What is a good conversion rate?

by David Mannheim

posted on: December 1st 2015

The average UK ecommerce conversion rate is 2.6%. Is…uh…that good?

Identifying what a ‘good’ conversion rate is and a ‘bad’ conversion rate is both neigh impossible and naive yet still a common question.

Conversion rate is a fickle metric. Do you want to increase your conversion rate? Easy, slash all your prices by half. Wow, look at that your conversion rate has doubled! That’s why a lot of us CRO experts discuss ‘optimisation’ as a whole, not just ‘conversion rate optimisation’; it’s much more than conversion rates. Because it is so fickle, identifying what is a good one and what is a bad one is difficult. And that’s why, continually, the term “CRO” is inherently flawed and continually we’re preaching the use of term CO (Conversion Optimisation) and dropping this arbitrary ‘rate’.

But wait, wait about the UK average of 2.6%? Consider the following scenarios:

  • What source are you considering? The IMRG state the average is closer to 4.2%
  • Seasonality affects conversion rate - with the proliferation of Black Friday and the January sales, user intent is much higher and therefore conversion rates increase
  • What industry are you in? The travel industry can have a much lower conversion rate than, say, women’s dresses for £20
  • How much of a considered purchased is the product and, at that, are your cookies and metrics set up enough to consider 90 or 180 day sessions that may or may not convert?
  • Devices can vary differently where, as a rule of thumb, mobile conversion rates are half of desktop

Most important of all is context. What level of intent do your users have within a specific time frame for a specific requirement? When we consider the definition of conversion optimisation, we look at that of value. When a user perceives the value to be more than the cost exchanged for the value, they will purchase. Optimising this process is the methodology of conversion optimisation and therefore, I ask, what contextual influences affect this perception?

  • Internal context is that ‘within’ your site - different users convert at different rates. Within Google Analytics it is easy to identify your ‘new’ user conversion rate, but we need to ask ourselves ‘what is a new user’? Even how Google Analytics ‘counts’ users is a debatable subject not worthy of lengthy discussion right now. It’s not just ‘new’ and ‘existing’ users that we should be segmenting but also type of user based on product, category, source and entire user journey. For example, Amazon Prime users convert at 74% whereas their entire site alone converts at (only) 13% (I admit, I actually heard somewhere this figure was 18% but cannot find the original source). Not only does this demonstrate intense customer loyalty, but that different user types (in this case the loyal signed up with a specific service) convert much higher than the non; and this inflated figure would naturally affect your overall conversion rate.
  • External context is that outside of your site. Yes, the ‘average’ might be 2.6%, but experience dictates that fast fashion will convert much higher than say bathrooms. In the same way that an average order value of £20 will convert at a higher rate than an AOV of £5,000. You could compare against like for like competitors if you know their conversion rate - some highly sought after information that, if they’re signed up with IRMGs peepmap could give you the information you desire; other than that, you’re in the dark. Everything affects this too from seasonality to new products to economical market forces.

Still not convinced? I recently had a client say to me “we are happy with our conversion rate as it’s above the UK average”. A small part of me smirked, but not to be rude tried to validate my response using data. If we look closely we could find that mobile devices actually convert at 0.35% and returning users convert at 21%. Their average figure was significantly warped and if focused on, because of the hundreds of variables involved in moulding this figure, leads to a dangerous path.

What should we be concentrating instead?

Well focusing on individual conversion rates at perhaps a more micro level are acceptable. It’s how the ‘conversion rate’ is framed. Instead of asking the question “is our conversion rate good?” is should be in relation to your business. The questions you should first be asking are:

  • What is my cost per acquisition?
  • What is our break even point?
  • What is our return on investment?

These are better questions to ask to determine how your website should be converting. Peep Laja discusses this too stating that “you are running your own race, and you are your own benchmark” (by the way this is a really good article and definitely on my wavelength here)

You’re only competing with yourself. There is no such thing as a ‘good’ conversion rate and I say that to encourage you to continually improve. If there was such a figure, Amazon would surely kick back and relax right? Instead they have an entire team dedicated to improving it day in day out.

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David Mannheim

David is an experienced conversion optimiser and has worked across a series of core optimisation disciplines including web analytics, user experience and AB & MVT testing.

What is a good conversion rate?

by David Mannheim Time to read: 3 min