Why do you offer rules of thumb when they are misleading? Any CEO with just a 5% conversion who reads this article must think that there is something wrong with his customer acquisition process. But this is not necessarily true.

“Marketing efficiency ratios” sound very sensible to me: “Conversion Rate” as a mathematical function has one input parameter only: “visitors”. “Marketing efficiency ratio” has multiple input parameters: “visitors”, “marketing budget”, “customer lifetime value”. IMHO it much better to try get the biggest bang for the buck in online marketing than optimizing CR only.

Unfortunately all those CR consultants praise CR optimization as the holy grail. But benchmarking your CR against your competitors’ CR does not mean anything and benchmarking against other industries can be misleading too.

For example “marketing efficiency ratio” would mean to measure customer acquisition costs against your customer lifetime value. As a CEO I would measure that – and I can assure you: This is an important metric in my company.

I’m happy that you embrace the idea of benchmarking against customer expectations. If we offer no guidance or rule of thumb conversion rates then our readers/ customers aren’t happy. We don’t think CR is the most important metric – you can see that from – “Companies with higher conversion rates almost always have better marketing efficiency ratios (net contribution/marketing expenses.)”

But I also agree with Tommy Swanson that a target of 10% conversion rate is randomly chosen. From my point of view a reasonable conversion target depends on your industry, on your competitive environment, on your pricing strategy.

Selling at insanely low price prices will result in a fantastic conversion rate but in no profit at all. IMHO as a CEO it is much better to try to minimize your customer acquisition cost: How much does it cost you to win a new customer? Maximizing your conversion rate is one part of the equation, but not the only one.

Do you want a simple example? Given you booked two keywords on Google Adwords:

Keyword #1: 10% Conversion rate, 50 cent per click
Keyword #2. 5% Conversion rate, 15 cent per click

Focussing on keyword #1 and abandoning keyword #2 will result in a conversion rate increase. Winning a new customer with keyword 1 will cost you $5. But you can win a new customer with keyword #2 for just $3.

In other words: the keyword with the lesser conversion rate is the more profitable one.

As a CEO, is it really a good idea to focus on conversion rate only?

These are rules of thumbs and their are more exceptions than you can possibly be aware of (I’ve seen countless having been optimizing sites for conversion since 1998.) This is meant to have people question their results. Nevertheless, 10/20 are good general rules of thumb.

As the CEO of small company, it’s rather simple to take responsibility for Conversion. When you begin to grow, it gets increasingly hard as CEOs tend to not dig into that data.

When we help corporations, I often have to play that role and get all department heads to work together. But conversions do reflect that extra effort.

Not an easy thing to do at all. Great post, though!