Here is Why Conversion Volume Optimization is better than CRO

 

Conversion volume optimization (CVO) is a web analytics term coined by me (searched the web, no one else has used the term so far) which focuses on optimizing conversion volumes of a marketing channel rather than the conversion rates.  I have been successfully using CVO for the last 6 months and now I think it is the time, to reveal its benefits to the whole world.

 

Issues with Conversion Rate Optimization (CRO)

I have discovered following issues with the traditional CRO approach:

  1. Data Collection Issues
  2. Data Interpretation Issues
  3. Data Reporting Issues
  4. Data Optimization Issues

 

Data Collection Issues

The manner in which web analytics tools like Google Analytics collects conversion rate data is misleading and downright wrong. For example:

1. Google Analytics add the Goal conversion rate of each individual Goal and then report the sum as the overall Goal conversion rate of the website.  So if you have set up 5 goals for your website and the conversion rate of each goal turned out to be 20%, then Google Analytics will report 100% conversion rate for your website.

 

2. Google puts each and every visit to your site in the conversion funnel while computing goal conversion rates and ecommerce conversion rates. But this is never really the case. Not every visit leads to conversion.  So following traditional definitions of conversion rates are downright misleading and incorrect:

Goal Conversion Rate = Total Goal Completions/Total visits to the website

E-Commerce Conversion Rate = Total e-commerce transactions/total visits to the website

 

There are ways (data segmentation) to get around these issues but it is still a pain in the butt. To know more about these issues, check out this post: What is fundamentally wrong with your Conversion Rate

On the other hand conversion volume has no such data collection issues. You get what you see.  If Google has reported 455 conversions through Google organic search than you have really got that many conversions through organic search.

 

Data Interpretation Issues

Since conversion rates calculated by analytics tools like Google Analytics do not represent the true conversion rate of a marketing channel, it is very easy to misinterpret them (unless you are a data segmentation junkie).  Another factor which contributes towards the misinterpretation of conversion rate data is its ‘ratio metrics’ nature. Ratio metrics are the metrics which are computed as ratio. For example, Bounce Rate is a ratio metrics as it is computed as: number of bounces/number of entrances.

 

So what is the issue with ratio metrics? Ratio metrics provide muddy analytical insight and can therefore horribly mislead you.  For example consider the following hypothetical scenario:

 

E-Commerce Transactions

Total Visits

E-Commerce Conversion Rate

1st Month

5

1000

0.5%

2nd Month

50

10000

0.5%

3rd Month

210

41916

0.501%

4th Month

345

68848

0.5011%

5th Month

392

78000

0.5029%

Your transaction volume has increased by more than 7800% in the last 5 months but since the focus is on e-commerce conversion rate there is virtually no improvement (flat 0.5% conversion rate as reported by Google Analytics, unless off course you bother to segment the data).

Since conversion volume is a ‘number metrics’, you can never misinterpret it. 300 conversions mean 300 conversions. It is as simple as that.

 

Data Reporting Issues

When you report conversion rates in aggregate form like 0.5%, your client has no idea what that means. Is it 5 conversions out of 1000 visits or 50 conversions out of 10000 visits? Whether we are making any progress and how this progress can be translated in monetary form.

Since ratio metrics like conversion rates provide muddy analytical insight they can’t effectively communicate your marketing efforts to senior management/ client.  Businesses understand numbers more than ratios. This is because numbers means money ££££ and if you can’t show them the money; you will have a hard time getting anything done in SEO, PPC or any form of marketing.

 

Your client will be happier if you tell him that number of orders on the website has doubled in the last 3 month than reporting him something like, your site e-commerce conversion rate has improved by 0.431% in the last 3 months. Even if you report the ratio, your client still needs to know the impact on the bottomline, in the form of ‘number of orders’.

Conversion volume is a number and it communicates really well. Any person regardless of his background can easily understand that when his website got 300 orders in first month and 410 orders in second month, his online business is making progress.

 

Data Optimization Issues

It is not very practical to optimize conversion rate since it is a ratio metrics. You can’t set achievable targets for conversion rate like improve the e-commerce conversion rate of the website by 1% in the next 6 months. This is because:

1. You can’t lead every visit and visitor to your website to convert, no matter what you do.

2. You will always get some traffic which won’t convert, no matter what.

3. Your website traffic will always increase (ideally it should) and it won’t always increase in proportion to conversion volume.

4. Any person working in the marketing field long enough knows what one 1% increase in the conversion rate can do to your business bottomline esp. at the enterprise level. It can be a difference between making £1 million and £10 million.

 

Conversion volume on the other hand has no such data optimization issues. Since conversion volume is a number, you can easily set numerical targets for it. For example, our target is to get at least 500 orders/leads in the next 6 months. Our target is to generate at least £50k a month in revenue in the next 6 months.

In Google Analytics standard reports, you won’t see the conversion volume in the way you would like to see for each traffic source. So you need to create a custom report which list conversion volume (ideally with the conversion rates) for each traffic source:

conversion volume optimization

 

CVO (Conversion Volume Optimization)


Here i have created a custom report and then i am viewing the data in pivot table. You can download this custom report from here. To know more about pivot tables in Google Analytics, check out this post: The Super Duper Guide to Google Analytics Pivot Tables.

 

Should i discard the conversion rate metric?

No. I am not saying to discard the conversion rate metrics.  Conversion rate is a good indicator of quality of traffic to your website and to determine website issues.  If you really want to use this metric then use, report and analyze conversion rates in analytics ninja style, in segmented form and along with conversion volume, not as a standalone metric.

 

So the smart questions to ask now are:

1. How many orders I got through Google organic search in the last one month and how much my conversion rate conversion volume has improved.

2. How many leads I got through email campaigns in the last one month and how much my conversion volume has improved.

3. How many orders we should aim for in the next 6 months.

 

In the end conversion volume is what matters the most to a business because it speaks the universal language (the language of money) loud and clear. Please share your views on CVO.

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  • http://categorycode.ca Landon Poburan

    I understand your approach with CVO but one of the benefits of CRO is knowing your ROI. Simply because your generated more conversions in August compared to July does not mean your marketing produced better ROI. For example you could have doubled your money, and generated only 50% more leads. So your CVO looks good, but you realize your actual ROI decreased.

    I like where your head is at but I think there needs to be some common ground between both in order to achieve perfection.

    • http://www.seotakeaways.com/ Himanshu

      Hi Landon! I believe one can do better ROI calculations through conversion volumes than conversion rate. This is because conversion volume won’t skew the ROI calculations as it truly represents marketing efforts and the impact on the bottomline. I am not sure how you are calculating the ROI. If you are talking about cost per acquisition then one can calculate this metric more accurately through conversion volumes. For example you spent $2000 in the first month to acquire 50 conversions. So your cost per acquisition is $40. In the second month you spent another $2000 but this time you got 100 conversions. So now your cost per acquisition is $20. In this way you can easily measure your ROI. It is a very simply math which anyone can understand and is no where as complicated as ROI calculations which involves conversion rate. Let me know if i am missing something. I believe in keeping things simple. Why makes things complicated unnecessarily.

  • http://www.lukeeales.com Luke

    Thanks for the post. IMO: You should be doing both. You can’t compare apples and oranges – volume and conversion should both be segmented and reported. Segmentation should not be considered optional.

    • http://blog.samuelgoh.net Samuel

      Totally agreed on this. No datasets nor number should be silo-ed.
      If you had been thru the reporting cycle often enough, you would always find ways to paint a good picture (not distort). If the conversion rate stays the same, i am sure one would go into the hard numbers and see if there’s any improvement.

      • http://www.seotakeaways.com/ Himanshu

        Thanks Samuel for sharing your insight.

  • http://www.q3tech.com/java-platform.html Q3Tech

    A very well explained concept. I will start working more on my conversion volumes from now on.
    Also, Himanshu, a great insight !

  • vaibhav

    Hi Himanshu
    Most of companies prepare reports on the basis of Volume or Ecommerce Transactions they have done in Month not on basis of CRO, it’s only a metric which they see along with volumes to check rate.

    You must have seen Ecommerce companies or any other co generally talk about no of Orders they have processed per day or month. It’s always the volume which decides growth rate not other way around.

    • http://www.seotakeaways.com/ Himanshu

      Hi Vaibhav! Conversions are much more than orders. They also include many micro goals like user engagement. The post is about optimizing conversion volumes and not conversion rates. Oftern marketers focus on optimizing conversion rates to improve the performance of their campaigns. I am emphasizing on optimizing conversion volumes to improve the performance. What you are saying is correct. But this is not what i am talking about in this post.

  • Osman

    “Conversion volume optimization (CVO) is a web analytics term coined by me which focuses on optimizing conversion volumes of a marketing channel rather than the conversion rates.”

    So? What’s Conversion Volume exactly? What’s the calculation?

    • seohimanshu

      Conversion volume can be raw number of micro conversions (like newsletter sign ups, file downloads etc) or macro conversions (like sales, leads etc).