This is a question that I hear time and time again. Everyone wants to know how to evaluate their conversion rate performance. Well, fact is, there is no such thing as an average conversion rate …at least one that carries any meaning. It is kinda like asking what is the average height of every person on the planet? If such a number could be calculated, it would be useless.
When reviewing your conversion rate performance, it is continuous improvment that counts. Actual conversion rates will vary just like actual mailing response rates. The actual rate will depend upon the product, the customer or prospect segment being targeted, the offer, the timing, etc. etc. What is meaningful and actionable is to track your conversion rates by incoming unique visitor streams and test programs or actions that deliver a better result. (i.e. Test against the control.)
Let’s say you are evaluating customer conversion rates. They will be much higher than prospect conversion rates. Also, higher if they are multi-buyers with higher RFM performance. Conversion rates will also be boosted if you have a lot of unique or hard to find products and if you have a high percentage of consumables (repeat purchase needed) items in your offer. List, offer, creative, pricing, media channel will also affect the conversion rate. You goal is continous improvement over time on like for like marketing programs. So, catalog multi-buyers, after a mailing of a new catalog might convert at 15-20%. Lapsed customers responding to a reactivation mailing or email might only respond at 2%.
On the prospect side, here again it depends on the offer, list/segmentation, prospect profile, promotional vehicle , timing, price, landing page, etc. Having said that, I would not be surprised to see a prospect response online of .5-2.0%. If you hit 5% you have a real winner!
Remember too, conversion rates are just one short term measurement. Important, yes. Are they everything? No. Your overiding measurement should always factor in your expected LTV (lifetime value) of a new or repeat customer. It is not what you spend to get a new customer, nor is it solely about the conversion rate or AOV but rather what you get in return over a one, two or three year period. It’s all about measuring the necessary steps to achieve the maximum ROI over the LTV of the customer.
So don’t be mislead by an average conversion rate statistic that is higher or lower than your current conversion rate. Keep focused on the detailed performance measurement of all prospect and customer streams that come to your site and make sure you are testing to achieve continuous improvements.
I totally agree!
Good points…as web analytics guru Avinash Kaushik says, the number one goal of every website is “Don’t Suck”! In other words, monitor analytics data like conversions to find holes in the conversion funnel, and fix them; moving the conversion rate in a positive direction, not trying to hit some imaginary benchmark, is the goal.