Daniel Burstein

The downside of very high conversion rates

Almost every marketer I talk to wants to know about average conversion rates. And, I presume, they want that info so they can focus on being above average.

While a marketing Lake Wobegon, where all of your conversion rates are above average, sounds tempting on the face of it, let me make a, perhaps, counterintuitive argument …

 

Very high conversion rates are usually not good for your ultimate KPI — profit

And this is one reason why an obsession with average conversion rates can be harmful to your marketing health.

There are two possible downsides to very high conversion rates:

  • You are focusing too much of your marketing efforts on an audience that would buy from you anyway, and not enough on finding new customers
  • You are offering too big of an incentive

 

Something’s rotten in Denmark

Let’s look at a great story that illustrates the above points and that shows why you should give very high conversion rates the sniff test to see if something is wrong (or, if you’re a business leader, if your marketing team is corrupt and only focusing on showing you metrics that make them look good but hurt the company overall).

First, a little background. This story comes from Soeren Sprogoe, a freelance e-commerce consultant.

In a recent post on our sister blog, MarketingExperiments, I shared research about average conversion rates for paid search marketing and organic search traffic. Since, as I mentioned, we’re very skeptical of one big, round, easy number as a conversion rate average, that blog post shares a range of reported conversion rates.

Then, perhaps a little tongue in cheek, I said …

And if you just happen to be the marketer nabbing 60% conversion rates from your organic traffic, then drop me a line please! We’d love to write up a MarketingSherpa case study about your efforts. We all could learn from your outstanding SEO efforts.

 

(What can I say; I’m always trying to remind marketers that we are constantly on the hunt for case studies that we can share with the audience.)

Soeren rightly called me out in the comments. When I followed up with him, here is the story he shared …

Years back, I was at a job interview with one of the largest e-Tailers in Denmark for a position as an online marketing manager. I was interviewed by the managing director and e-commerce director of the company. Several times during the interview they mentioned that my salary should partly be provision based, based on the conversion rate of the traffic I was able to bring in.

After hearing the two directors discussing this for a bit, I interrupted them and said that I thought this was a terrible, terrible idea. Surprised that I didn’t automatically agree with them, they of course demanded that I explain why (I don’t think they were used to people disagreeing with them). Here’s what I said to them:

“I can easily get you a conversion rate of 20+%, no problem. Here’s what I’ll do: Close the access for Google’s organic spider with a robots.txt. Do a couple of AdWords ads on your brand names only and bid 20USD per click. Plus send out a couple of newsletters with 20% discount codes.

You’ll see your conversion rate skyrocket, along with my provision. But you’ll probably not make any money.”

No, I didn’t get the job.


Let’s be skeptical out there

At the end of the day, I don’t think average conversion rates are bad, per se. I just worry about their misuse and abuse, and want to urge you to always be a skeptical consumer of information.

There are a lot of marketing blogs, webinars and websites out there vying for your eyeballs (and especially for the ones that come from vendors and agencies, your wallets). While I wouldn’t accuse anyone of being outright misleading, we all have our vested interests.

At MarketingSherpa, we have a great amount of editorial freedom to focus on helping marketers do their jobs better (and not simply selling), but I have my vested interests, too. Hey, I want you to send me some possible case studies.

So, to remix Sergeant Esterhaus of “Hill Street Blues,” be skeptical out there. Even of me. Thanks for keeping me on my toes, Soeren!

 

Related Resources:

Marketing Research: Average conversion rates

Traffic that doesn’t convert is an expense! (via Afdeling 18, in Danish but you can use Google Translate) – Blog post about figuring out what it is the customer is searching for and setting up micro conversions to match that.

Improving Conversion Rates: How a MarketingExperiments optimization training alum generated triple-digit conversion gains for his client

Converting PPC Traffic: How clarifying value generated 99.4% more conversions on a PPC landing page

 

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  1. April 13th, 2012 at 06:43 | #1

    Sørens comment is spot on. You always have to look behind the numbers to se how they came to be like they are and if they are extremely high you rightfully should be skeptical.

    I also very often talk to clients who only focus on getting more unique visitors and have no focus on what they want those unique visitors to do once they are on the site. I think it’s a matter of the level of insight that the customer have and it is then our job to guide them.

    In Sørens case it did unfortunately not work out to his advantage.

  1. November 2nd, 2012 at 02:01 | #1