In the past the focus of e-commerce websites was to attract visitors to the site. One can argue that the trend has shifted to focus on conversion rates, opening up a debate to which is a better return on investment (ROI)?
Should a company spend money on advertisement in an effort to increase website traffic or should a company spend money to improve the user website experience and subsequently increase conversion rates? An e-commerce conversion rate is the percentage of unique visitors to your online store who actually buy something. E-commerce traffic is number of visits a website receives during, usually, a 24-hour period.
Conversions are the gift that keeps on giving, according to the book Web Design for ROI. Buying traffic is a one-shot cost with a one-time benefit. Increasing conversions is a one-time cost with ongoing benefits as stated by authors Loveday & Niehaus. It might be hard to sale this statement to many upper-management executives that make the money decisions. Buying traffic is easier to measure than conversion rates. Conversion rate measurement can only be estimated and can be based on beginning metrics gathered by methods such as usability testing.
I read an interesting article: Uncovering Both Top- and Bottom-Line Growth for Your Online Business. The author, Kevin Gold, says online businesses have a similar “top line – bottom line” approach as those businesses on Wall Street to strive to improve their “top line” by increasing sales on their “bottom line”. The author recommends to evaluate “top-line” (traffic generation) or “bottom-line” (visitor conversion) improvements to by five criteria :
- Objectives you plan to achieve
- Amount of money you have to spend
- Time-line established to meet your goals
- Amount of visitor traffic your website currently receives and
- Conversion rate your website currently achieves
By evaluating these criteria the return on investment for “top-line” vs “bottom line” rates should become clear. No matter which method is taken or a hybrid using both, a measurable sales growth should be achieved.
Another interesting analysis of two competing websites was made- 1800flowers.com and Proflowers.com. The analysis tried to determine why the conversion rate of Proflowers.com is twice the conversion rate of 1800flowers.com. Items like better search, product, and checkout pages are thought to affect the conversion rate. Many of the techniques described in the Web Design for ROI book were employed by Proflowers.co, thus possibly contributing to their larger “bottom line”.
Maybe the answer to the debate on which is a better ROI – increasing traffic or increasing conversion, is both, improving the user experience before attracting more traffic can improve conversion rates.
