Re: E-commerce conversion rate

From: Mark J. Welch <MarkWelch_at_MarkWelch.com>
Date: Thu 04 Apr 2002 12:38:05 -0600

Christine Quan wrote:
>> I have a client who operates an online consumer products store. These
products are fairly expensive -- running for at least $1000. For leads
(people who've filled and submitted a form online), what's the expected
rate that these leads would convert into customers when a sales person
calls? In coming up with the expected rate, what logic, process, and
factors would I need to consider? How can I be sure that I have a good
estimate? <<

Without more information, it's impossible to know. What are the products?
Are the products priced competitively? Do they offer the features consumers
want? Has Consumer Reports issued a "Best Buy" rating -- or a warning that
the product should be avoided? Can your sales people answer the consumers'
questions and overcome any objections? Do the leads pre-qualify people (or
is "everyone" asked to fill in the lead form, even if they can't afford the
product or don't need it)? Will people gather information from your staff
and then buy the product elsewhere (either for less, or from someone more
local, or from someone they know)? What is the product purchase cycle?

For example, I would like to buy a solid, quality consumer treadmill (a
product category that runs from $1,200 to $2,500), and I live in
Pleasanton, California (which is 25 miles from Berkeley, which I assume is
your location since that's your email address). If your client sells
treadmills, then I'd be a very desirable client: someone with interest,
motivation, and adequate funds. That is, if your client sells treadmills
to consumers, and if I filled in the lead form, this would be a "really
good lead."

If I go to the web site for SuperDeluxe Exercise Equipment, will I be asked
to just fill in a lead form? If I fill in the form but the company only
sells high-end treadmills starting at $3,999, there is nothing the salesman
can do to convert me. If you sell only treadmills that fold, but you don't
tell me that, then I will fill in the lead form but I will refuse to even
look at your folding treadmill. If your product appears to have identical
features, strength, warranty, etc. as the competing products but costs $500
more, you won't convert me. If you sell only products from Manufacturer X
(which I know is on the brink of bankruptcy, jeopardizing the warranty
coverage), you probably can't convert me. If your sales staff keeps
talking about the shiny chrome and the nice flashing LEDs, but won't answer
my questions about fitness-program modes and whether a heart rate monitor
is included, I'm going to look elsewhere. If your client is located in
Berkeley but I want to buy the product locally (and if it's sold locally at
the same price or even $50 more), I may buy it locally despite the best
efforts of your best salesperson.

One of the tricks here is that "conversion rate" varies immensely depending
on what you are converting. Assuming that you sell $2,000 treadmills, your
conversion rate is going to vary substantially depending on the type of lead:
   (1) UC Berkeley students who say they are interested in "exercise
equipment" (poor - literally);
   (2) Accountants whose doctors have prescribed exercise (insurance won't
cover the expense);
   (3) Business executives who will buy the treadmill for the office and
declare it a business expense;
   (4) The manager/buyer for a chain of fitness centers.

I think we can all predict: category 1 is nearly impossible to convert,
while category 2 might be ten times easier, and category 3 will be much
easier. Category 4 is a wonderful lead for somebody, but a quite different
kind of customer (industrial versus consumer purchaser), which might
actually be "bad" for your sales staff.

So the answer to your question, without any doubt, is "it depends." I feel
about 90% confident that the actual conversion rate will fall somewhere in
the range between 0.1% and 90%, depending on what a "lead" represents and
what your client sells, at what price. I'm being honest here: I can think
of scenarios where the conversion rate would be substantially less than 1%
and I can also think of scenarios where the conversion rate could easily
exceed 50%. Without knowing a lot more, it's impossible to suggest any
meaningful formula.



-- Mark J. Welch - Internet Performance Marketing Consultant
-- http://www.MarkWelch.com/ 925-462-8483 Pleasanton, CA





Received on Thu Apr 04 2002 - 12:38:05 CST