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Whilst the e-commerce industry as a whole continues to grow at 20% per year, life for individual site owners doesn’t get any easier.

Whilst now levelling out, CPCs have seen heady growth over previous years, meaning that it’s more important than ever to secure a sale once you’ve enticed a user to your site.

However, at the same time there is a clear trend showing a decline in on-site conversion rates, meaning that more and more of your expensively-won traffic is simply visiting the site only to leave without purchasing.

As a data analytics provider we’re often asked what the drivers are behind this fall in conversions. At a simple level there are probably a few key reasons.

The most obvious is the rise in understanding of your average online shopper. People are more comfortable shopping around so are likely to visit more sites before finally making a purchase.

A more macro explanation may lie in the economy. In a recession people are more price sensitive so are more likely to research purchases more carefully, again leading to multiple site visits without a purchase.

Further drivers of variations in conversion rates might even be external to issues of consumer choice. For example, we recently undertook some analysis of conversion rate by browser type and saw some significant variations.

We found that

  • Microsoft IE users had a conversion rate of 3.5%
  • The average rate for Google Chrome users was 2.0%
  • Apple's Safari and Mozilla's Firefox users sit in the middle at 2.4%.

All of these factors put together explain a decrease in conversion rates per visit, but they also point towards a weakness in the measurement itself.

Greater purchase research, whether driven by increased understanding or recessionary behaviour, will by definition lower your per visit conversion rate as each user is likely to make more visits before making their final purchase decision.

Moreover, if your per visit conversion rate (VCR) is going to be affected by external factors such as browser type then the measure becomes even more muddled.

It’s perhaps time to move away from the simple VCR measurement towards a metric that takes into account changing consumer behaviour. The measure we tend to promote is visitor conversion rate (rather clunkily acronymed as VorCR) – that is the conversion rate per unique user, rather than per visit.

This overlooks the number of times a person visits before converting, which is after all a negligible additional cost of sale, and instead measures your retail performance on a human level.

According to our analysis the average visit conversion rate is 2.7% but your visitor conversion rate is 7.5% which means that average 92.5% of visitors are not converting on your website, not 97.3%.

Any site owner would appreciate an overnight 167% leap in conversions and all it takes is a slight change of perspective!

More importantly, we believe that VorCR gives site owners a much clearer view of how their site is performing in the real world, excluding macro behavioural factors.

The sooner businesses move away from average metrics like visits and start looking at the individual the sooner businesses will be more equipped to understand how changes both intrinsically and extrinsically are impacting their success online.

Ian McCaig

Published 20 September, 2012 by Ian McCaig

Ian McCaig is Founder at Qubit and a contributor to Econsultancy.

29 more posts from this author

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Nick Stamoulis

"Greater purchase research...will by definition lower your per visit conversion rate as each user is likely to make more visits before making their final purchase decision."

A great insight. Shoppers are smart and they are on the hunt for the best deal; they have no qualms about checking out multiple sites multiple times before finally making a decision.

about 4 years ago

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Deri Jones, CEO at SciVisum Ltd

Ian

I think we'd all agree that conversion per Visitor adds value over and above conversion per visit.

But you didnlt show any historic stats as to how that metric has changed over time? Is it also dropping?

One big factor you didn't cover is Mobile and Tablet - the fact that one visitor may hit your site with different devices and therefore appear as different Visitors to your tracking.

Only a couple of years ago no one browsed from a tablet on the sofa, and few from a moble phone.

Nonw that those have mushroomed it wouldn't be surprising if visits and visitors are up.

But as above the question remains : what has happened to conversions per visitor over the last year or two?

about 4 years ago

Rob Jackson

Rob Jackson, UK Managing Director at Elisa Interactive Ltd

Previously the visitor conversion metric was great if your product was a one off or high AOV purchase. With high consideration purchases you would expect users to research their choice and so therefore visit more than once.

Websites where users are likely to make multiple purchases like Amazon should absolutely not use a visitor conversion metric. If I go to Amazon four times in a month to research two different product categories and then buy one; the visitor conversion metric will not provide a realistic representation of performance.

Most importantly of all, as Deri points out - multi device browsing is on the rise. Two thirds of British adults own smart phones and counting. This means over time the Visitor metric is becoming less and less accurate due to cookie technology having no awareness of this multi device behaviour.

You can of course use mandatory logins to identify unique users across multiple devices. We are seeing more and more clients making use of Facebook connect to drive this. Not only can you get closer to single customer view but it can also provide powerful contextual and demographic information about users via the Facebook API.

about 4 years ago

Stu Bowker

Stu Bowker, Web Analyst at TUI Group

I think Avinash sums it well here http://www.kaushik.net/avinash/excellent-analytics-tip-8-measure-the-real-conversion-rate-opportunity-pie/. Not all visitors are there to convert so adding them to the conversion formula is misleading.

To better understand the intentions of your visitors you should consider the purpose of the content they're visiting.

Bounces are a great start. As are visits to pages such as 'press releases', 'become an affiliate', 'win a holiday' etc. We pretty much all have content that's not relevant to the booking process.

As you add more content like this then you're going to attract more non-converting visitors and therefore skew your conversion rate even more.

If you can filter these out with segments then you'll be in a far better place to see exactly what's going on, especially if you don't have logins.

about 4 years ago

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Deri Jones, CEO at SciVisum Ltd

Yes, that's nice Stu - segmentation is key after all, so that's a great approach.

What kind of % of the visitors do you exclude when you've done that in practise?

about 4 years ago

Chris Matenaers

Chris Matenaers, Head of Digital Marketing & BI Systems at brightsolid Online Publishing

I think the recommendation of using the visitor stat rather than the visit stat is in some ways wrong.
For many years I have been an advocate AGAINST what is proposed here.

The simple fact is cost is mostly calculated on a per visit basis: CPC is still a major driver and revenue should be measured against cost.

The fact that 7.5% of visitors convert, but only 2.4% of visits highlights that visitors do compare against other online offers or don't find all necessary information on the merchants site. They might also want to use other referring sites for discounts or customer testimonies. Maybe it is worth implementing those to get the conversion rate up?

In any case, it is important to understand the value of participating marketing channels when looking at conversions. By cutting the analysis short and looking at the visitor, you have nothing gained and is, in my book, a very bad idea.

about 4 years ago

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