Of course conversion rate will always matter but what happens when your site’s conversion rate is consistently below 1% or .5%? It won’t be long before conversion rates less than 1% are the new normal.

There are two forces at work here: 1. Increased com­pe­ti­tion as peo­ple spend more time shop­ping online—more shop­ping equals more vis­its per pur­chase and con­ver­sion rates will nat­u­rally fall. 2. Increased mobile vis­its where shop­pers seem to pre­fer to use smart­phones to browse, price check, and find store loca­tions – not purchase.

Lower conversion rates aren’t a bad thing since incre­men­tal traf­fic still means more revenue. What will be bad is if the only metric you look at to measure success on your site is your conversion rate. What about the other 99% of traffic? Is that not worth trying to quantify?

No one gets married on the first date, likewise no one buys something the first time they meet your site. How many little interactions, downloads, engagement, likes, views, subscriptions, reviews does it take to add up to a conversion?  Like Avinash says, If you solve for conversion rate are you solving for all your traffic and are you improving the website experience for all your customers?

Web analytics tools are only as good as the questions you ask of them. Knowing how to use Google Analytics or Omniture – how to pull certain metrics and create reports, doesn’t do you any good until you have a reason to do so.

There are two kinds of questions: reactionary questions and investigative questions. Reactionary questions come from looking at trends and reacting to the results to find out why those trends happened.

Here are some reactionary questions:

• Why did revenue dip week over week?
• Why is cost per acquisition going up?
• Why is site traffic increasing?
• Why is bounce rate increasing?
• Why is traffic decreasing from X traffic source?

Investigative questions are a result of discovering trends before they cause a reaction. These questions are the little discoveries that yield big results and the best questions are the ones that have a desired outcome tied into them.

Here are some investigative questions:

• Where do my most valuable customers come from, and how do I get more of them?
• Which keywords should I be focusing on in paid search and seo to decrease cost and increase relevant traffic?
• What content is most persuasive at driving desired outcomes so that I can make more of it?
• Which marketing channel is performing the best/worst according to sales and leads?
• Is the content on my site causing people to return frequently and how can I make it more “sticky”?
• How many page views does it take for someone to convert, is that the right amount or are we making it too hard for them to find what they are looking for?
• In what stage of the shopping cart are people abandoning so that we can fix the leaks and increase conversion rate?
• Which sources of traffic are driving the most new visitors so that we can continually add new prospects to the top of the funnel?
• How do we get users to add more items to their cart so we can increase average order value?
• What things are visitors searching for the most in site search? Are there opportunities to create content that doesn’t yet exist or make existing content easier to find?
• How do smart phone visitors differ from tablet users and desktop users? Could we make a better user experience for those different users that would lead to higher conversion rates?
• How long does the average paying customer spend on the site? Should we try to get everyone to spend the same amount of time or is it too long?
• What effect would increasing rankings on organic search have on revenue and leads?
• Which sources of traffic are assisting in conversions even if they aren’t the last source before the visitor converts?

The essence of web analytics is to boil down business objectives into unique actions on a web site. Its not about amount of visits, time on site, or most visited pages. When you match a desired outcome from a web site to a business goal and then devise a strategy around getting that desired outcome to happen more, by analyzing the data around that desired outcome, you’re doing web analytics.

Get enough of these and you can separate them into small objectives and large objectives where smaller ones lead to bigger ones, like it takes 10 sign-ups for every 1 sale. Then you build your marketing strategy off of these business objectives: “we need an increase of sign-ups if we are going to reach our sales goal so how can we optimize the content on the site by looking at bounce rate?” etc.

On a side note: Can the same methodology be used on optimizing your life? What is your personal life purpose and how can you boil it down into unique outcomes that you can track to measure your progress?

See if this scenario sounds familiar:

This report shows visits are up year over year. Yea! Well done everyone, the markting budget is paying off! Let’s keep the momentum going and see if we can continue to drive even more visits to the site!

This report shows conversion rate is down year over year. Boo! What the heck is going on everyone! Let’s optimize our accounts, cut cost per acquisition in all channels and limit non-qualified visitors entering the site!

The truth lies when you look at conversion rate on top of visits. Obviously, if you’re spending more on reaching out to drive more visitors to the site, chances are they are new visitors and not very low in the conversion funnel, causing a drop in conversion rate. Do you ask someone to marry you on the first date? No of course not, yet that is what too many companies expect when they pay to drive new traffic and expect them to purchase after their first interaction with the site.
What is a “good” conversion rate? Is less than 1% bad? Is greater than 7% amazing? Neither. It all depends on volume of traffic, average order value and margin. If you sell a product for $50 online, would you rather have a site that gets 100,000 daily visits and have a dismal looking conversion rate of .9%, or a site with an amazing conversion rate of 6% but gets 1,000 visits? Option one would be making $45,000 while option two makes only $3,000.
It gets dangerous when an organization has its mind set on a specific conversion rate and makes short term changes to maintain it – like managing their marketing channels so that only the most qualified and interested visitors come to the site. These visitors tend to be repeat customers already far down the conversion funnel – converting the converted. A healthy business will continue to invest in adding more new customers into top of the the bucket. If not, and the tyranny of maintaing conversion rate runs rampant, the amount of people leaking out the bottom of the bucket will exceed the amount going in the top. A target conversion rate should allow for a healthy amount of new visitors who are an investment in the long term. Today’s expensive, non-converting visitors are tomorrows cheap, high-converting visitors.

Landing pages are underestimated in the role they play in paid search. I think the reason is because it’s a lot easier to tweak adtext, bids and keywords than the landing page. For the query “front load stacked washer and dryer” this is the ad and landing page Sears gives me:

Can you imagine walking into a sears and telling the rep that you are looking for a front loading stacked washer and dryer and in response he says, “sure, all washers and dryers are in the back, go ahead and find it yourself.” Yet that is what this landing page is telling me – “here’s everything we sell related to washers and dryers, figure it out.”

You can discover where your ads are writing checks that your landing page can’t cash in Google Analytics. Pull up your keyword report under Advertising > AdWords and add the secondary dimension of Destination URL (or make a custom report like mine below). Sort by bounce rate and here you will see all the keywords that aren’t matching very well with their chosen landing pages.

In my example below, line 2 has spent $335 and has a bounce rate of 90% and -40% ROI – ouch. Time to rethink the quality of this keyword and the quality of this landing page.

Instead of using margin and volume to make your web analytics framework, It may be easier to build it out using a conversion funnel. The different steps of the funnel give you ideas and starting points for brainstorming the functions your site has. It also forces you to think through your marketing and web analytics strategy for each step of the customer acquisition cycle. The steps are awareness, consideration (desire, interest), conversion, loyalty and advocacy.
Each step has Key Performance Indicators and their associated targets and goal values. For some of the goal values you’ll have to determine internally, (Avinash’s post on this is rad) and other goal values are the Per Visit Values calculated by Google Analytics (dividing revenue by visits).

I like this kind of view because it puts into prospective where the majority of your advertising efforts are going. It’s easy to heavy up on everything leading up to the conversion and then forget about loyalty and advocacy, or vice-versa.

I really like using goals as advanced segments to find out what is working on the site.

Say your Goal #1 is a lead generation goal to get email sign-ups from people who want you to contact them later for more information. Set up an advanced segment for Goal1 Completions and then add it, and only it, to your report.

Now you’re looking at everything that went just right with these visitors: 1. Their expectations of what they were going to see before they clicked matched what they saw. 2. What they saw was engaging. 3. They trusted you enough to give you a chance and then they converted. Here’s some ideas on how to figure out what those 3 things were so that you can make it happen more often:

1. What kept these visitors from bouncing was that what they were expecting, by clicking on the search result or link in a referring site, is what they got. This can be found under Traffic Sources. What keywords and referring sites are driving these visitors who convert? I’m going to try to maximize the traffic from these sources especially to the page that they landed on. Under Content > Top Landing pages I can find out which landing pages worked. Make more content like that with those same keywords. Include those keywords in your SEO efforts.

2. How engaged does someone need to be before they convert? Back to Visitors > Visitor Loyalty > Depth of Visit you can see how many pageviews it it takes on average before someone converts. If the sweet spot is between three and four pages then I can start trying out strategies for getting more pageviews per visit. More up-sells (people who like this also like this) and more links to similar content to keep people on the site.

3. The amount of trust it takes can be found under Visitors > Visitor Loyalty > Loyalty. Here you can see how many visits on average it takes for someone to convert. Once I see how many visits it takes before someone trusts me enough to convert I can set a goal to get those repeat visitors. Creating content more frequently and maximizing the ways people can get alerted to new content (Twitter, RSS, Facebook) can help get repeat visitors.

This is one of the first things I look at when I analyze any website. Under Content in the left column click on Top Landing Pages. These are the most frequently landed on pages that your visitors see when they first come to your website. These are your “head” pages, which means that small improvements to these pages can quickly yield high ROI. In the furthest right column in the report is the bounce rate for each of these pages. % Bounce Rate means the % of visitors that came to your site and then left instantly, or in other words, that landing page was not compelling enough for them to read more than that one page. Bounce rate is a great metric to measure the quality of the traffic you are acquiring. It helps you hone in on where and how your website is failing your visitors.

So now you can see what is failing, in one more step you can get an idea of why it is failing: Click on one of those poor performing pages (I put little cash signs next to my contenders) with a high bounce rate to analyze it on it’s own. Then click on the drop down that says Content Detail on it and select Entrance Keywords. Do the keywords people use to get to this page align with the content of the page? Looking at their keywords you can get a sense of what their intent was and why it doesn’t match up with what the page is delivering. Now you have something to work with and fix. Now make the changes to that page so that it better matches what your visitors want. Bounce rate will go down, and positive outcomes will increase.