Thursday, April 30, 2009

What Is Your Conversion Rate?

When most marketers and analyst talk about conversion rate they seem to quote around 2 to 3% as the average conversion rate. Bryan Eisenberg wrote a great article on this subject titled The Average Conversion Rate: Is It a Myth?

In this article he writes:
“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.”

To inspire you or to make you depressed (the choice is yours) here are some of the top conversion rates for e-commerce sites as reported by

Source: Marketing Charts (via Nielsen Online)
Note: To be considered, e-commerce sites must have had a minimum of 500K unique visitors during the month. Conversion-rate data is based on visitor conversion rates, not session conversion rates: i.e., No. of unique customers/No. of unique visitors.

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  1. I entirely agree as a social networking/virtual world selling virtual assets we have a monthly visitor conversion rate of 2.0%. Looking at shopping cart abandonment on and comparing to real apparel sites (not a very good comparison I know) we think we should be able to get our site conversion to 5%. So we are looking at our conversion funnel and experimenting with Google Website Optimizer. Retention is also a big driver of conversions so we are looking at engagement as well. It makes no sense in generating lots of new visitors - pouring water into the top of the funnel when so much is leaking out the sides.

  2. Dave Goulden9:01 AM

    Isn't ROI the only metric that matters? Who cares if your conversion rate is 1% if you are maximizing gross margin (in total dollars). You could be outperforming a competitor on that measure who has a 40% conversion rate. The question to ask is what are you trying to optimize? The answer should be lifetime value (in gross margin) of a customer.

  3. I bet they don't advertise on the content network. A lot of the traffic is direct. (But 50% is still ridiculous).

  4. Anil,
    In the chart you show, are these the 'uber' conversions resulting in $$ or includes other forms of conversions?

    Personally, I have always tied a conversion rate to a goal. If you are a lead generating site, your goal and conversion rate would be defined differently than from say a content site vs an ecommerce site etc.

  5. I agree with Zen Analytics... for a lead generation site, would you still need to be concerned if the conversion rate is approx 3%?
    What would be a good average for lead generations sites (rather than ecommerce)?

    BTW, 50% is *awesome*

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  7. I completely agree with Dave. ROI is the most important factor here.

    From my perspective if you have a consistent .5% conversion rate, but your ROI is 200%, you are kicking butt. Plus it might mean that you still have a large opportunity to improve even more by using a/b and multivariate testing.


    If you invested $20 per lead and had a high 20% conversion rate (to purchases) but each sale generates net $10, you are screwed even in the short-run... unless you have VC funding ;)

    On the other hand, if you invested $20 per lead and had a low 0.5% conversion rate, but each sale was worth $20,000, then you have a very profitable business. Even better yet, you probably have room to improve!

    Just my two cents.

  8. ROI is the most important metric, but traffic conversion will often be a significant factor. PPC commonly runs in the $2 range. No matter what you're selling, going from 2% to 10% saved you $80 per sale. That has an impact on ROI no matter what you sell.


I would like to hear your comments and questions.