Everything You Know About Conversion Rate Optimization is Wrong via @Wordstream

Everything You Know About Conversion Rate Optimization Is Wrong

Conversion is a key element in your paid search strategy; after all, if you’re not actually turning lookers into buyers at a high rate, what are you advertising for? Conversion rate optimization enables you to maximize every cent of your PPC spend by finding that sweet spot that convinces the maximum percentage of your prospects to take action.

But what is a good conversion rate? If you’re already achieving 3%, 5% or even 10% conversion rates, is that as high as you’re going to go?

We recently analyzed thousands of AdWords accounts with a combined $3 billion in annual spend and discovered that some advertisers are converting at rates two or three times the average. Do you want to be average, or do you want your account to perform exponentially better than others in your industry?

Through our analysis of this massive amount of data on landing pages and conversion rates, we were able to identify some common traits of the top converting landing pages. What do they have that you don’t? Believe it or not, there isn’t much standing between you and conversion rates double or triple what you’re seeing today. But the way you’re going to get there is totally counter to typical conversion rate optimization wisdom.

In this post, you’ll learn a step-by-step, replicable process for boosting your conversion rates, all backed by data insights from the best (and worst) performing advertisers in the market. Our recent conversion rates webinar is available in full at the end of this post. Today, we’ll cover:

Are you ready to find out why everything you thought you know about CRO is wrong? Here we go…

Why Conventional Wisdom Around Conversion Rates Is Silly

Learning that the experts you’ve been listening to all along are wrong is a bit like learning for the first time as a kid that mascots aren’t real. Underneath that fluffy suit there was just a sweaty unshaven guy. Everything you’ve learned about conversion rate optimization is a bit like that: shiny and pretty on the surface, but seriously lacking in substance.
How is everyone getting it so wrong? Primarily, if you’re singing the same song as everyone else, you can really never be anything more than average. When all of the gurus are all preaching the same optimizations, and all of your competitors are listening to them, how are you supposed to stand out?

The Classic Conversion Rate Optimization Test is Silly

Ladies and gentlemen, this is the Great Conversion Rate Optimization Fairy Tale. Once upon a time, a self-professed marketing guru told you it’s really important that you optimize your site. They shared one example where the author changed the button color, or the font spacing, or the image. Lo and behold, the advertiser’s conversion rate jumped by 2-7%.

Everything You Know About Conversion Rate Optimization Is Wrong

Amazing, right?! Um, no, not really. These are really basic, run-of-the-mill A/B testing best practices. Yes, you should be doing these optimizations on an ongoing basis, and you’re probably going to see small, single-digit increases in your conversion rate – but it’s not likely to shoot you into the 10% or greater conversion bucket.

Let me show you what happens with those gains generated by these small tweaks on your page. Here’s an example of a landing page split test; the gray line on the bottom is the first page version we were running. The blue line is the second version we ran against it. In the beginning, the new page far outperformed the old. Awesome, right?

Everything You Know About Conversion Rate Optimization Is Wrong

Except as you can see, the gains were not long lasting. In fact, the “better” page would eventually plateau. We began running 20 to 30 tests at a time and saw this pattern across our tests. We call this a premature testing dilemma. You see an early lead but shortly down the line, the early lead disappears.

This isn’t true all of the time, of course. However, we found that in the majority of cases, small changes like line spacing, font colors, etc. = small gains. If you want big, serious, long-lasting conversion gains, you need to move past these spikes that last only a couple of days or weeks.

Why does this happen? Often, it’s because the total volume of conversions you’re measuring against are low to start with. If you’re looking at 50, 100 or even 200 conversions across your entire test, small changes can seem more impactful than they really are. A couple of conversions might mean a 4% conversion increase if there are only 50 conversions total, because your sample size really isn’t big enough to start with.

It’s Time to Stop Moving the Chairs Around

Everything You Know About Conversion Rate Optimization Is Wrong

When it comes to landing page optimization, you can stay really busy doing small things that have little impact. It’s like rearranging deck chairs on the Titanic. We need to move past this mentality to the big tactics and optimizations that will dramatically change your performance and fortune.

First, we need to know:

What Is A Good Conversion Rate?

Hint: it’s a lot higher than you may think.

Conventional wisdom says that a good conversion rate is somewhere around 2% to 5%. If you’re sitting at 2%, an improvement to 4% seems like a massive jump. You doubled your conversion rate! Well, congratulations, but you’re still stuck in the average performance bucket.

In this analysis, we started with all accounts we can analyze and went back a period of 3 months. We removed those that didn’t have conversion tracking set up properly, those with low conversion volumes (<10 conversions/month), and low volume accounts (<100 clicks/month), leaving thousands of accounts for our analysis. We then plotted where the accounts fit in terms of conversion rate.

Everything You Know About Conversion Rate Optimization Is Wrong

So what is a good conversion rate? About 1/4 of all accounts have less than 1% conversion rates. The median was 2.35%, but the top 25% of accounts have twice that – 5.31% – or greater. Check out the far right red bar – the top 10% of AdWords advertisers have account conversion rates of 11.45%.

Larry Kim
Larry Kim is the Founder/CTO of WordStream, a provider of PPC Management Tools.

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5 thoughts on “Everything You Know About Conversion Rate Optimization is Wrong via @Wordstream

  1. Awesome post Larry, thanks. I love the example of the Wordstream site, it just shows how re-thinking your whole approach can make a big difference – we get a lot of clients who expect most of split testing to just be about changing layouts and headlines… In fact, one of the biggest challenges is often getting permission to test the big changes such as a different marketing message.

    Thanks for the data about different conversion rates too. What are your thoughts on split testing for ecommerce landing pages? I guess it’s harder to “change the offer” when you are selling a selection of products. Obviously there are things like bundles or making the product more unique, but for some stores that’s just not possible.

    1. If the margins are too small or the conversion rate is too low, why wouldn’t you change your product offering to something more specialized, more customizable, more niche. That’s the power of thinking big!

      1. I guess in that case you could even extend it to testing an entire business concept before entering the market; Or perhaps testing new product ideas for existing businesses (perhaps including more specialised ones).

        By the way (note to SEJ editors):

        In chrome I can’t see any comments, just the line:

        2 thoughts on “Everything You Know About Conversion Rate Optimization is Wrong via @Wordstream”

        I’m having to use IE to leave this comment! Which feels a little bit like trying to etch it on slate :)

        Is this a known bug?

      2. Hi Mark, Thanks for letting us know about the bug. I forwarded it to our tech team.

        And I appreciate that your love for SEJ was so deep you even used IE for us. It means a lot, as I know using IE is a heavy burden to ask of anyone. :)

  2. As soon as I read the morpheus meme I knew this post was going to be right up my alley. I love your point on higher conversion not instantly meaning better results – Just recently someone was showing me how their form conversion increased significantly after he trimmed half of his form fields. The reality was, even though he was getting more leads, he spent more time chasing up the details that he trimmed from the form and was getting less qualified leads regardless! I recently wrote a post similar along these lines (http://goo.gl/zDuxnm) about CONTEXT being the most important thing for conversion optimisation – not colours, shapes and sizes. Glad to see there’s more of this sentiment going around on SEJ!