What is a good conversion rate? (That's not the question you should be asking)

The broad question of “What is a good conversion rate?” will bring you results from email providers, ecommerce platforms, and Etsy gurus. But unless you are running a DTC eCommerce storefront, this probably isn’t going to help you.

How many licks does it take?

What are you saying Mark, Conversion Rate isn’t important?

No, it is important, and it can provide you with some very valuable information regarding your paid and organic traffic channels, but it is not the metric I would optimize to.

Let’s back up a moment to provide some context.

I have been fortunate to work with dozens of clients and hundreds of campaigns over my 20+ years of digital marketing work. I have personally managed over $100 million dollars of paid media that has driven millions of prospects to websites, landing pages, and storefronts. Each client I have worked with has had unique parameters that required me to implement bespoke solutions. Here is a real-world scenario I would like to share with you.

Conversion Rates do matter for eCommerce, but perhaps not as much as you may think.

You are managing the Paid Search campaign for an online retailer that has three categories of products. You have a fixed media budget every month. Based on the information below, how would you allocate your media spend (which Product Group should receive your PPC dollars)?

	Product Group 1	Product Group 2	Product Group 3
Avg. Conv. Rate	3.0%	2.9%	2.5%

Based on this information, Product Group 1 is a no-brainer. Agreed. Now, what if I provide you an additional piece of information, the Average Cost Per Click (CPC) by Product Group…

	Product Group 1	Product Group 2	Product Group 3
Avg. CPC	$2.50	$3.00	$4.50
Avg. Conv. Rate	3.0%	2.9%	2.5%

At this point you are questioning my sanity because in this scenario not only is the Conversion Rate higher in Product Group 1, but the Average CPC is also lower. You are going to get more traffic, AND it is going to convert better! Obviously we should spend the entire working media budget on Product Group 1.

But not all Product Groups (just like clients) are the same, and in this real-world scenario, each product group has a different Average Order Value (AOV). Adding that to the optimization calculation provides us this scenario…

	Product Group 1	Product Group 2	Product Group 3
Spend	$50,000	$50,000	$50,000
Avg. CPC	$2.50	$3.00	$4.50
Visits	20,000	16,667	11,111
Avg. Conv. Rate	3.0%	2.9%	2.5%
Orders	600	483	278
AOV	$45	$54	$122
Revenue	$27,000	$26,100	$33,889

Now where do you feel we should be spending our money?

If we make decisions without seeing the full picture, we may be limiting our Return on Ad Spend (ROAS) by optimizing to the wrong variable. There are also additional factors to consider such as Seasonality, Cost of Goods Sold, Shipping & Handling Costs, and many others that every organization needs to consider.

[Note: in this scenario, the client ultimately decided to split the budget between Product Groups 3 and 2. Why? Because even though Product Group 3 had the highest ROAS, Product Group 2 had a higher Customer Lifetime Value (CLV) and it was determined the best use of the working media was to drive immediate profitable sales, and build a customer list of repeat buyers.]

If you are running an eCommerce operation, Conversion Rate is absolutely something you should be monitoring and will help you to focus your marketing efforts. It may also help you identify areas of your site that may be less than optimal in driving sales. All of this being said, I don’t believe Conversion Rate is something you should be preoccupied with.

What measurement is more valuable than Conversion Rate in regards to measuring and optimizing success?

The vast majority of us are not running online storefronts, and success looks different to us. We aren’t optimizing for immediate ROAS. We use our websites to drive awareness, increase engagement, persuade prospects, and generate conversions.

Conversions mean different things to different industries and I’ve built campaigns for all of them. Some conversion types may include, Newsletter Signup, Whitepaper Download, Demo Request, Online Application, Approved-Application, etc.

Is Conversion Rate important in understanding each of these Conversion events? Sure. But in my opinion, it is not the metric that is most important. What is?

Sessions-to-Conversion is one of the most important measurements you need to understand.

Do you know how many visits it takes on average for a visitor to convert on your site?

How many times do they need to visit your online properties before they are convinced that it is worth it for them to cough up their valuable contact information?

Many of the attribution models used today fail to find the “perfect” channel or tactic. And with cookies going away (allegedly), digital analytics is going to get even murkier. However, reviewing hundreds of clients campaigns, web analytics, and Path-to-Conversion reports, I can tell you one metric that we should all be able to measure is the average number of Sessions to Conversion. 

If your average number of Visits to Conversion is higher than one (it is)... you need to focus on how to drive new visitors to your site, and then how you are going to get them to come back that many more additional times.

There is no 1 perfect path. There are literally hundreds of combinations of Paid Traffic, Organic Traffic, Referral Traffic, Remarketing, etc. How are you going to find your prospects and engage them over time to come back again and again until they convert?

The Average Sessions to Conversion number is unique to you. For a major credit card campaign I worked on it was an average of 2.48 sessions until a prospect filled out the online application.

Are you in a demand-gen environment? How many sessions per user on average do you think it will take for them to fill out your form? Spoiler Alert: It is more than you think.

Are you in a B2B environment with a long sales cycle? Managing to a target Source/Medium Conversion Rate is not helping the efficacy of your campaign. 

Conversion rates are important, but they are one of the many variables we need to manage. I would encourage you to study the most important audience segment you have, your past conversions, and understand their behavior starting with the average number of visits it takes for them to convert.