Recently, a leading multi-channel retailer engaged in a landing page test that sacrificed thousands of dollars and compromised plenty of ROI. The retailer’s fatal flaw? Relying solely on the almighty conversion rate.
The retailer tested two landing pages for its #1 keyword, “red jackets.” The first was a product list page featuring only red jackets; we’ll call this “The Red Page.” The second, “The Promo Page,” displayed an attractive young person modeling a jacket (not red), with a “Save $15 on orders over $100” promotion.
The search engine marketing team alternated “The Red Page” and “The Promo Page” for all keywords in their Google “red jacket” campaign. Two weeks later, in an executive meeting, the search engine marketing manager boasted about the results.
“The Red Page proved to be the winner in our landing-page test with a 21% higher conversion rate than our Promo Page,” the manager said.
The announcement of the test results prompted smiles, “good jobs,” and other congratulatory verbal and non-verbal reactions by executives; none of whom fully realized they had just been duped by the misleading nature of the conversion rate.
Conversion rates are one of the most measured and optimized metrics in search marketing, and for good reason. A conversion rate is the percentage of visitors that result in a sale. So when a conversion rate improves, it is logical to assume that the ultimate metric, ROI, will also improve. Well, not so fast.
As a search engine marketing professional, I face situations like this all the time. Clients and other online marketers place too much emphasis on conversion rates when measuring performance. But conversion rates aren’t always king; king being defined as an “absolute ruler.” It is not absolutely guaranteed that one landing page, text ad, or other marketing component is performing better than another solely based on conversion rates.
While excited over the success of “The Red Page,” search engine marketer X neglected other factors that affect campaign success like traffic, revenue, average order value (AOV), earnings per click (EPC), and ROI.
Some visitors arrived on “The Red Page,” found a red jacket which retailed for $50, and went through the checkout process. Others landed on “The Promo Page,” found a red jacket for $50, and noticed the additional incentive, which offered $15 off of orders over $100.
The data below illustrates how other factors play a considerable role in search marketing performance. Had search engine marketer X considered more than conversion rates, the retailer would have maximized ROI and revenue.
Red Page: 2.3% Conversion Rate
Promo Page: 1.9% Conversion Rate
Lifetime value aside, the “Promo Page” is the true king in this test. If the retailer actually stopped testing the “Promo Page,” it would have forfeited $35 in AOV, $0.47 earnings per click, and a landing page that provided a 39% higher ROI. Not good at all.
Online marketers need to look at e-commerce conversion rates not as the sole performance indicator, but include it in a balanced scorecard that measures true online success.