Many companies are making huge investments in their effort to drive as many consumers as they can to their websites. Yet, companies are discovering that it is not enough to drive visitors to their websites; it is just as critical, if not more so, to convert these visitors into actual consumers or leads. The concept of conversion is by no means a new idea. Print advertisers have discussed response rate and conversion ratios for years. Most direct mail campaigns convert at 1% or less.[7] Online conversion rates did not do a whole lot better. Data reported by Shop.org reflects a continuous decline in online conversion rates. In June 2007, the Fireclick Index reported an average ecommerce conversion rate of just 2.2%. Fireclick Index data shows an average conversion rate of 1.7% in August 2010.[8]
As a result, most firms are increasing their investment in conversion optimization. From our experience, the majority of Fortune 500 companies are allocating close to 5% of their online marketing budgets to conversion optimization efforts. Based on the current trends, we expect that by 2015 most companies will spend close to 15% of their online marketing budgets on conversion optimization, and the remaining 85% will be spent on other forms of online marketing (SEO, paid advertising, email, banner ads, etc.).
Whether you are trying to measure the health of your website, the success of your paid advertising, or the ROI in an online marketing campaign, you’ll often discuss conversion rates. The term conversion rate has many definitions. For the purposes of this book, we define conversion rate as the percentage of visitors exposed to a campaign who take the desired action of that campaign. Since there are different goals and ways to measure conversion, this definition should be general enough to use with different media.
There are hundreds of millions of business websites, most of which fall into one of these categories:
Mirror their physical store counterparts by offering products to their visitors. A conversion on an ecommerce store happens when a visitor places an order with the site.
Are not designed for consumers to place orders on them, but rather are designed to capture leads. The actual conversion process takes place offline. Many professional services firms such as consulting companies and law firms rely on their website to drive leads for their business. A conversion on a lead generation website takes place when a visitor successfully fills out a contact form and submits it online.
Rely on publishing content to drive visitors to the site. Content sites usually sell advertising to generate revenue. A conversion on a content-based website is more difficult to quantify compared to a conversion on an ecommerce or lead generation website. These sites charge their advertisers based on the number of monthly views and visitors to the site. So, having more visitors or more page views will lead to higher advertising revenue. Thus, a conversion might take place when a visitor views more articles, spends more time on the site, visits the site regularly, or even subscribes to a newsletter.
Are designed to increase brand reach and awareness within a certain market. Although other types of websites can define measurable conversion goals, brand websites have vague notions of what a conversion is.
Are designed to help different audiences connect and communicate with each other. Examples of these websites include blogs, Facebook, and LinkedIn. Social websites introduce a new challenge in redefining what a conversion is within a social network.
Of course, a website does not always fit into a single mold. Although ecommerce companies sell products to customers, which is their main conversion goal, they still have other website conversion goals, such as increasing brand awareness or getting visitors to subscribe to a mailing list. A content website that relies on online advertising—such as an online magazine—might also sell paid subscriptions to access premium content on the site.