How can I analyze the reasons for a low conversion rate?
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:
- If your conversion rate is below the competitor average, then you probably need to improve your website.
- 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.)
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.