Increase Our Conversion Rate

Every once in a while a request comes to us in the words: “We have an e-shop and we would need to increase the conversion rate. You're guaranteed to increase our conversion rate by X.”

I see it as a great step forward that you have decided to devote your energy to your business and invest in its further growth. Your attention and finances have limits, so it's important to engage in the right activity at the right time.

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Will increasing your conversion rate help you?

The conversion rate in the simplest sense indicates how many visitors to the online store become customers.

— Shopped

There are entities in the market that will provide you with 5 ways to increase the conversion rate of your e-shop guaranteed. It is not a fundamental problem to buy this type of service. The question is whether it will actually help you. I know that sounds great — you will earn more in no time! But it may not be entirely true...

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Where is your bottleneck?

Constraint theory says that every business has a bottleneck that needs to be expanded to improve the overall situation. When you improve anything but the bottleneck, nothing happens in the overall situation, because you're still limited by the original bottleneck.

It means, for example, that when you decide to improve all of them part of the business by 20%, so in most cases you focus on changes that will have no impact on the overall situation.

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A low conversion rate can be a manifestation of many factors. Are you sure that you have a problem in the purchase process? Not in the acquisition of the right visitors? The quality of the products? Technical solution? Somewhere else entirely?

Illustrative situation — you have an eshop, it is gradually growing. Your conversion rate should be 1.5 percent. Over time, you begin to expand the content section of the site, but people go to it at a different stage of the shopping cycle and it can take a year to make a purchase. Or you start doing brand campaigns. Your conversion rate is suddenly 1.2%, although traffic and turnover are growing. Your e-shop is fine, but you're focusing on the wrong metric.

Of course, it is possible that you have some problem in the ordering process or the visitor does not manage to choose the relevant products. But it's not possible to tell from the table.

I'm sure of one thing. If you commission an agency to jack up your conversion rate, they'll do everything for it...

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Goals are a powerful management tool

May all your wishes come true.

— Chinese curse

In 2009, a group of authors described Harvard Business School what happens when you set a goal for someone. The positive effect is that it will increase its focus on specific aspects of the project. Thus, performance and motivation to fulfill the goal will increase. The negative effect lies in the same.

When you give people a goal, that narrows their view of the world. They will try to meet the set goal and that very goal. They will not address whether meeting the goal has any benefit for you. They will not address the unintended consequences that will most certainly occur.

In complexity you define a direction of travel, not a goal, because if you start on a journey you will discover things you didn't know you could discover which have high utility. If you have an explicit goal you may miss the very things that you need to discover.

-- Dave Snowden

Put the agency in a contract that you'll only pay it when your conversion rate goes up by X, and the agency won't focus on anything but your conversion rate. At that point, you're not sitting on the same side of the table -- instead of partnering, you're mining your new resource, the agency.

The agency wants to get paid and when you want higher conversions, you get higher conversions.

The easiest way to increase conversions is to knock down traffic that doesn't convert. Let's call it optimizing the quality of attendance. You disable something in robots.txt, delete something, and conversions are suddenly 2%. Client pay.

The second easiest option is a discount. Massive discount campaign, everything for halves. Orders grow, conversions grow, you lose.

I know, these are naive examples, and you won't want to work with such an agency for the long term. But those are certainly not all the tools the agency can use.

People can be fooled. There are types of site modifications that increase the conversion rate and take advantage of automatic reactions or reduced attention from visitors. They are called in the designer handyman dark patterns. Their use is unethical and, in the long run, is above all stupid. Will you risk losing a good name? On purely financial indicators, you will not recognize it this year and if you do not want to sell the company quickly, then it does not make sense.

Even if the agency will want to do its job well, so will every intervention on the site unintended consequences. You will either evaluate and deal with them or you will not. And an agency dependent on changing one metric won't address them.

If we improve this, what might we degrade? Improvements take time, how will we know when impact begins? How much good for this metric is enough or too much, what signs do we look for?

-- Troy Magennis

Note that the goal can be achieved without any benefit to you. Of course, you will notice this and you will want to change the agreement -- but that is no longer possible. If you attach an agency fee to the target, then you will have to comply with the terms of the agreement and only then change it. You don't sit on the same side of the table.

What you really want is probably a combination of increasing turnover in the long run with maintaining or increasing profitability while strengthening the brand's good name. That's not the same as a higher conversion rate or more orders over a couple of months.

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How to work with the agency?

Working with the agency is either win-win or lose-lose. If the agency is to help you, it needs to understand you, find the bottleneck, suggest a strategy and concrete steps, and then track and respond to the unintended effects of the changes.

You can share the risk with the agency. Those who bear the risk also bear the profit. Transferring part of the risk to the agency means an increase in the overall budget for the project - in simple terms, instead of one hundred thousand, you pay three hundred thousand for the same work.

If it doesn't work out, then of course you pay less or even nothing, but again you lose time. Therefore, it is important to choose a partner who will help you. The agency must have the competence and, above all, the intention to help you.

If you choose to share the risk, be even more careful with a well-chosen success metric — it really has to be of some use to you! Even a more complex contract with a bunch of additional criteria will not help you - you will not think of everything ahead of time.

I understand that tying the reward to the target emotionally reduces the uncertainty of your own business, because you've kind of outsourced the risk to someone else. But it's just a feeling. As an entrepreneur or manager, you have to learn to live with uncertainty. It's not comfortable, but we're paid to do it.

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How to move forward?

I mentioned analysis of the bottleneck of the e-shop. The latter should have both a quantitative and qualitative component. Part of the problems can simply be read from the data if you measure the site well, some of it is not.

If this is not an e-shop, but a whole business, then consider the following:

• Look at your business holistically — one metric or goal is usually an oversimplification of the overall situation.
• Do-It-Yourself strategic map of your business. While the map doesn't tell you what's wrong, it allows you to talk about it more effectively.
• Find key segments of visitors and their needs. That means doing a continuous user research.
• Address those needs—the solution itself will require experimentation and figuring out what works and what doesn't. You move in Complex environment.
• Evaluate the impact of change in the context of the entire business.
• Encourage exploring the new and discover things you don't know you don't know about. Again, that means doing user research.
• Don't jump into dark patterns — unintended impacts will come back like a boomerang.

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In conclusion, I recommend that you consider very well whether you really want to use the rewards linked to the fulfillment of the goal as part of the management of the organization. It is indeed a powerful tool and can simply go awry. What is useful in the case of a production line may not be beneficial to your context.

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Read more about Goal Setting

• Goals Gone Wild: The Systematic Side Effects of Over-Prescribing Goal Setting
• Metric Drives Behavior
• Theory of Constraints 101 — introduction to constraint theory