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
to pay for Google advertising!
|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
Your Customer Conversion Rate
There are two ways to improve the customer conversion rate on
- 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.