your conversion doubled, but you just lost a lot of money.
What Comes Next?
So, the obvious question is: what comes after conversion? First, let me ask another question: are all of the old metrics useless? Of course not. Let's look at online advertising; having a high conversion rate is great (all else being equal), but you still need impressions to drive click-throughs, and click-throughs to drive conversion. It's important for metrics to evolve and improve, but we can't ignore everything that came before the latest and greatest.In the end, no one metric is ever going to tell the whole story, and we have to let go of conversion's Holy Grail status long enough to see the big picture. Start by considering these questions:
- How does your conversion rate compare to the past?
- How does your conversion rate compare to your industry?
- Are you measuring the right goal?
- Should you be measuring multiple goals?
- As one goal improves, does it harm another goal?
Dr. Pete
· Wednesday, March 19That's a good example, Hannah; I think a lot of the next generation of metrics are really Conversion+ metrics, and are trying to take in the bigger picture.
Brian Rotsztein
· Tuesday, March 25Hannah, you brought up an important and very frequently overlooked idea. I've been discussing the lifetime value of a website-generated client for years. Each website visitor that converts from user to buyer has the potential to generate multiple sales for your company.
I believe that you have to consider the long-term effects of converting a website visitor. Will they return to make another purchase? How can you encourage them to do so? Similarly, will they refer friends to you, even if it's a year from now?
Hannah Smith
· Wednesday, March 19Really nice post. I'd also like to add another metric to the mix - Lifetime Value. This is a pretty awkward metric to measure, but it's even more indicative of the health of your business than conversion rate.
It works on the basis of not only taking into account the first transaction a customer makes, but subsequent ones too. Your conversion rates may look healthy, but if you're just attracting a lot of one time buyers your marketing spend might be better spent elsewhere.