Why Website Conversion Rates Are Important

Why Website Conversion Rates Are Important

You have a website for a reason – visitors on your product or service means that you may have more customers. But do you know what your conversion rate is? This article from our friends at Nelio takes you through what your website does for you and what conversion numbers on your site really mean:

1996 was a great year. I was 10 years old and the Internet finally arrived to my home. I don’t remember much other that we used Altavista to search for content on the web; there was no streaming content, no YouTube or anything like that; we shared content and music through eMule and Napster; all website were portals with tons of animated GIFs and useless crap…

Oh! And let’s not forget about all those “under construction” sites and signs:

But if there’s one thing I do remember clearly from that time, it was THE ADVICE that all businesses were told: “Build a website, man. You gotta be on the Internet, cuz that’s the future! That’s how you’ll get more customers and money!” And that was it—just being on the Internet meant you’d be able to become rich, right?

More than 20 years later, the Internet has changed radically and so has our understanding of its potential and usefulness. Today we have social media (with their advantages and disadvantages) that allow us to be connected with our friends and family, as well as to follow closely the brands or celebrities that we like the most. We have platforms like WordPress to create websites with dynamic content easily or WooCommerce to create online stores. And, above all, we have learned a lot about online marketing and content marketing: how to reach larger audiences and how to get more followers, more customers, more revenue.

And that’s precisely what I want to talk to you about: how to improve your website by focusing on its conversion rate and the important role this metric plays in your business. So, without further ado, let’s learn what it is, why it’s so important, how to interpret it, and how to improve it!

What’s the Conversion Rate?

Most websites have one clear purpose or goal, one reason for being. For example, our website, neliosoftware.com, has the ultimate goal of getting you to subscribe to one of our services. But it also has some secondary goals such as, I don’t know, that you subscribe to the newsletter, follow us on social media, or start a trial period of a service.

So, now that we know that a website has “a goal”, it’s time to define two basic concepts:

  1. Visitors. They are all those people who, over a certain period of time, access our website, browse it, and consume its content.
  2. Conversions. When a visitor fulfills our website’s goal, then a conversion appears. For example, when a visitor goes to the Nelio Content pricing page and subscribes, we just got a new conversion.

From these two concepts we can easily define a website’s conversion rate. As it name states, it’s the ratio between the number of conversions we have on the website and its total number of visitors. For example, if our website has 850 visitors and there have been 20 conversions, the conversion rate is 20 / 850 = 2.35%. This means that for every 100 visitors that come to this website, we can assume that there will be between 2 and 3 conversions.

Why Does Conversion Rate Matter?

The answer is quite obvious: the conversion rate is important because it’s a metric that tells us how good our website is when it comes to helping us achieve our business goals. It’s that simple. If we created our web to get more customers and its conversion rate is 0%, well… there’s clearly something going wrong. Tremendously wrong. By contrast, if everyone who comes to our web purchases something, we’ll have a conversion rate of 100% and that’s just awesome!

Unfortunately, extreme conversion rates are unusual—you won’t see a website with a 0% or 100% conversion rate often. And this begs the following question: if I tell you that our website has a conversion rate of, I don’t know, 2.5%, is it good or bad? ? We need something more…

For the conversion rate to be really useful and help us to identify the quality of our website with respect to a certain objective we need to study it from one of the following perspectives:

  1. Evolution of the conversion rate over time. As I was saying, it’s impossible to know if a 2.5% conversion is just a good or bad figure. However, if we study the conversion rate of our website over time, we’ll see how it’s evolving and, therefore, we’ll see its trend. So, for example, if we start at 2.5%, and the next month we have 2.8%, and the next month we have 3%, and a few weeks later we reach a 4% conversion rate… well, it’s clear that whatever we’re doing on our website, it’s working just fine, because we’re getting better and better results!
  2. Comparison with the industry. The other perspective for determining how good our conversion rate is is through comparison with the ratios other companies have. For example, in a recent article by Khalid Saleh you can see the average conversion rates per sector. If the sector in which we are (software) has an average conversion rate of 4.10% and our website has a conversion rate of 2.5%, it’s obvious we’re behind our competition and that we have to do something to improve.

Conversion Rate Doesn’t Always Matter… Because It May Be Lying To You

As we have seen at the beginning, the conversion rate is defined as the ratio between two figures: the conversions of our website and the number of visitors we have. Therefore, the conversion rate can go up (or down) if we change one of the two figures.

For example, if we improve our marketing campaign and reduce the number of visitors who are not usually interested in our products, we’ll reduce the total number of visitors (for example, from 1,000 to 600) and perhaps maintain the number of conversions (say we had 100), thereby increasing the conversion rate (from 100/1,000 = 10% to a new conversion rate of 100/600 = 16.67%).

The conversion rate is often used as a metric to identify how good the web is at generating revenues, but there’s no direct correlation between these two concepts. As the author describes in the Website Magazine, there are many possible explanations as to why the conversion rate can get better (or worse) and have a completely unpredicted impact on our sales/revenues:

  1. Your conversion rate relies solely on set goals and visitors: If your conversions increase, then your conversion rate increases.
  2. Your conversion rate decreases if your visitors increase: If your conversions hold steady, but more people visit your site, then your rate falls. This is seen as a bad thing – even though you are making the same number of conversions as before.
  3. Eliminating low-quality traffic increases your rate: But what about the sales you have lost by eliminating that low-quality traffic?
  4. A “typical” conversion rate? There’s no such thing: All businesses are unique when it comes to conversion rates. Your rates may tell you your business is failing when in fact it is doing fine – it depends upon which companies you are comparing yourself to.

As you can see, the conversion rate only gives us a biased picture of the quality of our website. We have to consider all the numbers at our disposal (including, of course, absolute conversions and visits figures) to really understand what’s going on. Being aware of these limitations will help us make better decisions, so don’t be afraid and gather and keep as many information as you can.

How Can You Improve Your Website’s Conversion Rate?

There are a variety of actions and recommendations we can take to improve the conversion rate of our website. In Wikipedia, for example, we can find several examples:

  • Employ Attention, Interest, Desire, Action (AIDA) principles to design the user experience through the conversion funnel,
  • Enhance the user’s credibility and trust in the site, the product, and the business by displaying third-party trust logos and by quality site design,
  • Improve site navigation structure so that users can browse and shop with minimal effort,
  • Offer active help (e.g. live chat, co-browsing),
  • Generate user reviews of the product or service,
  • and so on and so forth.

Unfortunately, this is easier said than done. How can you “improve” the user experience? What does it really mean to “improve” it? Which changes are helpful and which ones are harmful to this goal?

A/B Testing is The Best Technique to Improve Conversion Rates Methodically

A/B Testing is a methodology that allows us to compare two versions of the same website and see which one works best. Neil Patel has a great post about this topic—if you don’t know anything about it, I strongly recommend you visit his blog and read it carefully.

If you are interested in improving the conversion rate of your website with split testing, the smartest thing to do is to use an A/B Testing tool. Personally, I recommend the WordPress plugin we developed: Nelio A/B Testing. With it you can create multiple variations of your pages and content and see which one gives you higher conversion rates.

In Summary

All websites exist for a reason and have a purpose, a goal. When a visitor fulfills that goal, we say there’s been “a conversion“. That’s precisely the basic idea behind the conversion rate metric: determine how good a website is getting conversions compared to the total number of visitors it receives. This metric is great because it’s simple to obtain and easy to understand, but you have to be careful because it only tells a (small) part of the story.

If You Want To Know More

Radical Designs Creative Agency can skillfully guide you through the process of getting more conversions on your site. Give us a call. 866-999-6587.

Attribution – Neliosoftware.com
Photo – fancycrave-329196-unsplash

7 Simple Reasons Against Drop Shipping

7 Simple Reasons Against Drop Shipping

If you are building a website to jump on the bandwagon because someone told you drop shipping is the way to make money – then it might be a good idea to look a little further. In this article via ShoeMoney, we bring you seven reasons to think again about drop shipping:

Weebly founder David Rusenko isn’t a fan of drop shipping. He believes we’ve flooded the world with enough cheap crap. We don’t need any more middlemen flooding out Instagram feeds with knock-offs.

But is he right? What’s wrong with middlemen doing the marketing legwork?

I’ve been around the web a time or two and have seen drop shipping touted as the next affiliate marketing. But I’ve encountered few who’ve made it work.

Here’s why you should be careful with one of the hottest trends in e-commerce right now.

1. What is Drop Shipping?

I use the word middleman literally. If you sell or make lanyards but don’t really care to market your lanyards, a drop shipper is a great way to get your product out there. A drop shipper essentially sets up shop and sells your product as if it’s theirs.

Often, a drop shipper works directly through a wholesaler like Alibaba. This is where the cheap crap comes in. A ton of stuff on Alibaba is cheaply manufactured knockoffs.

Despite this, drop shipping is appealing to home entrepreneurs for a few reasons. You don’t have to store or ship, you just have to market. If you do it right, fulfillment centers like Amazon will store and ship your product for you.

You only purchase what you sell. And all you really need is a computer.
Sounds amazing, right?

2. Nothing in Life is Really Easy

You are still running a business. While part of that business isn’t in your hands, all the same marketing, customer servicing, website maintenance, etc are things you must do to succeed.

The only thing drop shipping really eliminates is product overhead.

It’s not a get-rich-quick scheme. It’s a true business niche. And if you thought otherwise, it’s time to go back to that nine to five.

Online money-making is all about working 60 hrs a week to avoid working 40. Even if your drop shipping business becomes a hands-off affair later, it will take a lot of work to get there.

3. Everyone Else is Jumping Off the Same Bridge

When you Google drop shipping, some of the top articles are from six years ago. Drop shipping isn’t a new idea. It’s as old as Amazon.

In those six years, how many people do you think entered the drop shipping business? Too many. “Competition is a good thing,” you cry. I wouldn’t argue with you if this were a normal business situation.
The problem with drop shipping is that you can’t control supply and demand. You can’t actually compete because you have no control over your products.

4. The Tools They Give You Are Cheap Pieces of Crap

Like some of the stuff drop-shippers try to sell you, the digital tools they give you are just not worth your time.

How do you find your products if you’re a first-time drop-shipper? It’s the one step that seems so daunting many don’t even take it. Because it’s so scary, some websites have taken up the mantle and decided to give you a quick way to choose and price items.
Quick doesn’t always mean accurate, however. With some of these sites, you’ll find some misleading information about demographics and conversion rates. Sometimes it seems these sites pull information out of their rears just to fill a page.

5. Quality Control Is a Lie

Because you rely on warehouses and fulfillment center, you product never goes through your hands. How do you even know if the product you’re shipping is any good?

In a regular e-commerce business, you would get the product, inspect it, package it and ship it. If anything came to you damaged, you could return it to the manufacturer.

In drop-shipping, you will have to absorb the cost of poor or damaged goods. This will come out of your bottom line.

It’s a risk you take for convenience. The question is: is the risk worth it?

What are the consequences? You end up losing any credibility in the e-commerce world because customers will ultimately blame any shipping or product faults on you. While you’re the middleman, you don’t have the convenience of blaming “corporate” for their failures.

6. Returns Will Haunt You Forever

Because quality control is not a thing, you will most definitely have to deal with returns. Some wholesalers won’t take the product back. This is another huge dent in your product line.

In a normal e-commerce business, you would rely on 30% of purchases returning to you. Imagine how much this number might inflate when you erase any semblance of quality control.

7. Free Shipping is a Thing Now

About ten years ago I tried to start a used book business on Amazon. I worked 60 hr weeks and doing this on top wasn’t easy. I quickly found that shipping was the only way I would make money.

Amazon would give me $3.99 for shipping and I could ship media rate for pretty cheap. I could have made a killing if I could’ve quit my job and jumped in full time.

Today, I don’t know how possible this is. People expect free shipping thanks to Prime and WalMart’s e-commerce entry. To compete you really might have to offer some free or cheap shipping option. This too comes out of your bottom line.
It’s Possible But…

If you’re willing to put in the time and money, you might be able to find a niche nobody else has tapped. But you’re gonna be digging for a while.

Some have compared hopping onto the drop shipping bandwagon to arriving at a movie 45 mins late. You’ll get some value, but you’ve missed the entire setup. It would have been better if you’d gone to a different movie altogether.

 

Attribution – ShoeMoney
photo – redd-angelo-229863-unsplash