Visitors Are Not All The Same – Moving Beyond Conversion Rates, Part 3

Jared Spool

May 23rd, 2012

Moving Beyond Conversion Rates:

You can read this in Italian thanks to Marco Dini.

Part 1: Avoid Ratios for Metrics
Part 2: Not All Visitors Make Great Customers
Part 3: Visitors Are Not All The Same (this)
Part 4: Campaigns Are Where Conversion Rates Shine
Part 5: Measuring Money Left On The Table


The electronics retailer, Crutchfield, has two kinds of folks who visit their site. One kind understands the value that Crutchfield’s incredible customer service brings and is very likely to make purchases. The other kind is a person who shops for the lowest price and, because Crutchfield’s prices aren’t discounted as much as others, probably won’t purchase – they just don’t see why they should pay more for service they don’t think they’ll need.

The probabilities of purchases for each groups is really very different. Bunching them together doesn’t make sense.

Crutchfield isn’t the only one with this problem. Each day, many people visit Amazon.com to look at the reviews of a product they have no intention of purchasing from Amazon. Maybe they found it somewhere else at a better price? Maybe they are standing right in front of it in a store and, if the reviews are glowing, want to buy it right now?

Again, this group of users is very different from shoppers coming to the site specifically to make a purchase at that moment. Bunching them together doesn’t make sense.

This is the third big problem with conversion rates: visitors are not a homogeneous lot. In Part 1 of this series, we talked about how you shouldn’t use metrics that are based on ratios and in Part 2, we talked about why not all visitors are people you want as customers. In today’s installment, we’ll talk a bit about how conversion rate fails because it doesn’t separate out the folks who are likely to convert from those who don’t.

I remember first realizing this problem when I got a call from the folks at Domino’s Pizza a few years back. They had just launched their first (and as far I know, anyone’s first) online pizza ordering application. And the application was getting a ton of press and positive attention.

The Domino’s team were really proud of it and were boasting that they had a 15% conversion rate. That’s pretty good, since most decent e-commerce sites convert between 1.5% and 5.0%. So, here Domino’s were doing 3 times the conversion of some of the best sites.

Yet, a 15% conversion rate meant that 85% of the people visiting their online pizza ordering application weren’t ordering pizza. Shouldn’t 100% of the people visiting their site actually make a purchase on their visit? After all, what else is there to do?

It’s possible that some number were just curious about ordering pizza through a web site. And some were looking to explore, in case they wanted to order a pizza in the future. But would that account for an 85% majority?

Unfortunately, it’s really hard to separate out those who are likely to convert from those who are never likely to convert. There’s no simple tools or techniques to divide up the total visitors into the group who we want to pay attention to, taking away the group we’re not interested in right now.

That’s another reason why conversion rate isn’t really useful for making a great online experience. If you optimize for higher conversions, you may be pushing your most likely converters away to – dare I say – trick your unlikely converters into converting.

The big problem with this is that sites like Crutchfield, Amazon, and Domino’s can’t tell what their upper limit should be. Ideally, getting from a 15% to a 50% conversion rate would be awesome, but it is unrealistic considering the number of visitors who will never convert.

This is why we see folks get all excited over tiny improvements in conversion. It is a red flag when that level of precision is necessary to detect meaningful improvement.

What we really want is a metric that focuses on the most valuable visitors – those that are likely to convert and aren’t because the design isn’t working – so we can tell when we’ve improved the design. In a future installment, I’ll talk about where these metrics might come from.

However, in the next installment, we’ll talk about the one scenario when conversion rate might actually be the right metric to use.


Moving Beyond Conversion Rates:

Part 1: Avoid Ratios for Metrics
Part 2: Not All Visitors Make Great Customers
Part 3: Visitors Are Not All The Same (this)
Part 4: Campaigns Are Where Conversion Rates Shine
Part 5: Measuring Money Left On The Table

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