What's Your True Conversion Rate?

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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.