Let’s imagine a standard web app with three main steps:
- Viewed Homepage
- Signed Up
Furthermore, lets say 20% of the visitor to the hompage sign up, and 5% of the users that sign up complete a purchase giving you a 1% overall conversion rate.
Your boss comes to you and says “You need to double the overall conversion rate from 1% to 2%. Do whatever it takes.”
As a thought experiment, consider at a high level what the numbers have to be for this to work out. Your first thought might be to double the homepage conversion rate from 20% to 40% (giving you a 40% * 5% = 2% overall conversion rate) or double the purchase conversion rate (20% * 10% = 2% overall conversion rate). You could also increase both by some smaller amount to get a similar result: 30% * 6.67% = 2%.
In the real world, this winds up being really hard. If you increase the percentage of people signing up, it’s probably going to decrease the percentage of people who then purchase. Why? Consider what would happen to a site that has a pricing section on its homepage and then removes it completely. More people will sign up, but once they do and see the pricing, many of those extra people you got to sign up (because they thought your service was free) will leave (because they realized after signing up that your service actually isn’t free). So if you increase the sign up rate to 40% somehow, your sign up to purchase conversion rate might drop in half from 5% to say 2.5% giving you that same 40% * 2.5% = 1% overall conversion rate. If you’re lucky some of those extra users will convert and maybe you’ll get 40% * like 2.8% = 1.12% overall conversion rate. Getting closer to that 2%, but still a long way away.
The trick to getting to 2% is to improve the quality of the traffic at each step.
Consider that homepage conversion rate of 20%. How could you increase that without making any changes to your website?
That 20% conversion rate is actually a composite of different segments. For example, imagine your website has three traffic sources:
- Direct traffic (50% of your traffic) converts at 30%
- Search traffic (40% of your traffic) converts at 10%
- Social traffic (10% of your traffic) converts at 10%
50% * 30% + 40% * 10% + 10% * 10% = 20% homepage conversion rate.
What would happen to your conversion rate if you delisted your site from search engines completely? The numbers now become:
- Direct traffic (83.3% of your traffic) converts at 30%
- Social traffic (16.7% of your traffic) converts at 10%
83.3% * 30% + 16.7% * 10% = 26.7% homepage conversion rate.
Without making any changes to your site itself, you increased the homepage conversion rate by 26.7%/20% – 1 = +34%. Because the quality of your traffic has improved, the sign up to purchase conversion rate will likely increase as well. Instead of 5% upgrading, it might wind up being 8% (+60%). What’s your overall conversion rate now? 26.7% * 8% = 2.15%!
So in order to double your conversion rate in this made up example all you had to do was delist your site from search engines. Mission accomplished 🍻. As an added bonus many of your other metrics will increase as well. Because your site’s traffic is of a higher quality, your retention rates will go up, your churn will go down, your average revenue per user will go up, your refunds will go down, and more.
You could also do similar hacks where you make your website non-mobile-friendly so Google decreases its mobile rankings, which (assuming mobile converts more poorly than desktop users) would increase your conversion rates. You could block certain poorly converting browsers from visiting your site (I’m looking at you, IE). You could block users from poorly converting countries, or even non-English language users if your site isn’t translated.
Of course you should never do any of these things.
In the process of improving your metrics by hacking off a large portion of your traffic, you’ll also wind up decreasing the number of people who make it all the way through the funnel (purchasing in this case).
It’s tempting to want to focus on a single metric like conversion rate, but it’s also important to remember that individual metrics can almost always be artificially boosted:
- You can increase your conversion rates by preventing low converting traffic from reaching your site (at the expense of revenue)
- You can increase your revenue by increasing paid advertising (at the expense of profit)
- You can increase your profit by laying off a bunch of employees (possibly at the expense of your long term growth and profitability).
Instead, try to identify the set of metrics that are most important to your company and pay attention to the group as a whole. More often than not when one metric goes up, another will go down but with solid execution and a little luck, the overall impact of your changes will be a net win for your website or company.