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What’s my Competitor’s Conversion Rate?

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Conversion Rate

The question from the title is one of the worst questions a client can ask an online marketer. Conversion rate is the number of goal achievements divided by the number of website visitors shown in form of percentage. At e-commerce websites, the main goal is usually for visitor to make a purchase, thus making the conversion rate the number of visitors that bought something divided by the total number of visitors.

Conversion rate def & E-commerce conversion rate def

Once you explain the concept of conversion rate and process of conversion rate optimization, most of the clients will ask several questions, including:

  • What’s my conversion rate?
  • What’s the industry benchmark?
  • What’s my competitor’s conversion rate?

We can’t really know the conversion rate of any website without the access to the website’s statistics, so we can’t answer the question from the title. The trick is – we don’t need to know our competitor’s conversion rate at all, so these are all wrong questions. Let me explain why…

We will imagine two websites: example.com and example.org. They have two different owners and they are competing in the same industry. Both websites are selling example widgets. The thing that’s unique about these websites is the way they receive the traffic.

Example.com invests a lot of money in their paid search engine listings but have little content marketing strategy. Example.org on the other hand doesn’t invest a lot in the paid search but is extremely active on social networks. Example.com has remarkable conversion rate of 23%. Example.org has only 0.03% conversion rate. The owner of example.org is disappointed with such a terrible conversion rate compared to his competitor, but little does he know that he makes much more money than his competitor due to a lot bigger visitor volume.

The point is, various sources give various quality of visitors. Some of the sources like paid search give us very targeted visitors that convert really well but cost a lot of money, while some sources like social networks are free but give us little control over targeting.

This is why comparing the conversion rate of two different websites is pointless. When performing conversion rate optimization, think of it as a closed system. You can’t really stop the less targeted visitors from visiting your website, and you don’t want to, since some of them buy something anyway. Don’t chase that magic number (the percentage) but concentrate on the profits instead.

What’s a good conversion rate for my store?

When the client asks you the tricky question – “What’s a good conversion rate for my store?” – tell him it’s the conversion rate that brings him profit. Unless your conversion rate is 100%, there is always space for improvement (although you will never achieve 100% conversion rate or even come close to that number in practice).

About

Toni is an internet marketing expert at Inchoo, an e-commerce design and development company. He is certified Inbound Marketing Professional and has years of experience in the field. Lately, he is mostly working on and writing about e-commerce marketing.

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{ 15 Responses }

  1. EK OBrien says:
    The key to social media and marketing is making your efforts more relevant to your site to attract more targeted visitors and word of mouth. Word of Mouth is the most successful marketing out there and its free! Focusing on relevant directories, affiliates and back links can go a long way in high conversion rates and can help with organic rankings vs. PPC which is expensive and a consistently high marketing cost.
  2. James says:
    I think companies spend too much time worrying about their competitors and not focusing on what isn't working on their own site and developing ways to improve it. Try something new to increase your own conversions.
  3. Jason Jumat says:
    I think conversions of all websites fluctuate all the time. But too low conversion rates tell us that something might be wrong and this causes us to change significant things on a website. A website, a blog - it's a business and thus conversion is always important. It won't help if get 10,000 visitors to your site but only a conversion of 0.10%. Then you had 9,990 people who did nothing for you.
  4. SEO Company says:
    Nice post for competitor's conversion rate, if we know about this that should good for me, in seo point of view, i always open eyes what competitor's do, and what search engine say...many competitors do just copy of their competitors but i think this is not good always follow search engine's rules...
  5. Jamian says:
    Although I always trying to keep with my competitors strategies that being said I don't really invest time in get to know what their conversion rates are its redundant.
  6. Tushar says:
    do anyone thinks that this conversion rate theory works for blogging...the only place i could think of conversion rates in my blog is that how many visitors to my blog convert to my feed subscribers and i do not think i have never really looked deeply into that
  7. Dennis Edell says:
    Far too many bloggers spend more time trying to figure out how others do it, then on their own. e-Commerce sites are just the same issue under a different label. Kristi nailed it. If we would all worry more about our own then others, everyone would be doing better.
  8. Kristi Hines says:
    I think instead of spending time obsessing with how to find out your competitors conversion rates, you should take that time, study conversion increasing strategies, and apply them to raise your own rates.
  9. Anwar says:
    Some people obsess over their competition. Always over analyzing their performance. Or trying to...because they will rarely know the exact numbers. Yes it sometimes help. I mean Google is proposing allowing Bing like backgrounds on their homepage...so somebody is watch the opponents. But to expect to know the turnover rate...too controlling. Thanks, conversion is top of mind for me these days.
  10. Toni Anicic says:
    @Kennewick Interesting, I've never worked on real estate marketing. I guess it is easier to measure competitor's conversion rate in this field since much less "products" are sold and you can actually see when something is sold, but you still can't be sure was the sale result of online or offline efforts of your competitor's.
  11. John Soares says:
    Toni, this is a very clear and concise explanation of conversion rate. So far I've been using social media strategies and SEO techniques to bring traffic to my websites. I may do some pay per click soon, but only as a supplement to the other techniques.
  12. Karan Singhal says:
    Great article. Might help when I'm working with clients, although I focus more on SEO. I think it's important to note that conversion rates don't matter unless you compare them with the amount of traffic a website gets. A website with 1 visitor and 1 sale has a better conversion rate than a website with 10,000 visitors and 50 sales. But 50 sales is obviously better than 1.
  13. Murlu says:
    Competition is certainly a funny thing because there are way too many factors that come into play. The post shows a great example of this. Some companies will have a very high volume of sales but they're selling cheap items. There may be no return customers so they're forced to bring in new customers. The other company may have very few customers but each sale is gigantic and the customers come back over and over again. Which is more successful? Both are in reality but because we're a competitive nation we only want there to be one.
  14. Colleen says:
    As a real estate company, it is easy to see what is working for our competitors. We monitor our competitor's conversion rates through our area's real estate buying and selling statistics of which are public information. Funny thing is, we will do things in marketing just to keep our competitors from knowing what exactly works for us and what doesn't.