True Conversion Rate
Conversion rate is one of the most commonly misused behavioral metrics, and focusing on an aggregate conversion rate can be misleading. Your true conversion rate is the metric you should care about.
True conversion is the number of visitors who came to your site intending to make a purchase who did in fact make that purchase. The same is true with the visitors who came to your site seeking support information. You want to know whether they were able to find the information they sought.
True conversion starts with determining your business’s specific goals and only then moves to measuring the customer’s intent. A multichannel retailer, for example, has a website designed to provide two basic services: sell products and provide customer support. But visitors come to this site for different reasons. Some come to purchase a product, some arrive to do research for a potential future purchase, and some look for support.
In fact, when ForeSee evaluated the 40 largest online retailers during the 2012 holiday season, we found the same three segments: 43% of visitors came to those sites with the intent of researching, 39% came with the intent to purchase, and 18% came with other intentions, such as product support or to check the status of an order.
What is an acceptable conversion rate for these three segments? For the first segment, visitors who intend to make a purchase, we have seen true conversion rates as high as 40%, depending on the company and the industry. The second segment, visitors researching a product for a potential later purchase, is not easy to convert. They never planned to purchase in the first place; either they are still researching, or they have a plan to buy the item at another place or another time. Low single-digit, near-zero conversion rates for this group are the norm. Your objective then is to meet customer needs and exceed customer expectations—to satisfy the customer.
The consumer determines success; you do not. The key is whether visitors found the information they wanted to find. A satisfying experience could potentially lead to an immediate purchase, but a future purchase is more likely, whether from a website or a retail store. Success for this segment cannot be measured by purchase alone at the time of the experience or by other behavioral measurements.
The third segment, the visitors who arrive for support, have no intention of making a purchase. Any conversion from this group is a bonus. Your goal is to satisfy these visitors by increasing their likelihood of becoming loyal customers and making a purchase in the future. You hope these visitors will also recommend you to others. Plus, they could possibly decrease our overall support costs, since the support they receive is online instead of through more costly channels such as a call center.
Conversion rate alone is not a measure of success. Is a 1.5% conversion rate a good or bad result for your researching segment? There is no way to tell by evaluating conversion rate alone. What you must know is whether visitors were satisfied and whether they are likely to purchase from you in the future, either online or off-line. The long-term value created from positive consumer experiences can be far more important to your business than the short-term value.
Success in your support segment cannot be measured by visitor behavior or conversion. Success should be measured by the customer experience satisfaction level of those visitors and by their future likely behaviors, such as whether they will recommend you to others, continue to use the online channel for support, or purchase more from you in the future. In other words, you must use different success metrics than conversion rate to evaluate visitors who arrived with no intent of making a purchase.
The true conversion metric provides a better and more accurate measurement of success. Use voice-of-customer research to find out why customers came in the first place and whether they were satisfied; combine this information with behavioral data to find out whether they made a purchase. Then you can transform conversion rate, a fundamentally misleading measurement, into a meaningful metric.
Categories: Customer Experience Analytics