the goose

If we can just get 1% of our visitors to convert  …

Never have more dangerous words been written in a business plan.  It sounds plausible only because humans are mind-boggelingly bad at understanding percentages.  Even if you were a complete wingnut in school you probably still managed to get 10% in the honours math exam.  A 5% discount is nothing.  A doctor telling you that you have a 1% chance of not waking up after an op is hardly worth losing any sleep over.

However, I don’t see a lot of discussion on the chances of a 0% conversion rate in your business.

Just before Christmas we were on RTE’s The Business – a program with a listenership of 200,000 people.  It was great for getting recognised by mates or the odd bloke in a shop (don’t ask how you can get recognised from the radio, but it happens) but rubbish when it comes to converting sales.  Out of the piece we got exactly 1 signup for a Piehole voiceover training day.  I’m not sure what type of conversion rate that works out to, but lets call it close to zero.

The excellent Rob on Software makes the same point in a recent post.  All traffic is not created equally and much of it can just create ‘noise’ – making it much harder to figure out what is going on in your Google Analytics account.

With no background in statistics or even any data to back me up, I’ve created this completely fictitious 3d pie chart to illustrate the way I think about conversion rates for a new product.

It comes down to this.  The number 100% gives the illusion that there are only 100 possibilities – or options.  In reality there are infinite number of possibilities – and for the purposes of you and your product – the likely-hood you and I should prepare for is 0% or a figure so close to it that it completely mucks up your plan.

Now while this post is full of completely un-researched here-say, Rob has put together a altogether more scientific list of traffic generators in order of quality as measured by the conversion rate.  I’m posting a clip here so you don’t just head over to his blog and start reading instead.

Now I might quibble with the position of 8 and 9.  In my experience, Adwords does convert better than organic traffic – but I guess that depends on where the organic traffic might come from.

So what?  Well – the first step is to figure out what your conversion rate is.  That means tracking how many actual sales you are generating.  In a traditional e-commerce website this might be pretty easy.  Oftentimes, especially if you are driving traffic to someone else, it might not be.  If you are making money by generating work for someone else, it is not always easy to track.  That is a problem, especially with these 0% conversion rates hanging about.