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Good Internet marketers pay close attention to conversion rates, checking their Web analytics system to see how many folks came to the site and how many actually bought something. Some interesting research from Sun Microsystems shad some new light on the limits to how easily we can calculate certain types of conversions.

For some kinds of businesses, conversion rate calculations are easy. Think about Amazon--people come to their site every day and many complete their purchases in the same visit. For Amazon, all they need to do is to divide the number of purchases by the number of visits and they get their true conversion rate.

Most businesses don't have it so easy. If you customers visit your site several times before they convert, you don't want to figure your conversion rate based on visits, but rather on unique visitors. If you are selling computers, such as Sun does, three visits to the site over three days by the same person doesn't tell you that you had three chances at a sale--you had one.

So, the mechanism that you use to identify each of those three visits as being from the same visitor is extremely important. If, for some reason, the mechanism fails, you might interpret two or all three of those visits as being from different people, throwing off your conversion rate calculation.

For most sites, the mechanism used to identify returning visitors is tracking cookies, and this is where the new research from Sun becomes interesting. Every time cookies are deleted, the tracking mechanism is upset--some visitors are counted multiple times because the analytics system can't match their cookies from a previous visit. Sun's research showed that almost 30% of cookies are deleted within a week, but that some cookies are retained even months later. The article suggests that businesses with long buying cycles might need to adjust their calculated conversion rates using this information.

To some, this news might be alarming, but it needn't be. After all, the real reason that you track conversion rates is to understand the effectiveness of what you are doing. As long as user behavior remains consistent--they delete cookies at about the same rates and on the schedule as they used to--or it changes very slowly over time (a safe assumption), whether your numbers are precisely accurate or not isn't important.

What you care about is the trend--the difference between last month's conversion rate and this month's, for example. If both numbers are inaccurate because of cookie deletion (and they are), it's OK, because you can still compare last month to this month to make the decisions you need to make.

Sun's research is important, yes, but it will be more important if that research is conducted every six months to see how behavior is changing, rather than to be used to frantically adjust your conversion rates to make them seem better. Your real conversion rate isn't important as long as you pay attention to what actions made that number go up and down each period.

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September 17, 2009





Mike is an expert in search marketing, search technology, social media, publishing, text analytics, and web metrics, who regularly makes speaking appearances.

Mike's previous appearances include Text Analytics World, Rutgers Business School, SEMRush webinar, ClickZ Live.

Mike also founded and writes for Biznology, is the co-author of Outside-In Marketing (with James Mathewson) and the best-selling Search Engine Marketing, Inc. (now in its 3rd edition, and sole author of Do It Wrong Quickly, named by the Miami Herald as one of the 11 best business books of 2007.






Comments(6)

Tracking your conversion rate is very important or you will end up paying to the search engine company and get less returns. Nobody likes losses.

Great Article!!!

I have always wondered what a user's behavior was when it came to cookies and how long they leave them on their computers. Very interesting article and I think it goes to show that nothing is 100%. You are correct, the trends are the most important thing.

Tracking conversions is the only way to run an online business. If someone doesn't consider it a business, than conversions aren't necessary... Tracking phone calls and non e commerce websites such as lead generation sites is more complex. Tracking the number of leads to sales ratio. Especially with long sales cycles. Using salesforce to track the lead gen and sales process is great...but not cheap.
Art

Excellent advice. I've just taken a job with a company where I will have to advise them on this sort of web stuff so this is very helpful! :-)

Agreed. It's important to take the metric that is most logical or practical for you to measure and then trend off it to chart your progress. Comparing to other companies is often more trouble than it's worth when it comes to the absolute number on conversion rate. My post "Conversion Rates: How High is Up?" goes deeper into what you need to account for if you do decide to start comparing your rate vs theirs.

In addition to the issues you've mentioned (visits vs unique visitors), we've run up against some other complexities. Many of our visitors come to the main website (the "marketing site") just to log-in to their subscription-based (SaaS) product. And many visitors come to the main site just as the first page on their journey to the Support content. Still more come through the main site to register the product they just purchased.

If you really cared about some absolute number that represented how well you are at moving product, you would want NONE of these visitors to count towards your "conversion rate" metric. Each method of excluding them (tag based, report based, behavior based) has its pros and cons. Through one of these approached you could derive your "qualified lead conversion rate". But is that what the others in my benchmarking category are using? Do they have the same issues with logins/support/registrations? To the same degree?

Luckily, by using the baseline-then-trend approach, we can avoid these headaches. Then we're only confronted with worrying about the potential seasonality of those non-qualified visitor segments.

Great points, Jared. When I was at IBM, we found that 60% of all visitors came for support, so we had almost no chance of converting them on that visit. I totally agree about the difficulty of comparing yourself to others. If you keep improving yourself, eventually you won't care what the other kids are doing. That's what my Granny told me, anyway. She was a great Internet marketer...

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