So I was talking with my co-worker Patrick Glinski about my notion of conversions being the only metric that matters and he brought up an interesting problem with it. If you have a business, and your only concern is sales (conversions) then over time you will lose because you are ignoring the other parts of your business. To continue with my Rolex example, if Rolex only focused on the sale, the conversion, and not on the aspiration, eventually everyone who could buy one, would have then Rolex wouldn’t have any new potential customers.
Essentially it becomes a resourcing problem. There are only so many hours in the day to spend on optimizing the various aspects of your business, but neglect any one of them and the whole thing falls apart. Spend too much time on the rest while ignoring the purpose of your business, to make money, and you end up going bankrupt.
Also there seems to be a sort of degradation over time. So that metric you had worked so hard on tweaking to be optimal, has now changed.
I still think conversions is the key metric, and the rest are connected through, as Patrick called them “pipes”. The bigger your pipes, the more it aids conversions. the only way to increase the pipes though is by monitoring the other metrics. I have yet to map it all out, but it should be fun!
Hey Dave!
Nice to see you have decided to join the blogosphere :).
I think both you and Patrick are right on this one. If by conversions you’re only truly looking at point of sale, then you are most definitely missing out on a lot of value-driver metrics of your business.
For me it comes down to a fundamental difference between lead and lag measures. Conversions are great at telling me what did work or what did happen, but they give me no indication on what we expect will happen in the near future.
Take one of mine and Novo’s favourite metrics for example – recency. The traditional marketing research person would tell you that the way in which they define a “customer” is “anyone who has bought from you at least once AND WHO IS LIKELY TO BUY FROM YOU AGAIN”.
I love this definition because you’re not really a customer of mine if you never ever plan to come into my store again. You were a customer then, but not now.
Recency is actually a “lead” measure for future conversions. If for example an e-commerce website notices that visitors are allowing more time to pass in between visits, then this is a key lead measure that their sales could potentially be off in the next period.
Just some food for thought :).
Best,
Mike
I think the focus on conversions is a bit pedantic. Yes you have to track sales, or leads, or whatever your site conversion is. But that’s the basics, and is kind of short term.
It’s also, and forgive me for using the term, not very user-centric. I say this because even though you may be running an ecom site, users may be coming to your site for a lot more reasons than simply buying.
I’m not so sure I would worry about new vs. old, so much as I would worry about happy, and likelihood to purchase again and recommend. To that end, you have to support a lot of non-purchase funnel behaviours: customer service, product documentation, complaints procedures, etc.
And find way to measure those type of non-purchase types of conversions well.
A conversion is often a business defined byte of information. It is essential to look at what users are coming to the site for, and support, at minimum, those activities as well. Conversion is too narrow a focus.
Recency is surrogate for