Better Website ROI the Right Way
10/19/2006
I think most people
will agree that getting traffic to your website is your number one goal after
the site is built. After all, a website
with no traffic has no real value to anyone.
But once you’ve got some traffic, what is goal number two? You’ve built the site and are starting to get
some targeted visitors and possibly turning a profit. Maybe you’re getting a flood of visitors to
your site. Do you just sit back and
collect the money? If you’re smart,
you’ll get to work on an even better website ROI. Here’s why:
It’s All About
Conversion Rate
Conversion rate is actually
MORE important than traffic to your website.
That sounds crazy, I know, but stick with me and you’ll see why. First, back to basics: the conversion rate of your website is the
percentage of visitors that perform the desired action on your site. This is usually something like making a
purchase, or filling out a contact form – something that presumably makes you
money.
Now let’s do the math with an oversimplified equation:
Sales
= Visitors x Conversion Rate
This means that the number of conversions your website makes
is equal to the number of visitors multiplied times the average rate at which
visitors convert.
Hypothetical Example
Now let’s take a
hypothetical situation where a company is averaging 500 visitors a day to their
site with a conversion rate of .1%:
500
Visitors x .1% Conversion Rate = .5 Sales per day
Now when most website
owners see that their sales are not as high as they’d like, the natural
inclination is to go out and advertise in order to get more visitors. Whether you’re increasing traffic through
pay-per-click ads, banner ads, search engine optimization or any other method,
odds are high that it will cost you something.
There’s nothing wrong with that as
long as you’re turning those visitors into sales.
The Power of a High
Conversion Rate
Now imagine you
spend some time improving your website in such a way that a higher percentage
of visitors will convert. Improving your
website’s conversion rate is something that can be done at a minimal cost and
produce dramatic results. What if we
made some changes to the site that improved the conversion rate to just .2%?
500
Visitors x .2% Conversion Rate = 1 Sales per day
You can see that
sales just doubled without getting anymore traffic. What happens if we increase the conversion
rate of our site to a nice even 1%?
500
Visitors x 1% Conversion Rate = 5 Sales per day
Wow, sales are up
ten-fold – that’s significant. What
would you say is easier to accomplish: improving your website’s conversion rate
to 1% or increasing your daily traffic from 500 to 5000 visitors per day?
Now here’s the
kicker: now that your website is
converting more visitors into sales, you
can afford to spend more on your advertising. If you’ve ever wondered how some companies
pay so much per click on Google AdWords, this is it. They’ve tested and optimized their landing
pages so well that they can afford to pay $1, $2, sometimes $10 or more for a
single targeted click!
Now we’ve optimized
our site for conversions and can now afford to spend more money on
advertising. When your conversion rate and your visitors go up, your sales go up exponentially!
In our hypothetical example, it’s not unreasonable to go
from this:
500
Visitors x .1% Conversion Rate = .5 Sales per day
To this:
2000
Visitors x 1% Conversion Rate = 20 Sales per day
Summary
My goal here was to
show you one secret to achieving a better website ROI. Improving your website conversion rate can
double your sales in an instant and open up more advertising options to
you. Of course, there’s still the open
question of how to improve your
conversion rate. That will have to wait
for another day. If you simply can’t
wait and want some professional guidance, Bitwise Logic, Inc. specializes in
using statistics and testing to systematically improve your conversion
rate without guesswork. I invite you to
contact us for a free website consultation.