Conversion Rate: Is a drop really that bad?
I often hear clients say, “My conversion rate has gone down. Help!” In so many organizations conversion rate, is the Holy Grail. High conversion rate means things are going well, and low conversion rate means things are going bad. The only problem is – that’s not necessarily true.
Conversion rate is a calculated metric (orders divided by visits). A change in either of the metrics will make conversion rate go up or down. Before declaring a state of emergency, some simple analysis can determine if a problem even exists.
First, let’s look at visits. If visits go up, but orders don’t, then your conversion rate will go down. But an increase in visits could be by design. For example, many retailers are adding more content to their websites. This includes blogs, product ratings and reviews, buying guides, educational content, and so on. All of these initiatives (should) increase repeat traffic. As visitors return more often to read your blogs or research products, your visit number will go up, but not at the same rate as orders. This will lead to a decrease in conversion.
Another common reason for an increase in visits is more online marketing. If the marketing team starts sending more emails or launches a new banner ad campaign, visits to the site will most likely go up. If this new traffic doesn’t convert well, then your overall conversion rate will go down. Also note that the reverse is true. If marketing stops a banner ad campaign that had a high bounce rate, your visits will go down and your conversion rate will go up. To help isolate the marketing impact to conversion rate, look at conversion rate for each channel as well as the conversion rate of visits not tied to a marketing channel. Additionally, if you already know that marketing is driving more traffic to the site, look at the overall bounce rate of the site. If bounce rate has gone up, this may indicate less qualified traffic. Finally, look at the conversion rate of visits who view more than 1 page. This will help determine the conversion rate of more qualified traffic on the site.
After visits have been investigated, it’s now time to look at orders. If orders have gone down, then most likely you do have a problem on your hands. You’ll want to isolate where and why the orders have dropped. The first and easiest thing to check is the performance of micro-conversions on the site. For example, look at the conversion rate of the checkout process and internal search conversion. Additionally, look at the conversion rate of specific categories or departments to determine if one particular department or category is causing the overall drop in orders. This will help isolate an inventory issue.
While a drop in conversion rate can signal problem, it is not always the case. By looking at how each part of the conversion rate metric performs (visits and orders) you can better determine if the drop in conversion rate is bad, and if so, how to fix it.