In the last few years somehow the metric ‘conversion rate’ seems to have taken the place of metrics like profit and ROI for many CRO consultants/agencies. That is why every second CRO agency boasts of improving the conversion rate of their clients by not less than 2 digits and at the same time shies away about its impact on the business bottom line.
280% improvement in conversion rate
Now the problem with this type of promotion is that we don’t know how this 280% increase in conversion rate impacted the net profit and ROI of the business. Did they spend 280% more to get this conversion? Did they decrease the traffic to the website to achieve this level of conversion rate? Did they increase the conversion rate of the conversions which don’t really impact the business bottomline? Is the conversion rate they are talking about goal conversion rate or ecommerce conversion rate? How was this conversion rate calculated? Did they use visits or visitors in their calculations? Is it in aggregate form or segmented? When was this conversion rate calculated? Was that the peak season? Does this improvement really mean anything?
With so many questions, it is hard to gauge the effectiveness of the service provider who is selling the conversion rate metric to promote his/her business. If a 280% improvement in conversion rate was such a big deal, it would have made any business owner a multi-millionaire overnight.
What good is ‘conversion rate’, if it is not tied to, and reported with, business bottom line impacting metrics like revenue, profit and cost. There is always a possibility that an increase in the conversion rate actually resulted in an only marginal increase in sales or even a decline in gross profit. How do we know as an outsider or as a client? It reminds me of the old days when SEO agencies boasted of search engine rankings they acquired for their clients like they really mattered.
I would like to see more marketers talking about improving the sales and the ROI of their clients.
Sales improved by 50%………..ROI improved by 10%
I would like to see experiments/tests being carried out with the focus to improve sales and ROI and not the conversion rate.
Now it is your turn. How much does ‘conversion rate’ alone impact your business decisions? What do you think about the service providers who boast of improving the conversion rate of their clients by 3 digits but don’t talk about how it impacted the business bottom line?