Conversion Rates Don’t Really Matter: Here’s 8 Reasons

You are probably wondering why we decided that conversion rates don’t matter, yet they are the main reason behind every marketing strategy. Well, here’s something for you. Way back in 1907, a well renounced physicist made a preposition that the ‘truth’ will be determined to a great extent by the perspective from which it’s observed.

When you consider all the knowledge that we have today, and you put that together with the traditional concepts of motion ad time, you will see that there is a lot of relativity when it comes to what is perceived as true.

In the same way relativity made a big impact in science, it has the potential to take marketers to the next level when applied to conversion rates. With this in mind, we can rephrase our title to become “Conversion Rates are Relative”.

Despite the fact that many people are always looking for an average acceptable conversion rate that will give them the confidence that they are on the right track, I like believing that more attention should be given to relativity.

Conversion Rate Defined?

Simply put, a conversion rate is the percentage of visitors or prospects that performs the action that you want them to perform. This action is known as the conversion event and it varies from signing up for a newsletter all the way to purchasing products.

To ensure that you understand better what a conversion rate is, take a look at this equation.

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This means that if you get 270 sales or conversions out of ten thousand visitors, your conversion rate will be calculated as shown below:

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What is the meaning of all this in practice?

The Conversion Rates Don’t Really Matter

I know that this won’t go very well with the conversion rate optimization community, but I’ll tell you that the conversion rate doesn’t matter. Sounds crazy, right? Let me present my argument.

  • This rate depends solely on these two components of the equation: the denominator and the numerator. Let’s start with the numerator, which is the number of sales per day. If this increases, your conversion rate also goes up. That’s a reason for you to smile.
  • The denominator on the other hand will increase if the number of visitors to your site increases. Supposing your daily sales do not change, you will get a lower conversion rate for an increase in the number of visitors. However, your sales have remained the same. Your conversion rate has made you feel that your business is not doing well yet the change is irrelevant.
  • Imagine a store owner who decides to eliminate low quality traffic sources.The conversion rate will go up. However, don’t forget that the lower quality traffic also brings some sales. It’s just like the numbers are not as high as those in high quality traffic. Does it make sense to lose these sales just for the sake of improving the conversion rates? Be the judge.
  • It’s possible to achieve higher conversion rates when using marketing models that give emphasis on repeat purchases. While it is an arguably viable marketing trend, it doesn’t enhance growth of the business. For the business to grow, new customers have to be engaged. This growth should not be lost at the expense of increasing conversion rates.
  • Your call to action will determine to a great extent the conversion rate that you will get. The conversion rate for a ‘request a quote’ will be different from that of a whitepaper download even when they are both used in the same business.
  • There are products with higher conversion rates than others. If you base your decisions on the conversion rates, you may end up eliminating products with lower conversion rates and lose clients in the process.
  • Depending on external factors like offers, seasons, the number of products left in stock and market fads, you may experience a change in the conversion rates.
  • There is no such thing as a typical conversion rate. Every business is unique when it comes to conversion rates. You may think that your business is doing terribly yet in real sense, your business is growing at a higher rate than those you are comparing yourself with.

Does this mean that conversion rates are not relevant? Is it possible for Infinite Conversions to base a big chunk of energy on lifting conversion rates and consequently sales and profits?

Here’s my side of the story:

Your own Relative Conversion Rate is Critical and Important

By saying that conversion rates don’t matter, I’m not trying to say that people should forget about conversion rates. My point is that you should interpret these rates effectively.

If you have reasons to believe that you can place emphasis on a different aspect of your organization’s value proposition to increase your conversion rate for the same pool of visitors, then you have made good use of your conversion rate.

This rate is a very important scale when you monitoring the impact that a specific change has on your business. This rate is very important for monitoring controlled tests.

The following example is obtained from a company that added a new traffic source.

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Despite the fact that the conversion rates went down, sales increased. By use of a controlled A/B/n split test, it was identified that the conversion rate increased by about 40.8%. This is the right way to use conversion rates.