Contrbuted by Alan Samuels, CEO of Clearpath
Conversion rates are one of the most popular ways to evaluate the marketing success of any company. But what is a good conversion rate? Is there an absolute benchmark?
In traditional retail stores, conversion rates are calculated with a simple formula: the number of people who walk into the store divided by the number of transactions recorded. Though the calculation is straightforward, the retail conversion rate varies a lot from industry to industry based on the needs and attitudes of shoppers. Big ticket items, such as cars, usually involve deliberation and extensive comparison before any purchase is made. By contrast, common purchases, such as groceries, and “destination stores”, such as electronics outlets, attract more focused consumers which yield conversion rates near or above 50%.
Irrespective of the industry, the conversion rates of web-based companies are typically lower than their brick-and-mortar counterparts. Commerce websites suffer from more noise in their conversion rates since many people end up on a site based on snippets of information from Google. Furthermore, it's effortless to click through to a site and, thus, the propensity to purchase is lower for visitors. Potential customers can follow dozens of links before making purchases because the Internet takes the hassle out of comparison shopping; online browsing doesn't involve the expense of travel, making calls or small talk with shop assistants.
Ordering food online is one of the most immediate and clear needs for service (I want my lunch, and I want it now!). At Dotmenu (recently sold to GrubHub), we managed two highly trafficked web properties: campusfood.com, where we provided online food ordering at takeout restaurants, and allmenus.com, where we aggregated menus for all types of restaurants. Our online food ordering properties had conversion rates in the low 20%s, however that number dwindled to the low single digits when visitors reached our sites to just look at menus (perhaps with the intent of dining at a restaurant later)
The conversion rate for plumbing services hovers at a relatively high 15%,which makes sense given the context of most occasions to call a plumber - nobody wants to have leaky pipes or a broken toilet for very long! (But, perhaps, lunch is a more pressing?). Non-essential items or big ticket purchases (i.e. ones a price-conscious consumer traditionally takes the effort to shop around for) average conversion rates below 5%.
At clearpath, we are streamlining the confusing, costly and paper-based immigration filing process, our target client is any potential immigrant to the US who has access to the Internet and needs to fill out a government form. Our demographic is narrow in scope, but high in volume, so we see focused ad targeting as the best way to get quality visitors who are more likely to use our service. As we evaluate our marketing effectiveness it is important for us to understand whether we are doing a good job or not. Given the nature of our service we are shooting for a conversion rate in the mid-single digits because our visitor will typically be conducting a bunch of research and won’t necessarily be pressed for time.