What is Conversion Rate Hiding from You?

By Dan Kuthy, Supervisor, Search Engine Optimization

Often, we find ourselves asking:

“Does this keyword, banner or referring domain convert?”
“Does it drive online sales?”

When answering this question, the first place we tend to look is at our conversion rates. I’m going to make an argument that conversion rate is not a sufficient metric for determining revenue yield of media in an ecommerce environment.

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Here are two product categories that you’re considering prioritizing in 2009 with the objective of driving online revenue:

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Product Category Stats

Using conversion rate as our guide post, we might make the statement:

“Category B is more efficient at driving online revenue; we should focus our attention on this category in 2009"

This data is so compelling that we might even encourage investing in copywriting, merchandising and Web development resources for Category B in 2009.

Let’s do some more math though. What if we look at the amount of revenue, on average, per visitor in this category. Let’s call it Average Revenue per Visit (revenue/visits).

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Category Average Revenue Per Visit

In this model, Category A yields 29% more online revenue for each visitor we send to the site.
Granted, there are assumptions in both of these models, but at the end of the day, the thing we know for sure is that:

Visitors who have expressed an interest/need for Category A yield more online revenue than those that express an interest in Category B products.

Just something to think about, feel free to disagree. I think Revenue per Visit is absolutely critical to look at when you’re evaluating site-wide numbers that aren’t highly reliant on search media/auction models, but simply reflect the aggregate behavior of your site’s visitors.

Remember, conversion rate completely ignores Avg. Order Size.


CJeffCampbell said...

Dan, completely agree that efficiency is the most talked about metric and volume takes a back seat. In fact, both should always be discussed:

Avg Rev per Vistor is a great metric that considers both. Nice!

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