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Archive for March, 2008

What is the value of a single website visitor?

Google Analytics statistics for Posted on

By looking at the revenue per customer of and, we can estimate how much the average business should be spending on its website. Website owners know that if the amount they’re spending on their website exceeds the site’s revenue generating potential they will quickly find themselves in bad shape financially. However, many site owners don’t know what a mature site’s ultimate revenue earning potential will be. This post attempts to help you calculate this on a per visitor basis.

How much money can generate one visitor?

We all seek to increase the number of visitors to our website. However, the amount that many companies spend to acquire a single visitor is often far beyond the value of that visitor. It is intelligent to analyze your website’s revenue potential to ensure you never spend more to acquire a visitor than the amount of revenue that user will generate.

Unfortunately, most of us face a catch 22. Because most of us have never had tens of thousands of visitors hit our website every month, we don’t know how much money we can generate from each visitor.

We optimistically imagine that if we can get traffic at what feels like a reasonable cost, then we will be able to recoup the investment to obtain that traffic.

But as a reality check, let’s look at someone else’s data to see what type of revenue generating potential is reasonable to expect from our website.

Example of a content website, Tech Crunch, and its revenue per visitor

First let’s look at a successful content website. Yesterday I was watching this Yahoo! Tech Ticker about a successful technology blogging website. In the video, Michael Arrington, the founder of, reveals that has an annual revenue run-rate of $3 million. Then today on Michael Arrington’s blog, he posted the above graph from their Google analytics data. This graph shows that in January had 2,647,027 visitors.

So how much revenue is generating per visitor to their website? At the current rate, would get about 31.8 million visitors per year. At $3 million in revenue per year that is about 9.5 cents per visitor.

So, one of the most successful content websites,, generates only 9.5 cents per visitor. Are you operating a content website? Are you spending more than 9.5 cents per visitor to acquire readers? Remember you must include all costs in this figure, including any costs to author and host content.

Example of an e-commerce website, Amazon, and its revenue per visitor

What if you sell a product? Let’s look at another example. As of this writing, gets about 600 million visitors per year and generates $14 billion in revenue for these 600 million visitors. Thus, Amazon is making about $23 per user.

If you operate an e-commerce website, do you think your revenue per customer is similar? Can you build out this website, grow it, and advertise it for less than $23 per customer?

What should we, as website owners, do with this information?

Steve Pavlina, who is currently generating significant income from his website, has this to say: “Your business should put cash into your pocket, so before you ‘invest’ money into it, be clear on how you’re going to pull that cash back out again.” (“10 Stupid Mistakes…“, March 2008)

What’s the point? Please make sure, before you invest any money into your website, that you are being realistic about your revenue generating potential. Don’t pour money into your website only to find that you quickly run out of budget and only have a small revenue increase to show for all of your money, time, and effort.

Do you operate a content website? Then ask yourself, realistically, should I be spending any money on advertising? Perhaps you should be focusing on generating quality content and nothing else.

Do you operate an e-commerce website? Then ask yourself, realistically, should I be more concerned with increasing my traffic or increasing my revenue per customer? Perhaps you should be increasing your revenue per customer and forget about increasing your traffic at this time.

If you are to be successful, the answer to these questions must be impacted by a realistic assessment of the value of a single website visitor for your company.

Make sure you carefully compare your income per customer to your investment costs per customer before you invest a penny in your website.

Be the first to comment - What do you think?  Posted by Ayo - March 26, 2008 at 1:06 pm

Categories: Some web questions   Tags: , , , , , ,

A Quality Inventory Provides Greater Sales than Elegant Site Design

Summary: What can we learn from, the #2 vacation rental website on the internet? Well, first, simple websites often outperform slick elegant designer websites. Second, having quality inventory is far more important than having the best looking website. Focus on beating your competition by having high quality products and services and don’t worry about having the best looking website in your industry.

Be the first to comment - What do you think?  Posted by Ayo - March 24, 2008 at 8:49 pm

Categories: Site reviews   Tags:

Increase Site Traffic and Sales By Using a Loss Leader on a Discount Website

jewelry site review

Summary: How can a discount website increase web site traffic and generate buzz rapidly? Sam Walton, the founder of Walmart, perfected the art of using unheard of discounts (a loss leader) to generate foot traffic and buzz. In this video review, we discuss how a discount website can leverage this strategy to increase sales.

Be the first to comment - What do you think?  Posted by Ayo - at 3:44 pm

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What is a blog and do I need one?

Screen capture from as I edit this post.

The technology world tends to get excited about new products and new ideas, blogging just being the example we’re going to discuss today. However, the average businessperson wisely views the technology world with some skepticism. We have learned that technology is never the magic pill to solve business problems. Blogs are no different. In themselves, they have no special power to solve business problems. Nevertheless, it is wise to ask, “What is a blog?” and “Do I need one?” This article will help answer those questions.

A simple definition of a blog

So, what is a blog? To start, this article that you’re reading is a blog. Put simply, a blog is a column, similar to a daily newspaper column, which is published on a website instead of in print. Just as a newspaper column can be a Dear Abbey, a column about sports, or a political opinions column, a blog can also be about any topic. Just like columns are a series of regularly published articles, blogs are a series of regularly published posts. Newspaper columns are typically read in print. Blogs are typically read online.

Differences between a blog and a newspaper

However, blogs are not exactly like newspaper columns. Whereas a newspaper column is published at most once per day, a blog can be published as often as you want. That’s because it’s cheaper to update a blog on a website than it is to print a newspaper. Some blogs are updated every hour. For example, just recently, a blogger published one post every hour for 24 hours straight about Kobe Bryant. Even the New York Times could not afford to print twenty four updates to their sports column in a single day. And who would buy all twenty-four copies?

Another difference between blogs and newspaper columns is that, while newspaper columns are controlled by the newspaper, a blog is controlled by you. You are the author, or someone you hire is.

Difference between an article on a blog and an article on another website

As I mentioned earlier, this article you’re reading on my website right now is an example of a blog post. But what makes blogs so special? How is this blog post any different from any other article on a website? The reality is that to most people there is no major difference.

From the reader’s perspective, blog posts may look no different than any other article on a website. If this is the case, then why is there so much buzz about blogging in the technology world?

This brings us to our next question, “Do you need a blog?”

The easy answer to that question is, No. A business can operate perfectly fine without a blog. However, blogging provides some advantages that make it a powerful tool for publishing communications to your customers.

A blog : first a very good and easy writing tool!

It is best to think of blogging as using a writing tool just like one uses Microsoft Word. Word let’s you quickly write what you have to say, save your document to a file, and print it or email it for someone else to read. Similarly, a blogging tool let’s you write your thoughts into an article, automatically applies a standard blog layout and format, and automatically uploads the blog article to your website to share with your visitors. The tool builds the web page for you so that you don’t have to be a programmer to put articles on your website.

In summary, if you plan to write lots of articles for your customers to read, then a blog can save you time. A blog helps make authoring and publishing articles on your website faster.

Blogs have a lot of other powerful features that also help you. However, there are so many features that they can’t be covered in just one article. But you wisely don’t start blogging merely because blogs provide cool features. Instead it is wise to start blogging because you have something of value you want to say to customers on a regular basis and you want to do that as efficiently and effectively as possible. If your goal is the latter, then the features provided by blogging might be just what you need.

In conclusion, blogs are just a way to publish articles on a website. Blogs consist of a series of posts published at a regular time interval on a website just as newspaper columns consist of a series of articles printed in a newspaper at a regular time interval. Blogs, in and of themselves, do not solve business problems. Nevertheless, if you wish to communicate with your customers through regularly published articles, then a blog is often the easiest way to do this. That’s why I write articles such as this through a blogging tool. Using blogging as a tool can save time and make it easier to share your articles with customers and partners, and to have their feedback and impressions through comments.

    Additional articles: 

  1. “What’s a blog?”,
  2. “What Exactly is a Blog?”,
  3. “What is a blog?”

Be the first to comment - What do you think?  Posted by Ayo - March 21, 2008 at 12:06 pm

Categories: Web design tips   Tags: , , , , , , ,

What gave The Popcorn Factory the highest conversion rate on the internet?

Picture from the homepage of the Popcorn Factory, the website with the highest conversion rate in 2007.

In December of 2007 the Popcorn Factory had the highest conversion rate, 29.50%, of any major website (, 2007). For most retail websites, a conversion rate of 10% is considered excellent. Anything below that is considered average (Eisenberg, February 3rd, 2008). What can we learn from The Popcorn Factory to help us improve our own conversion rates? In this article we will answer that question by looking at one very important reason behind their success.

No doubt there are many reasons that The Popcorn Factory has one of the highest conversion rates online. However, as I researched this article, one reason kept coming up, product selection. Not all products sell well online (Warren, 2000). The Popcorn Factory has done a good job of identifying what sells well online and investing their resources in those products. They have done this in the following ways:

  1. The Popcorn Factory sells a product the customer already wants to buy.
  2. Their online product mix is specific to online tastes and is different than their offline product mix.
  3. Their products are well suited to being delivered by mail.

Let’s discuss each of these points one by one.

The Popcorn Factory sells a product the customer already wants to buy. If you manufacture a product, improving on this point may be difficult for you. However, if you are an online retailer retailing other vendor’s wares, then this is entirely within your control. The simplest way to increase your conversion rate online is to start with great products. This quote bears that out:

“People’s motivations trump any great or poor [website] design. If people have made up their mind (persuaded themselves), that they want to buy flowers or popcorn from the particular retailer then they’ll work through almost any poor shopping process…” (Eisenberg, January 29th, 2008)

How can you improve your product mix? Put extra effort into the product selection process. Read product reviews, see what people are talking about. Are there any trends you can take advantage of? Product strategy is not my area of expertise. Nevertheless, the key point I want you to take from this article is that bad product selection will trump good website design. So don’t invest more money in improving your website or increasing your online marketing if you don’t already have products that the customer desires. After all, we can put lipstick on a pig, but it’s still a pig. A better website might just end up being a better color of lipstick for a litter of ugly piglet products.

That brings us to the next point.

The Popcorn Factory’s online product mix is specific to online tastes. The Popcorn Factory has a print catalog as well as their website. Cheryl Zatz (the Vice President of Marketing for The Popcorn Factory as of at least October 2006) made clear in a case study that, “the Web site doesn’t simply replicate the paper catalogue: the number of products is limited, to avoid creating navigation problems for users, but the site does include a number of exclusive lines.” (Warren, 2000)

If you already sell products offline, moving online may not be as simple as putting pictures of your products on your website. Here the Popcorn Factory specifically faced a navigation issue. They didn’t want to overwhelm users. Nevertheless, not all products are tailored to the online world. For example, a clothing store that sells suits and dress shoes will probably find dress shoes are far easier to sell online than suits. Clothing that needs to be tried on first may be harder to sell than shoes that have fairly universal sizes. Such differences may affect policies such as return policies. Return policies online may have to be different than the return policy you’ve used successfully in the past.

These are just some of the things to think about. There are probably dozens of factors I could list. However, hopefully you see the point. When you decide to go online make sure you think through how the customer’s preferences are different online than when he is buying from you in your store or even over the phone. Your online policies, prices, product descriptions, may need to be different.

This brings us to our last point.

The Popcorn Factory’s products are well suited to being delivered by mail. The Popcorn Factory started as a mail-order business, so their products are already nicely suited to being delivered through mail. What does this mean for those of us who don’t have mail-order businesses to learn from? We can take a look at the products we’re trying to sell online and make sure they really fit the online purchasing model. For example, the majority of cars will probably always be purchased locally. The internet is a powerful marketing tool for cars, but most customers want to test drive the car they ultimately buy. On the other hand, tin cans of popcorn are very easy to sell online. The cost is low; if you don’t like the popcorn, you’re not out a lot of money. Popcorn is a pretty standard product that is hard to mess up, so there isn’t much fear of completely botched service.

Thus, it is wise to ask yourself the following questions: Do customers understand your product well enough that they would feel comfortable buying it online? Is your product’s value proposition only convincing when seen in person? All of these factors will affect your conversion rate. Again, these factors are far more important than the overall look and feel of your website.

In conclusion, product selection on your website is going to have a larger impact on your conversion rate, than even the best website design can have. The Popcorn Factory achieves a high conversion rate, not because of outstanding website design, but because of outstanding products. Focus intensely at improving the product selection on your website and you will naturally see an improved conversion rate.


  1. 2007. “Top 10 Online Retailers by Conversion Rate – December 2007”
  2. Eisenberg, Bryan. January 29th, 2008. “Top 10 Online Retailers by Conversion Rate: 12/2007”
  3. Esenberg, Bryan. February 3rd, 2008. “Top 10 Online Retailers by Conversion Rate: An Analysis”
  4. Warren, Liz. May 18, 2000. “Positive approach to e-business will pay dividends for SMEs”

Be the first to comment - What do you think?  Posted by Ayo - March 20, 2008 at 8:35 am

Categories: Site reviews   Tags: , , , , , , , ,

Question from Readers: Is it enough for a discounter to show the discount off list?

Image of an example of discount off list on the Jewelery and Watches website.

After viewing the video: Site Review: Online Bargain Hunting Website, a viewer sent this comment. The viewer made a good point which merits a response.

Just out of curiosity did you click on any of the products on that website home page? If you had you would have seen that it is shown what the list price is and his sale price like the Cartier womans watch you pointed out in the video

“The #1 challenge for an online discounter is to prove that you truly provide a meaningful discount.” – Ayo

List Price : $3,650.00

Our Price : $2,910.00

$740 dollars is a meaningful discount

If someone is shopping for a high end product like a watch such as Cartier they would already know what a good deal is since shopping for a watch of such a name is not an impulse purchase, like a $30 DVD player from walmart would be.
– DG


[Ayo’s Response]

Hi DG,

Thanks for the feedback! Those are good points.

I did see that shows the list price on the product page. Unfortunately, to keep the video short, I wasn’t able to talk about everything I looked at before recording it.

However, though the discount, I still felt should provide a more explicit comparison.

Here is my concern. As of today (March 7, 2008), if you search for “Cartier Women’s Pink Santos Demoiselle Watch” in Google you basically find that all online vendors sell this same watch for the same price, $2,910.

Since there is no easily accessible online evidence that this watch is being sold for more than $2,910 online. can seize the moment, by telling us who exactly is selling this watch for more than $2,910. This will clear some of the customer’s skepticism.

For example, if JaW ( could link us to the Cartier website and show the page on which Cartier shows the list price for this watch, that would be much more convincing.

The problem with list price, is that many list prices are artificially high. Many products are never really sold at list price. So in the customer’s mind, selling a product below list price is no longer considered a discount.

For example, when a car dealership shows the list price (MSRP) on a car, let’s say $25,000 and then shows the dealership price…say $23,000. How many of us really take the dealership discount at face value? Is the discount on list meaningful? Or is the customer more interested in the discount versus other dealerships? If all dealerships in the country are selling the car for $23,000, then this price is no longer perceived to be a discount.

Unfortunately, industries are so competitive, that we have come to expect real product prices to be below list prices. Thus, to the consumer a real discount is, not the discount from list, it is the discount below his other options.

If no other company on the web sells this watch for a higher price then $2,910 ceases to be perceived as a discount. Thus, JaW can benefit by telling the customer who exactly is more expensive than JaW’s price. It’s okay if that discount is versus a brick and mortar, JaW should just tell the consumer that. More information is better than less information.

Nevertheless, as I mention on my website the day after creating this review. If it is not possible for a company to provide a discount, it may be better to advertise another differentiator. For example, JaW’s could say, “We’ve scoured Amazon and found the best deals on Amazon for you.” Or JaW could say, “We provide a wealth of knowledge on Jewelry and Watches.” The point is that, somehow, JaW needs to get the customer to buy on their website, and whatever their selling point is, they need to really convince the customer that it is a real selling point.

Again, thanks for that feedback! I’m providing only one perspective. It’s definitely not the only perspective.


Be the first to comment - What do you think?  Posted by Ayo - March 16, 2008 at 8:46 pm

Categories: Site reviews   Tags: , , , , ,

Discouraged? A Successful Website Requires Realistic Goals


Summary: In this article we will discuss how to establish realistic goals for a website and why we do so. Realistic goals are important for a website owner if he is going to have success. Realistic goals accomplish two objectives. First, realistic goals lead to constant, measurable progress. Second, realistic goals provide motivation when achieved. Whereas, unrealistic goals can lead to wasted effort and discouragement.

What is wrong with having unrealistic goals for your website? Unrealistic goals can lead to discouragement. Discouragement can lead to a loss of joy and, worse, giving up altogether.

Sometimes in our efforts to reach out for as much as possible for our business, we reach out for so much that we overstretch ourselves.

Therefore, to keep your joy, and to continue to grow your company, you should always set goals that force you to stretch but that also allow you to see steady progress.

What makes a goal realistic? And how can your goals help your company make steady, measurable progress?

Here are some guidelines:

  1. Realistic goals should be in-line with what companies in your industry have been able to accomplish historically.
  2. Your goals should allow time for your efforts to bear fruit.
  3. Realistic goals should reflect deep planning and not shallow thinking.

Let’s briefly expand on each of these three points.

Realistic goals should be in-line with what companies in your industry have been able to accomplish historically.

If your goals fail to take into account industry averages they are more than likely going to be missed.

For example, if the average conversion rate in your industry is 5% and your website’s current conversion rate is 6%, would a goal of having a 25% conversion rate be reasonable?

Google Analytics has a new benchmarking tool that helps companies to benchmark their websites against industry averages. Consider investing in tools like this or manually gathering data published about your industry. Then, armed with industry knowledge, set realistic goals.

Your goals should allow time for your efforts to bear fruit.

The farmer can not plant his seed Monday night and expect to reap Tuesday morning. Similarly, reaping the results of your effort to increase traffic, revenues, or profit requires time. Often noticeable improvement requires consistent effort for years not months.

Don’t try to fool yourself into thinking that you’re going to increase your monthly revenues an order of magnitude through a brief three month burst of activity. Though some websites manage to buck the trend, on average websites seem to take 2-3 years of consistent effort to gain traction. To read a real life example, click here.

How long are you currently planning on waiting for your efforts to yield significant results?

Realistic goals should reflect deep planning and not shallow thinking.

Many website owners obsess over only two numbers, traffic and revenues. This obsession is shallow because it fails to look at the root sources of traffic and revenue.

There are myriads of factors that go into a successful website (e.g. quality product selection, good site design, educational content, quality customer service, well written product descriptions, etcetera). Don’t just set traffic and revenue goals as a knee jerk reaction. Try setting goals for improving very specific parts of your website.

For example, a study by Jakob Nielsen on website usability found that users are 22% more satisfied when website content is written in a concise, objective and scannable manner (Nielsen, 1997). Can you set a goal to re-write all of the text on your website to make it more objective (e.g. remove any biased or overly optimistic statements)?

One of Jack Welch’s most famous actions when he became CEO of GE was to get GE out of any business where they weren’t #1 or #2 (Wikipedia, 2008). This allowed GE to focus its energy on its strengths. Can you do something similar with your website? For example, can you set a goal of trimming back your product selection to only products with margins at or above your industry’s average?

Paying attention to the three points discussed in this article as you set goals for your website will help you to set realistic goals that continuously move your website forward. By setting realistic goals you will avoid discouragement. More importantly, your steady, measurable progress will serve as personal motivation to continue working on building a successful business online.


Nielsen, Jakob. 1997. “How to Write for the Web“
Wikipedia. 2008. “Jack Welch“

Be the first to comment - What do you think?  Posted by Ayo - March 15, 2008 at 10:35 am

Categories: Web design tips   Tags: , , , , ,

Internet Discounters: Do you really provide a discount?

Picture of an everyday low prices sign.

Summary: If you are an online discounter, how can you convince customers that you really provide a discount? You can’t expect the customer to trust you. You must provide the customer with evidence either by showing your prices versus competitor prices or by offering a deal so good the customer can’t refute it.

“Super sale!!”, “Only One More Left!!” These are phrases we hear all the time. But do customers believe those statements? After hearing overstated hype so often, customers are now skeptical that prices being advertised are really lower than average. If you can convince the customer your prices are good, you are many times more likely to win their business. You don’t want the customer to just window show.

There are two principal ways to convince the customer that you provide a meaningful discount.

  1. Show actual prices of your competitors.
  2. Find one product you can sell so cheap, that customers don’t question your discount.

Showing actual prices from your competitors is effective because such facts can’t be questioned by the consumer. The key is that the company you use as a comparison does not need to be another discounter. You don’t have to convince the customer that you have the best price on the web, you just need to convince the customer that you truly provide a discount. Therefore, if you sale an identical product as a premium retailer such as Nordstrom’s, and you can prove your price is lower, by all means refer to the competitor explicitly. This evidence makes a far stronger statement than your merely stating you provide a discount.

Your second option to convince the customer that you provide a great discount is taken from Walmart’s playbook. Do you remember November 28, 2003 when a Central Florida Walmart offered a DVD player so cheap ($30) that it caused a stampede? Sam Walton, the founder of Walmart, began Walmart’s use of this technique to draw in shoppers.

Sam Walton realized that if he offered even one product at an unforgettable price, he could draw in shoppers to shop at his store at an incredible rate. Such outlandish sales accomplished two things. First, it generated publicity and drew in shoppers for higher margin products. Second, it gave Walmart a reliable reputation for low prices.

However, you may be worried that you can’t profit by copying what Walmart has done with success, because while Walmart was selling more than just the $30 DVD player to visiting shoppers, your website tends to sell only one or two products in a single shopping cart.

That’s a valid concern. Your best option here is to try and cross-sell higher margin products or services to make up for margins you lose on your sale.

Nevertheless, if neither of the suggestions in this article seem to work for you, you may need to consider another reality.

You may do well to ask yourself, “Am I really able to provide the customer with a discount?” Some industries are so competitive that it isn’t possible to offer a better price than what your competitors offer. If that is the case, then can you really build a business based on discounting? Sometimes it is wise to consider another business model. For instance trying to be a premium retailer instead of a discounter, essentially becoming a Mercedes of your industry instead of a Kia.

No matter what you end up choosing, be honest with the customer. The worst thing you can do is tell the customer an untruth. If you offer a consistent discount, then by all means state this on your website. However, if you don’t offer a discount, it is best not to lose the customer’s trust by telling him that you, like Walmart, have “Always low prices.”

By being honest and providing evidence that your website’s prices are lower than the competition you will win customer trust, generate buzz, and have a consistently higher sales conversion rate for your website.

Be the first to comment - What do you think?  Posted by Ayo - March 13, 2008 at 9:07 pm

Categories: Sales strategies   Tags: , , , , ,

How Can I Use Video to Increase Website Sales?

Picture from the Roof Life Oregon homepage showing how they use video to enhance the human nature of their homepage.

Summary: The web is a very insecure and impersonal medium. Customers fear identify theft, unfulfilled orders, and other fraudulent activity. Hearing a human voice on your website, especially a video of you or an employee can calm customer nerves.

Have you ever heard of someone being defrauded online? Of course you have. There are email scams, phishing scams, stolen credit card numbers, etc. Though you or someone you know may never have been defrauded, no doubt you are very aware that it happens. More importantly, your customer is also aware of the real risk of fraudulent activity on the internet. Fear of fraud is a major reason that customers don’t buy from websites they don’t already know. How can we use video to calm the customer’s nerves?

We all know that most con men like to hide who they are. Criminals don’t like to give away their real name and they don’t like to show their faces. When we see a person or company exhibit similar behavior, red flags go up. So, to build trust, you need to do the opposite on your website. With video the customer can see your face, he can hear your voice, and learn your name. This makes videos a great way to build trust.

What makes websites feel untrustworthy is that they appear anonymous. Fortunately, video of company executives or employees can remove much of this anonymity. To see an example of how this is done successfully, look at Roof Life Oregon’s website. Roof Life Oregon is a successful roofing company in the state of Oregon. They effectively use video to introduce the customer to the company CEO.

Commenting on Roof Life Oregon’s use of this technique, and the use of video in general, Tom Wanek, of Marketing Beyond Advertising comments: “Nothing bridges that chasm of anonymity on the web like real pictures/video.”

You may wonder, what if customers don’t like the person they see in the video? This is a natural concern. But everyday we do business with people at grocery stores, restaurants, banks, etc. Usually a friendly smile and caring tone of voice is all that’s needed to satisfy us. It is no different with your video. Just make sure to be friendly and show that you care about the customer and you won’t need to worry about customers seeing your video in a negative way.

Again, why is it worthwhile to build trust? Because for a customer to turn over his contact information or billing information to you, he has to trust you. It doesn’t matter if you sell the best product or service ever invented. If the customer can’t trust you, he can’t do business with you.

So, you do well to ask yourself, “Can my website benefit by building greater trust?” If you answer, “Yes,” then by all means start planning when and how you are going to incorporate trust building videos into your website.

2 comments - What do you think?  Posted by Ayo - March 7, 2008 at 2:13 pm

Categories: Sales strategies   Tags: , , , ,

How can I analyze the reasons for a low conversion rate?

Picture of an example chart analyzing your company's website conversion rate versus the competitor's.

Summary: The past two articles have emphasized the importance of product mix in determining website success. How can you figure out if a low conversion rate is due to a poor product mix versus a bad website? This question will be discussed in this article.

How can you identify the reason for a low conversion rate? As I mentioned in a previous article stressing the importance of analytics, you can’t measure yourself against yourself. The best way to measure your success and identify methods of improvement is to benchmark your website against your competitors.

What type of benchmarking do you need to do?

Since this article is discussing website conversion rate, the answer is to compare your conversion rate to the conversion rate of your competitors. For example, do you sell Caterpillar tractors? What is your conversion rate on those tractors? What is your average competitor’s conversion rate? Even better, what is your best competitor’s conversion rate?

If your conversion rate on a product is 8%, is that good or bad? Well, it always depends on the average for your industry. If the average conversion rate for that product, in your industry, is 3%, then you’re doing great. If the average conversion rate for that product, in your industry, is 15%, then you have some serious catching up to do.

What conclusion should the data help you reach? Here are two conclusions:

  1. If your conversion rate is below the competitor average, then you probably need to improve your website.
  2. If your conversion rate is low, but at or above the competitor average, then improving your website is unlikely to help generate a higher conversion rate. Perhaps you need to sell a different product. You’re already at or above the industry average. Unfortunately, this product doesn’t look like it sells well in general.

Unfortunately, figuring out the conversion rate for your competitors can be difficult. It may require some in-depth research. Each company will likely have to find industry specific resources in order to do their own analysis.

(Now that we are on the subject, I am interested, myself, in finding this data. I will do my best to dig around and see if there is a conversion rate research database out there. However, I doubt there is one. Nevertheless, if you are aware of one, I would appreciate your notifying me about it.)

UPDATE: I’ve found a wonderful database of conversion data at Read more about Fireclick’s web site conversion rate database.

In conclusion, make sure that you are benchmarking your conversion rate against your competitors and not against yourself. Benchmarking how you rank in your industry is the only objective way to identify whether a conversion rate is low because the product you’re selling just doesn’t sell well or if you have a problem with your website and marketing approach. By doing this benchmarking you allow your business to make much more intelligent decisions in product selection and web strategy.

1 comment - What do you think?  Posted by Ayo - March 6, 2008 at 2:04 pm

Categories: Sales strategies   Tags: , , ,

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