The key to turn your traffic into cash - Conversion rate
e-commerce, Marketing, Business May 28th, 2008 
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First of all, I have to admit that I forgot to post my weekend confession last week. I don’t quite remember what I was busy for. I did spent time on the Internet promoting my online business. It turns out that my online stores have getting more traffic everyday. The shopping season is official started.
In the past week, I have been working extremely aggressively to increase the traffic to my online store. I know the economy is down, but I still believe that people are buying stuff online. According to my conversion with one of the Zappos staff, Zappos is still going strong this year. They must done something right to drive their business forward. You can read my blog post about that at Start Last - Finish First - Are you the next Zappos?
Now I have generated traffic to my stores, how do I turn that into cash? We all know that conversion rate is the key to make good profit and the key of the online business success. I want to turn the red light into a green light for my business.
I have been doing research on conversion rate. I have to say that I am very disappointed by the promise out there. I post questions and sent email asking for help. I got so many emails from marketing companies telling me that they can definitely increase my conversion rate, but none of them gave me a firm guarantee. They don’t even understand my niche. Those companies can’t even make good pitch on selling their service to me. I guess there is no guarantee in the marketing world. No one can promise the ROI and a successful case without costing your fortune.
I am going to learn increasing conversion rate myself. There is something that I want to share with my readers.
1. The average conversion rate for online store is 1%. It means there will be one buyer in 100 unique visitors.
2. Most of the small online store has conversion rate lower than 0.1%. It means there will be one buyer in 1000 unique visitors. This is very low conversion rate.
3. If your conversion rate is lower than 0.1%, you need to find out what you did wrong.
4. You don’t need to spend a lot of money on Marketing, according to Zappos CEO.
5. It takes time to increase your conversion rate. Generate traffic first and work on conversion rate.
6. High web site traffic != Better Conversion Rate! You can have huge web site traffic, but zero conversion rate.
7. Conversion Rate != Profit. You can sell 1000 items a day with $1 profit on each, which makes you $1000 richer. You can also sell 100 items with $50 profit on each, which makes you $5000 richer.
8. Higher returned visit rate = higher conversion rate. How many of your unique visitors coming back? If you have high returned visit rate, you have better chance to make sales.
9. Organic search engine traffic seems to have more buying power. Affiliate program and PPC actually decrease your conversion rate.
10. Narrow your niche and focus on the right buyers will increase your conversion rate.
Here are things that I will be focusing on in the next few weeks.
1. Find the target customers in the right salary level. Not many people is willing to pay for what I am offering because their salary level.
2. Find the target customers in the right location. I have been getting web site traffic from the countries that I don’t do business with, which will not do any good to my business.
3. Offering something unique and free.
If you are reading this far, I bet you either have the same concern about your business or you are capable to help me on increasing conversion rate. Please don’t hesitate to contact me.
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12 Responses to “The key to turn your traffic into cash - Conversion rate”
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May 28th, 2008 at 12:28 pm
Same here! I want my green light as well! Wonder if I should abandon selling 125×125 ads and start offering marketing & business services instead @_@!
May 28th, 2008 at 12:33 pm
@Marketing Deviant:
It doesn’t hurt to sell 125×125 ad on your blog. However, I believe that you should make your marketing skills a profitable products.
May 28th, 2008 at 4:06 pm
Terence - very interesting information on conversion rates.
From your previous post, I know Zappos started at the bottom, but I think that they had a lot of initial capital for marketing…
May 28th, 2008 at 9:12 pm
@Mark:
For small people like us, it’s a lot of money to replicate what Zappos did. For Zappos, those are just a small portion of their capital funding. I know I don’t have such amount of fund to spent, but I am motivated and wanted to learn how I cam do something to boots my business with minimum budget.
I think creative and uniqueness play important roles. My understanding is that if I can prove that my idea and business process can bring more profit, I don’t see a problem to get funding. I know it’s not that easy. If it took Zappos 7 years to become what they are today, I don’t expect to become Zappos in 7 years. I do expect to become 1/5 of Zappos in 7 years.
Jarkoo posted BIG PICTURE few days ago. I should start drawing the big picture of my business.
May 29th, 2008 at 8:37 am
As a professional marketing man, my immediate question to you would be, “if your products’ price range is at the level out of reach to most computer users, should you not be looking at reaching your target customers through other methods?” Perhaps online marketing is not the right approach for high priced jewelry. I do not know the product range but to me it would appear that wealthy people do not spend time at the computer!
May 29th, 2008 at 10:45 am
@Dining Tables:
My product price are very competitive. There are many rich people buying high price products online. It’s matter of how you can find those customers and get the money out from their bank account. Personally, I don’t have budget to stock some very high price products in my warehouse. I do know that some companies can live for a year by selling just one piece of very valuable collectible items.
You did make a good point. There must be other ways to find your customer off-line.
May 29th, 2008 at 11:15 am
I’ve hit 5%, 8% and higher conversion rates before. I’m telling you, I’m still a believer that long text sells!
May 29th, 2008 at 5:46 pm
@DCR:
Last year, I was hitting 50% conversion rate for few days, because I had only few customers. After that, my conversion rate is getting lower and lower. Now I am getting more traffic every day, it lowers my conversion rate a lot. So it makes me rethink about my marketing strategies.
I do believe that long text will help getting a better SERP, but it doesn’t means the higher conversion rate. My store has been ranked on the first page of Google search result for certain keywords, but that did not bring me any conversion rate. However, that’s what marketing companies will promise you - TOP SERP.
Right now, getting traffic is not my concerns. I just need to figure out where my customers are and how I get them to pay.
June 2nd, 2008 at 12:09 pm
[…] down. It’s time to have another weekend confession. Few days ago, I posted a thought about conversion rate, the most important key fact to make profit online. I was working on generate more traffic to my […]
June 2nd, 2008 at 10:42 pm
Interesting article, time for me to go back and see why my conversion rates are less than 0.1 %
June 3rd, 2008 at 12:29 am
[…] days ago, I posted “The key to turn your traffic into cash - Conversion rate.” I realized that conversion rate is the key to identify your success of online business. Web […]
June 4th, 2008 at 12:02 am
[…] something else, I didn’t pay enough attention to when I started working on this challenge: conversion rate. Hear what Terrence Chang says about it: 1. The average conversion rate for online store is 1%. It […]