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Customer Conversion

The customer conversion rate is probably the most important number you should know about your website. You can calculate this number by taking the number of people who actually buy something from your site in a week, and then divide by the total number of unique visitors to your site. So, if 6 people bought something on your site and 300 people visited, your conversion rate for that period would be 6/300, or 2%.

The Pay-Per-Click Difference

If your website makes substantial use of pay-per-click advertising, improving the customer conversion rate on your site will be the difference between life and death for your business. Here's why:

Suppose you (and your many competitors) sell a product that offers a $35 per item profit. You advertise on Google; you pay 50 cents for every click-through. Now, suppose your conversion rate is 2%. That means that if 100 people click through, you must pay Google 100 x .50, or $50, for the advertising.

You have a conversion rate of 2%, which means you got 100 click-throughs x 2%, or 2 customers. The per item profit from these sales was 2 x $35, or $70. Subtract what you paid Google; $70 - $50 leaves you with $25.

What if your competitors improve their conversion rate? If they improve their conversion rate to 4%, not only could they make more money from the same number of click-throughs, they could bid up the price of a click-through to the point where you could not afford to pay for Google advertising!

Your Company Your Competitors
Ad Cost: 75 cents per click Ad Cost: 75 cents per click
Conversion Rate: 2% Conversion Rate: 4%
Customers from 100 clicks: 2 Customers from 100 clicks: 4
Cost of Advertising: $75 Cost of Advertising: $75
Profit from Sales: $70 Profit from Sales: $140
Net Profit/Loss: -($5) Net Profit/Loss: $65

Let Improve Your Customer Conversion Rate

There are two ways to improve the customer conversion rate on your site:

  • Improve the usability of your site
  • Improve the online sales characteristics of your site.

A usable website is greatly preferred by customers; see the Website Usability page for the details. However, improving the usability of your site is not enough: I will examine your pages for up to 200 sales conversion best practices.


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