Meat and Potatoes – Understanding Conversion Metrics

Photo Mix. (n.d.). Retrieved from https://pixabay.com/photos/holiday-shopping-smartphone-phone-1921658/

In my last post, we looked at Foundational Web Analytic metrics, which provides a good basis of information for a bare minimum understanding of website performance. But what is the point of a website if not to provide consumers with something? Whether it is providing information, a product or service, or entertainment, businesses often rely on websites to influence consumer behavior in one way or another.

A business must define the goals of a website in order to track its effectiveness. For example, I work in higher education recruitment and our website’s goal is lead generation. Of course, there are secondary goals like providing potential students with information about the program. Defining a clear business goal is key to understanding the conversion metrics of a website. Conversion is when a consumer completes a desired action like visiting a specific page, filling out a lead form, or beginning the purchase path. The Web Analytics Association defines conversion as “the number of times a desired outcome was accomplished” (Web Analytics Association, p. 30). Conversion rate is simply the actual conversion number divided by the number of visitors over a period of time (Optimizely, n.d.).

“Understanding what percentage of your users are completing the goals that drive your business allows you to gauge the success of your site or app and identify areas for improvement” (Optimizely, n.d). Ultimately the meat and potatoes of any website’s performance are its conversion rate. There are two key metrics in the conversion category of web analytics: conversion and conversion rate.

Does High Conversion and Conversion Rate Equal Success?

To answer the question, it depends. Conversion is a metric set by a business. So if a business merely cares about page views brought in by a paid search ad and that goal is met, then a business could consider that campaign a success. Most companies, probably care more about conversion as a metric to define the success of a lead generation or commerce campaign.

Arguably the king of conversion is eCommerce giant, Amazon. As an online retailer, Amazon sells products to consumers with a heavy focus on customer experience. They focus on selection, price, and convenience (Gudat, 2019). In the case of Amazon (as a retailer and not advertiser, production company, acquisition giant, etc.), the key conversion metrics it seeks probably ranges from the number purchases, number of Amazon Prime sign-ups, to page views, time spent on pages, etc. All of these conversion metrics provide insight into how Amazon’s site performs as an eCommerce platform.

In 2015, Millward Brown Digital reported that Amazon Prime members converted 74% of the time, while non-members converted at 13% (Zaroban, 2015). Needless to say, if Amazon sees a dip in conversion, it probably does not worry too much about individual pages on any given day. Huge events like Amazon’s Black Friday or Prime Day probably garner more attention from the Web analytics team as they can be compared year-over-year.

(Clement, 2019).

Statista reports that the Amazon Prime Day conversion rate has grown since 2017 (Clement, 2019). An account manager for Amazon Prime Day might ask, what has changed over the past three years to help this growth? Is it web functionality, more advertising, or an increase in awareness? Some of the answers to these questions can be answered by Web analytics to help answer the business question of what can we learn from this past year to help with the continued success of future year Prime Day events.

So what can businesses do if they are not a front-runner like Amazon? The Millward Brown Digital report also stated that the average conversion rate for other retail companies of a similar tier was 3.32% (Zaroban, 2015). Lessons can be learned from Amazon, such as putting the consumer experience first and making the purchase path as simple as possible. Many online retailers can watch conversion metrics as a method for identifying pain points in the consumer journey.

For example, if a company’s desired conversion is to drive sales of a specific product, but the conversion rate is low. One of the first stops of an account manager would be to Web analytics to see if the landing page is showing any anomalies such as long load speed, high bounce rate, or if something is broken in the checkout functionality.

Conversion metrics are key to identifying issues and improving the ability of businesses to meet consumer expectations. A trending conversion rate gives clues to how a site is performing in the eyes of a consumer. Conversion metrics provide clear road markers for marketers to ask themselves is the site performing its purpose? If not, then further analysis is needed to determine the why.

References
Gudat, S. (2019, March 18). 2019 Amazon Business Strategy: Goals, Objectives & Retail Marketing Takeaways. CCG Retail Marketing Blog. Retrieved from https://www.customer.com/blog/retail-marketing/amazon-business-strategy/
Optimizely. (n.d.). Conversion Rate. Retrieved from https://www.optimizely.com/optimization-glossary/conversion-rate/
Clement, J. (2019, August 22). Amazon Prime Day conversion rate in the United States from 2017 to 2019. Statista. Retrieved from https://www.statista.com/statistics/207168/amazon-prime-day-conversion-rate/
Web Analytics Association. (2008, September 22). Web analytics definitions. Retrieved on October 13, 2012, from: http://www.digitalanalyticsassociation.org/Files/PDF_standards/WebAnalyticsDefinitions.pdf
Zaroban, S. (2015, June 25). Amazon Prime members convert 74% of the time. Digitalcommerce360.com. Retrieved from https://www.digitalcommerce360.com/2015/06/25/amazon-prime-members-convert-74-time/