How to Calculate Your Site’s Real “Conversion Rate”
Moving Past Basic Conversion Rates
An online business lives and dies by its conversion rates. While it is always tempting to generate more traffic to a website, it rarely makes sense if the website can not convert visitors into paying customers or sales leads. Conversion rates therefore are like a website’s score card, and if you are going to keep score, you really need to know how the best way to go about it.
The problem is, there is likely a lot of traffic on your site that is diluting the actions and intentions of the buying customer, to the point where you look at the common Conversion Rate and think, “is that all I am converting?”
Some Common Reasons people visit sites:
- To gather information (they don’t intend to buy at that time).
- Check Prices (may buy if yours is lower, if you are last site they are checking).
- To purchase.
- Order Status Checkers (Makes it look like Return Visitors are not buying).
- To Look for Work.
- To see what you have (browsing still happens).
- Looking for products you don’t even offer (common with niche sites).
- Your Social Network, including your Mom.
Conversion Rates can therefore be deceptive. They ARE meaningful, especially if you are looking at Unique Conversions/Unique Visits, however they are not giving you the best picture of how your site is converting visitors that are interested in buying. I call these qualified Visitors.
Who is Qualified?
A visitor is qualified after they show that they are more than just a browser, a job seeker, a friend or someone looking for a product you don’t have. While there is no perfect way to identify this people statistically, a good start is identifying pages people might visit if they truly are a prospective customer or lead. This might be product pages, they may be other pages. The 1st step is to figure out which visitors are qualified, and start calulating the rate at which these visitors were persuaded. I call this the Sway Rate.
Sway (Persuasion) Rate
You have now identified people more likely to be real prospective customers, and you want to figure out how many of THEM, you are persuading, or saying to convert. That is your “Sway Rate”. For us, this is the most important Conversion Rate on a website, and the one we focus the most on lifting.
Here is a chart that show a common Conversion Rate besides a Sway Rate.
(Data above is for example purposes only.)
Calculate the Sway Rate
So your common “Conversion Rate” (Purchases / Visits) or “Real Conversion Rate” (Unique Purchases / Unique Visits) does not tell you about 5 out of the 6 visitor types above. That is why you need to calculate the Sway Rate. Once you have this, you will see it coorilates much closer to your sales volume than the overall conversion rate (See the Chart Above.)
The Sway Rate Formula is below:
(Unique Cart View / Q-Pages) *(Number of Orders / Checkout Starts)
What is a Q-Page? It is a page that show the user is qualified to be counted as a prospective buyer on your site. For most product focused eCommerce sites, a Product Page is a Q-Page. Here is an example:
Take the rate of the Qualified people your site got people to the Shopping Cart.
900 Unique Cart Views / 3250 Product Pages Views (Q-Pages) = 0.28
Then take the rate of people who added to their shopping cart, and actually ordered.
240 Orders / 500 Checkout Starts = 0.48
Now, multiply them against each other (rate of those who got to the cart and got through it).
0.28 * 0.48 = 0.1344 (around 13.5%).
Now, Calculate your Own.
I hope this helps you cut down the “noise” of what you measure on your sites, and gives you something more meaningful to measure. This should allow you to better measure how well you are persuading those who are more ready to buy. Don’t forget, you may need to work on getting more people to “Q-Pages”, especially if your bounce rate is high, but once visitors on are you q-pages, this helps you keep a better score of how you convert them.
I know it is not as “Simple” as website conversion rates, and the people you present your metrics to might want simple. Just remind them that accurate metrics are simple metrics, and think about how long it would take to explain to them why sales are up and the site conversion rate is down (it will take 23 minutes, and a white board, trust me).