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Why Conversion Rate is Highly Overrated

by Ron Douglas
15 replies
I'm in a controversial mood this morning and I guess I'm just looking for trouble :-). But I think I've been here long enough to be able to disagree and debate with other members in a healthy fashion.

That said, here's why I think conversion rate is highly overrated.

On it's face, if Product A has a 5% conversion and Product B has a 3% conversion, you'd rather promote Product A, correct? It's a no-brainer right - because you'd make more money?

WRONG!

What really matters is how much you will make from sending 100 or 1,000 visitors to the offer. You have to consider the price and payout.

For example, I got an email the other day from my partner saying that the conversion on our recent launch was not that great to start. It was "just 1.3%" he said.

At face value 1.3% seems low, but when you consider that we're paying JV partners a recurring $100 per sale/ per month, the conversion rate is actually killer. That's 1.3 sales for every 100 clicks. That means that they were making about $130 for every 100 targeted visitors they sent. If you consider that it's recurring commissions, if their referrals stay on 3 months, just 100 clicks could produce over $300.

I don't know about you, but I'll take that any day of the week.

So, I think the lesson is, don't just make decisions based on conversion rate - it's highly overrated.

Thoughts?
#conversion #highly #overrated #rate
  • Profile picture of the author Loren Woirhaye
    In a more long-range view it's the lifetime value of the
    customer. For people who are just going for the affiliate
    sale and not building a customer list conversion rate and
    profit ratios is very important... since all they have going
    for them is the one-off sale.

    I recommend anyone who has a skill work to build a business
    around lifetime customer value, not one-off sales. That's
    no reason not to go for the quick sale in some cases though,
    it all adds to the mix.
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  • Profile picture of the author Kenneth L
    Spot on!

    It's all about the dollar value per visitor. It's good to do immediate, 7, 30, 60 and 90 day values as soon as possible for your visitors.

    Once you have your metrics down you know what you can afford to pay.

    Marketing is ALL about arithmetic.

    Kenneth
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  • Profile picture of the author michael_nguyen
    Value per subscriber is more important than conversion rates. As an example, you can have a list of 1000, conversion is 2% on a $27 product thats = $540. Each subscriber is worth $0.54. If you build a better relationship, then sooner or later each subscriber might be worth $1. Promote better products AND build a relationship.
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  • Profile picture of the author Ross Dalangin
    Good point Ron! I also don't mind the conversion rate. It's the profit for us and the value to our customer and/or subscribe list. If product A and B gives me money then I will promote both.
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  • Profile picture of the author JayXtreme
    My thoughts are..

    Ron Douglas is an expert at stating the obvious

    In my neck of the woods, we'd say.. no shit Sherlock.. lol.. just jokin' with you Ron.

    Of course you should take into account payout and price.. why wouldn't you?...

    I see the point you are trying to make, but for me.. it was already obvious.

    Peace

    Jay
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    Bare Murkage.........

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    • Profile picture of the author Ron Douglas
      Originally Posted by JayXtreme View Post

      My thoughts are..

      Ron Douglas is an expert at stating the obvious

      In my neck of the woods, we'd say.. no shit Sherlock.. lol.. just jokin' with you Ron.

      Of course you should take into account payout and price.. why wouldn't you?...

      I see the point you are trying to make, but for me.. it was already obvious.

      Peace

      Jay
      Sure Jay, that's because you're the Babyfaced Assassin.

      You'd be surprised by how many people don't take this into consideration. Making use of the obvious is often brilliant - just Google "The Story of Obvious Adams"
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      • Profile picture of the author JayXtreme
        Originally Posted by Ron Douglas View Post

        Sure Jay, that's because you're the Babyfaced Assassin.

        You'd be surprised by how many people don't take this into consideration. Making use of the obvious is often brilliant - just Google "The Story of Obvious Adams"
        Oh, for sure.. and I hope you didn't think my post was intended to discredit the information...

        It's good advice for peeps that don't take this into consideration.

        :heads off to Google the obvious adams bit::

        Peace

        Jay
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        Bare Murkage.........

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  • Profile picture of the author nick1123
    ROI or Return On Investment is what I think matters.

    I also look traffic and conversion. You have a point about looking at profit in addition to conversion rate.

    But there are many ways to slice it.
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  • Profile picture of the author Michael Silvester
    Hi Ron,

    Your not the only controversial one here today

    I Completely Disagree with Everything That You Have Said.

    There are 5 important things that you should measure
    when promoting a product.

    1. Leads (visitors)
    2. Conversion Rate (% of visitors that bought)
    3. Average Dollar Sale (amount per sale)
    4. Transaction Amounts (how many times they buy)
    5. Margins (Your % profit)

    Just joking about disagreeing...

    As you can see conversion rates is only 20% of
    the whole picture.

    Hope this helps someone...becasue this is powerful stuff.

    Take Care,

    Michael Silvester
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  • Profile picture of the author JonathanBoettcher
    Yeah - it's only part of the picture. Though I could see it would get annoying if you heard people harping on it all day long like it was the be all and end all.

    The other thing is that product owners can tell you all affiliate traffic doesn't convert equally. So when they tell you there's a 1.3% conversion, that's probably the average OR it might be their best converting stream of traffic too. Some affiliates really help with preselling, bonuses, etc etc which can boost conversion.
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  • Profile picture of the author Steve L
    i believe the customer experience is priority #1
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