The Average Conversion Rate: Is It a Myth?

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According to “American Heritage Dictionary,” a “myth” is “a popular belief or story that has become associated with a person, institution, or occurrence, especially one considered to illustrate a cultural ideal.” Sometimes a myth is used to inspire. So is the average conversion rate, the percentage of site visitors who make a purchase or some other transaction, reality, a myth, or a nightmare?

Dr. Pete (a.k.a. Peter Meyers) recently posted the following in response to something I wrote about conversion rates:

Whenever people talk about conversion rates, they all seem to quote an average of 2-3%. The problem is that, over time, I’ve noticed another phenomenon: no one ever seems to back this up with data. Ultimately, 2-3% conversion seems to be a bit like Bigfoot or, at best, a friend-of-a-friend statistic: “my cousin’s sister’s hairdresser said she read in Business Week that the average website gets 2-3% conversion.”

Here’s some of my response to Dr. Pete:

Let me address a couple of your points. First the 2-3% average conversion rate comes from a few different sources. The one I typically quote comes from Shop.org that releases their annual benchmark of all their affiliated members. This one is a bit harder to be sure they all are measuring in the exact same way. However, another publicly available source is the FireClick index (here every retailer is being measured with the same software and methodology). Last week, the average global conversion rate was 2.4%. This is also consistent with other non published benchmarks I have seen through out the years such as data from WebSideStory’s StatMarket, CoreMetrics Benchmarks and my 10+ years of experience optimizing website conversion rates. I can’t agree that this 2-3% is mythical.Dr. Pete concludes the discussion by making a valid argument for other key performance indicators (KPIs) and correctly states that even a small increase in conversion rate can mean substantial top-line increases for certain businesses. He also seems to suggest that some businesses may be aiming too high even when striving for the average 2 to 3 percent conversion rate. Sadly, this is true.

Why, then, is 2 to 3 percent a mythical conversion rate for some? Have we set our sights on a nightmare?

Aiming for the Gutter?

As far as I can tell, the willingness to embrace the average 2 to 3 percent conversion rate as a good benchmark of site performance is likely rooted in average direct mail response rates, as these marketers were early online adopters. From Gaebler Ventures:

One company we’ve worked with is an office supplies company. They get a 1% response rate when mailing to prospects. When they target current customers, their response rate doubles to 2%.

As for industry averages, the DMA analyzed 1,122 industry-specific campaigns and determined that the average response rate for direct mail was 2.61%.

Direct mail is a long-established marketing practice and shouldn’t be compared to online marketing. Almost all direct mail is implicit. It’s a push-marketing method.

Online, the game’s completely different. Almost all online actions are explicit, and each action reveals some degree of the intent of the person taking that action. When someone arrives at your site with a need you can fulfill, she comes with a degree of intent and is more than likely somewhere in the buying process for what you sell. Even if you factor out accidental traffic, the percentage of convertible traffic should convert at a much higher rate than 2 to 3 percent on average.

The sites that should convert 2 to 3 percent of their traffic are the exception, not the rule. I’ve long stated that sites that convert less than 10 percent should be concerned. Consider this along with the rising cost of online traffic, and the concern becomes a nightmare. Too many online marketers are spending too much money and time throwing too much unqualified traffic at their sites, then tweaking their traffic quality trying to reach the 2 to 3 percent mythical conversion rate.

If more online marketers focused their efforts on studying visitor intent and site optimization, instead of just driving traffic, their average conversion rates would be much, much higher. Many sites are wildly successful using this strategy:

Retailer Conversion rate (%)
Proflowers 14.1
Coldwater Creek 13.3
FTD.com 13.0
QVC 12.8
Office Depot 12.4
eBay 11.5
Lands’ End 11.5
Tickets.com 11.2
1-800-Flowers.com 10.0
Amazon.com 9.6

In short, most sites shouldn’t be satisfied with the industry average. Are you aiming for the gutter, or are you inspired by those that have moved well beyond the average?

Let me know how you’ve pushed passed the myth.

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2 Responses to “The Average Conversion Rate: Is It a Myth?”

  1. Dr. Pete Says:

    I hope no one took my post as meaning that they should aim low. I may have overstated a few things, but my intent was more to get people to stop worrying about an elusive phantom benchmark and look at the big picture. I’m concerned that we’re starting to abuse conversion just like we have every metric before it.

    That said, I absolutely agree that people who operate commercial websites need to start appreciating quality over quantity. Marketing and traffic cost money, and spending it on people who have no interest in buying what you sell is just a waste of resources.

  2. Jason Says:

    Great find for me here. I have found that the industry average is just not good enough for the website I am currently working on. One if is not cost effective and two with the amount of time we will be putting in we are aiming for a much higher conversion rate. Thus we do promote quality over quantity but feel that people will see that and the quantity will be there as well. With the study we have done for our market and targeting those who would be most likely gain the benefit of our service would almost push a higher conversion. Any rate I am just glad that someone else out there thinks along the same wavelength.

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