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Online businesses have plenty of room for improvement, with 39% saying they are dissatisfied with their conversion rates, and just a quarter claiming to be either 'very' or 'quite' satisfied.

This is one of the findings from our Conversion Report, produced in association with RedEye, which presents the results of a survey of 700 company and agency respondent about their approach to conversion rates.

While companies have concerns over their conversions, agency respondents were more optimistic, with nearly half (46%) saying their clients are typically satisfied with conversion rates. Rates are improving though with 70% of companies and 82% of agencies reporting an increase over the last 12 months.

Here are a few other highlights from the research:

Measurement

  • More than two thirds of companies (68%) measure overall site conversion to sale (shown below), compared to half (54%) who measure overall site conversion to response, while agency responses were similar (70% and 59%). 

Segmentation

  • Segmentation improves conversion. Organisations whose online conversion performance had improved over the previous 12 months looked at twice the number of segments as those whose rates have not improved.
  • The main types of segmentation carried out are: demographic (39%) geographic (36%) and behavioural (33%). Some are clearly missing a trick, as 13% of companies do not segment at all.
  • Over half of companies (56%) use segmentation for customer analysis, and 50% use it for email personalisation, with search engine marketing lower down the list of priorities:

Barriers to improvement

  • The biggest obstacle to improving conversion rates is a "lack of resources" (cited by 47% of respondents), though there is some disagreement here between company and agency respondents.
  • Only a third of agencies (33%) said that the lack of resources was an issue holding back improvements to conversion rates, with more (40%) pointing to a "lack of budget".
Graham Charlton

Published 12 October, 2009 by Graham Charlton

Graham Charlton is the former Editor-in-Chief at Econsultancy. Follow him on Twitter or connect via Linkedin or Google+

2565 more posts from this author

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Kim McCumber

It's interesting that companies are citing "lack of budget" as the reason to low conversion rates. However, the lack of budget would impact the raw impressions (and hopefully clicks), but conversions, in my opinion, are a matter of optimization, not dumping more money in. The only exception I can think of are high-competition markets, where high-conversion PPC keywords are prohibitively expensive for a company.

about 7 years ago

James Gurd

James Gurd, Owner at Digital JugglerSmall Business Multi-user

Hi Graham,

I would be interested to know how many of these companies and agencies use analytics effectively. Measuring conversion rates is one thing but looking at the on-site behaviour of different customer segments to determine what people are doing, where people are leaving etc and then marrying this with voice of customer data helps provide insight around conversion rates.

In my experience, there is a reluctance to invest in analytics (by that I mean the data analysis as well as customer surveys and testing) yet at the same time the complaint is that conversion is just not good enough. 

To get people to take analytics seriously to drive conversion requires providing a business case and commercial model for investment.

Kim, lack of budget is also relevant to conversion optimisation - you have to invest in a testing program (the testing software, the expert to define the test strategy, the resource to create multiple versions of pages to test etc). Any testing involves time and effort - allocating resource to this has an opportunity cost.

The hardest battle to win is shifting the mentality from investing in marketing because the model is known, to divesting a proportion of your budget into effective analytics and testing. Start with a basic project to prove the business case, then role out to other areas of the marketing mix and website.

Thanks

james

about 7 years ago

Graham Charlton

Graham Charlton, Editor in Chief at ClickZ Global

Hi James,

There is more on analytics etc in the full report. I didn't want to give too much away...

about 7 years ago

James Gurd

James Gurd, Owner at Digital JugglerSmall Business Multi-user

Hi Graham

Fair enough, I look forward to reading (when I can find the time!).

thanks

james

about 7 years ago

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Kim McCumber

James,

Thanks - my focus is in paid search, so I was thinking in terms of a paid search budget only. You're absolutely right in the costs associated with the testing and optimization process.

Kim

about 7 years ago

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Mark Bolitho, New Business Director - Ecommerce at more2

James, you have nailed it - exactly right.

The prevailing model is to spend on marketing to boost revenue, but the table on our website shows that this is the least cost effective method of the two by a long way - it's far more effective to increase conversion rate.

A good analytics and conversion optimisation strategy will involve marketing though, so it's perhaps not helpful to view the 2 things in isolation.

And yes, it costs money! Most small businesses won't want to outlay 40k plus for a good data analyst so either end up having a go in-house with a free tool or hook up with a 3rd party. Both these options have a significant cost attached.

The mindset is gradually changing, and those who position themselves correctly will reap the rewards. 

it's a very insightful report, am getting through it bit by bit.

about 7 years ago

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Simon Taylor, Senior Director at Visual Sciences

Hi, having worked in the web analyrics industry for many years and with  various of the vendors I have seen very few organisations getting anywhere near using the full power of the tools.  This is often a combination of lack of budget (people) and also availability of those people (who are expensive if theyre any good!).  Pretty much all the major tools, including increasingly products such as Google Analytics, offer far more capabilities than any one organisation will ever use.  There are key basics that any analytics tool should be setup to measure and most tools are capable of offering, the first of which is tracking all conversion points (not just sale, e.g. registration).  Where possible segmentation should be tied to these events too, this enables the audience demographic that have 'converted' to be analysed and compared to the general mix of visitors.  Funnels should be setup to track any key process flow, not just the shopping cart.

As commented by others, endlessly throwing money at PPC etc isn't sustainable or an efficient use of funds. The audience are there, they just need a hand converting!

Having gained an understanding of the differing groups who visit your site and those that are more or less likely to buy/convert, then comes the dilemna of how to engage the people who adandon - what is stopping the 50+% (or whatever it is) who add something to their cart and then drop out from going that extra step.  The world has moved on from simply adding more to the top of the funnel in order to get more out of the bottom, in my experience a gross conversion rate of low single figures is typical, that means there is an available audience >90% which is there to be optimised, personalised to and proactively engaged to get them that final mile. 

I am working with a number of clients now using chat and click-2-callback as mechanisms to reach out to those 90+% who are adandoning (in some cases it's 99%!).  To set that up effectively needs analytics knowledge and commitment to a program to improve site performance from senior management, who need to recognise there is an existing pool of potential customers already on their site, showing intent, that simply need a little reassurance and hand-holding to become a loyal and valuable customer.  A well targetted program can interact with a very small percentage of visitors and increase gross conversion by 10-20% very quickly, you only want to 'talk' to those who are showing signs of abandoment following demonstrated intent (insight revealed by the web analytics tool if you know where to look!).

Given this, I can't see how any organisation would ever say they are 'satisfied' with their conversion rates, everything that can be measured can be improved, especially in the medium such as the web where everything CAN be measured.

Just my 2c's, hope others find this useful.

Simon

about 7 years ago

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Mark Bolitho, New Business Director - Ecommerce at more2

Should we conclude that 61% are happy because their conversion rates are very good? I don't think so. Industry stats don't support this. I actually think that many of those who are unhappy with their conversion rate become frustrated due to a lack of real understanding as to how they can improve it.

in our experience, those who have adopted the testing mindset always have hope! it's up to the likes of us, along with our clients, to come up with ideas that will be worth testing and are most likely to bring a positive result. Yes, of course there will always be those with extremely high expectations because they've read about a 15% conversion rate on a consultants blog, and is/should a business owner ever truly happy with results anyway?

We do rather sell the concept that there's always room for improvement, and i think that generally that's not a bad approach to take, so, in one way I'm surprised that only 39% said they we're unhappy.

Ultimately, I'm erring towards the conclusion that the 39% are largely made up of those that 'have a go' in-house because they think it's the most cost effective option, test the wrong things, and don't know how to get the best from their tools.

about 7 years ago

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