In our new Metrics That Matter series, Mashable is speaking with digital marketers about the metrics they pay attention to and why. While it's always a good thing to have consumers tweet nice things about you and "like" your Facebook posts, marketers are in the business of selling, and they need to influence consumer behavior. The goal is first, to let people know about a product and second, convince them to buy it. But to do so, they need a solid grasp on the best ways to convert consumers.
Monitoring KPIs and analytics are obviously helpful for assessing performance and efficacy, but they're much more than that. "They are early indicators of where resources should be allocated, either to improve problems, or increase growth or revenue," says Hugo Smoter, director of marketing for ecommerce site Spreadshirt. Keeping an eye on metrics can make sure you're spending marketing dollars wisely and targeting the people who are most inclined to make a purchase.
One of the most crucial metrics marketers monitor is that of conversions. Now, conversions don't always indicate a sale, but the metric does indicate that a person took some action that pushes them a bit further down the purchase funnel.
Depending on the campaign, a conversion can be the number of people who filled out a contact form, made a purchase, clicked on an email or signed a petition — whatever action leads to accomplishing the overall goal, says Sara Helmy, CEO of Tribu. "Conversion rate is by far the biggest indicator of whether or not our efforts, as a marketing agency, are successful. Every other metric we examine (page flows, bounce rate, traffic source) is simply a number that supplies helpful hints on where we are succeeding or not succeeding in increasing the conversion rate," says Sara Helmy, CEO at Tribu.
Let's focus on the purchasing conversions for now. A lot of consumers start to shop and then abandon cart — they get distracted, they become noncommittal, they decide they'll just buy the items later or maybe even in-store. Smart marketers can turn these abandoned carts into sales — they already know what products the consumer is interested in. Even if the user don't put something in a cart, you still know what products they looked at on the site. "Various messaging vehicles paired with incentives and promotions can be used to address objections and push people over the edge," says Cezary Piertzak, director of marketing at Appboy.
If you're looking to increase the conversion rate —purchases or otherwise — you might want to consider "microconversions." Instead of asking yourself the daunting question of, How do we get people to buy more?, it would be wise to break down conversion into its many steps and elements, writes ecommerce expert Dan Barker. He recommends examining your site's most important pages and common consumer pathways, and paying attention to stats such as the percentage of searches that result in a click to a product page. Armed with that information, you can focus on optimizing your search results to improve these microconversions and drive more business.
"Step-by-step funnel conversion rates are critical in determining problems and snags in the conversion process," says Smoter, adding that an analysis of conversion on each step of checkout can help to improve overall conversion rates.
Maciej Fita, SEO director at Brandignity focuses on these microconversions. "If our goal is a 'thank you' page from a lead form submission, we need to know how they are getting there from organic referral sources. Knowing this allows us to focus and refine every step of the marketing process," he says. If the conversions are coming from a paid ad source, he knows whether to increase or decrease spending because he has a sense of the ROI of this paid ad. "Without seeing that metric you simply can't make that decision. It is the blind leading the blind," says Fita.
Of course, a conversion rate alone doesn't tell the whole story. Conversion rates are a simple percentage, a ratio of people who did something (bought an item, signed up for emails or some other lead) out of all the people who were presented with an option to do something (all of the site's visitors). And while a 20% conversion rate looks better than a 10% conversion rate — after all, more of your site visitors are converting — your business could be generating more revenue off the 10% conversion rate, because conversion rate doesn't take into consideration the user's total spend. Plus, not every visitor coming to your site intends to purchase; perhaps they're browsing products, or looking for contact information or hours of business.
Conversion rates don't measure time spent or pages per visit or how much a user is engaged with your site, and those are three very important behaviors that develop brand affinity, boost brand sentiment and could lead to conversion down the road. Conversion rates are important, but it's essential to not develop conversion myopia. You need to understand that conversion rates vary widely by referral channel, and you can tweak your approach for each channel to optimize the experience and tip the scales toward a conversion for many different kinds of users. Some conversion rates broken down by referrer are below:
Image: Smart Insights
And benchmark conversion rates by industry are as follows:
Image: Image: Marketing Sherpa
Of course, once you have a conversion, that does not mean game over. There are important steps to take post-purchase. "Marketers can learn a lot by answering the question of what drove those consumers to buy? If it's an advertisement that was particularly successful, it's worth repeating. If it was a blog post that was shared and that encouraged users to a site, then it's worth trying to replicate that type of content," says Jason Squardo, executive vice president of optimization at ZOG Digital, a search and social marketing company.
Conversion rates are a metric that needs to be monitored regularly to help marketers influence customer behavior, but it's clear that there are more tools in a marketer's arsenal. We'll be covering dozens of other metrics over the next month, so stay tuned to Metrics That Matter.
How do you use conversion rates in your marketing efforts? What tactics do you use to drive conversion? Tell us in the comments.
Image via iStockphoto, webphotographeer