When conversion is not enough - Profit Hunter

When conversion is not enough - Profit Hunter The history of web-analytics is similar to the search for the holy grail. The search for the golden mean, the ideal conversion rate has turned into an endless series of samples, experiments and discussions.

When we drink from the "wrong" Grail, we look like a bad guy from Indiana Jones 3 (the movie is like this) who, with an astounded face, explains to the boss where he spent a considerable amount of money on promotion and at the same time practically none.

Conversion Rate. Crash rate

Let's start with some basics, as for beginners, since this coefficient is not always correctly defined:

When conversion is not enough - Profit Hunter

There are many options in determining the conversion. " Action ” (action) can mean anything - pressing a button, making a subscription through a form, RSS subscription, actual sale, etc. We will not consider every single option. Take A simple example. Let's say that 10,000 people visited our site and 450 of them performed the action.

When conversion is not enough - Profit Hunter
Quite simply, isn't it? Powerful enough%. The values ​​in the numerator and denominator are important measurement elements of the coefficient. However, there is something wrong here. What exactly? Consider three scenarios.

Scenario 1. Donating traffic

This is the most common A strange scenario occurring in PPC is raising CR by “cutting” traffic. Here are a few examples:

When conversion is not enough - Profit Hunter

In all three cases, CR = 5%. The question is, are they equal? Not. All other things being equal, someone will choose option C. To save such a proportional CR, resort to over-optimization. And this entails problems.

Suppose we have a classic PPC scenario: (A) a company targeting branded woofers, low traffic and high CR, and (B) a company targeting heavy traffic and low CR. Your client starts complaining about low CR. What are you going to do? You will reduce costs in the company (B), CR will increase by reducing traffic and the side effect indicated by the client will be gone. Is this the way out? No, because you donate sales (Actions) and, as a result, profit.

Solution: Pay attention to both CR itself and the total number of potential customers or visitors. When CR collapses, the values ​​of the numerator and denominator decrease, and their ratio remains unchanged. If you are a PPC manager, then set a reasonable CPA price (Cost-Per-Action, fee per action). Traffic within the CPA price range may be less than the ideal CR requires. However, traffic costs more than an acceptable CPA, even if they (the traffic) have to sacrifice a little. Changes in CPA prices affect the quality of traffic.

Scenario 2. Dumping prices

Want to know the secret to increasing conversion? Lower prices by 2 times. How to lower it? Is it possible to earn good money? Yes, monzhno. People are always looking for where to buy cheaper. And, always buy more where cheaper. You get big CR and traffic. However, this approach will cost you a profit.

Let's do an experiment. You get 1000 visitors per day. Let's influence CR by dumping prices:

When conversion is not enough - Profit Hunter

We look at CR. The good news is CR doubled. Bad - your income fell by 40%. Such a move can be useful in the short term in order to attract visitors, to make such a promotion. No more.

Solution: If you do not make any changes to attract customers on less expensive products, make sure that you track not only the change in CR, but also the change in the average purchase amount. Conduct a study of purchasing power on the prices of goods. Determine the best CR ratio from the average purchase amount.

Scenario 3. Loss of loyalty

Aggressive jumps in CR due to traffic or short-term drastic changes in price can greatly affect long-term profit and customer loyalty. Does this mean that making such changes is bad? Not. Before making any changes, you should always look at the big picture.

We must always remember that we cannot rely on only one indicator of the number of visitors. Think about your goals and results.

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