The following is an article originally written by Larry Kim, CEO of WordStream, a company that develops Search Marketing Software for PPC advertisers.  MGR utilizes WordStream tools synced-up with Google AdWords on a regular basis to optimize our clients PPC campaigns.  This article really mirrors our philosophy about Conversion Rate Optimization (CRO) as it relates to separating all the junk that you read all over the Internet from the tools and practices that really work.  I hope you enjoy it!

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Conversion is a key element in your paid search strategy; after all, if you’re not actually turning lookers into buyers at a high rate, what are you advertising for? Conversion rate optimization enables you to maximize every cent of your PPC spend by finding that sweet spot that convinces the maximum percentage of your prospects to take action.

But what is a good conversion rate? If you’re already achieving 3%, 5% or even 10% conversion rates, is that as high as you’re going to go?

We recently analyzed thousands of AdWords accounts with a combined $3 billion in annual spend and discovered that some advertisers are converting at rates two or three times the average. Do you want to be average, or do you want your account to perform exponentially better than others in your industry?

Through our analysis of this massive amount of data on landing pages and conversion rates, we were able to identify some common traits of the top converting landing pages. What do they have that you don’t? Believe it or not, there isn’t much standing between you and conversion rates double or triple what you’re seeing today. But the way you’re going to get there is totally counter to typical conversion rate optimization wisdom.

In this post, you’ll learn a step-by-step, replicable process for boosting your conversion rates, all backed by data insights from the best (and worst) performing advertisers in the market. Our recent conversion rates webinar is available in full at the end of this post. Today, we’ll cover:

  • Why Conventional Wisdom Around Conversion Rate Optimization is Silly
  • What Is a Good Conversion Rate?
  • Key Points to Consider

Are you ready to find out why everything you thought you know about CRO is wrong? Here we go…

Why Conventional Wisdom around Conversion Rates is Silly

Learning that the experts you’ve been listening to all along are wrong is a bit like learning for the first time as a kid that mascots aren’t real. Underneath that fluffy suit there was just a sweaty unshaven guy. Everything you’ve learned about conversion rate optimization is a bit like that: shiny and pretty on the surface, but seriously lacking in substance.

How is everyone getting it so wrong? Primarily, if you’re singing the same song as everyone else, you can really never be anything more than average. When all of the gurus are all preaching the same optimizations, and all of your competitors are listening to them, how are you supposed to stand out?

The Classic Conversion Rate Optimization Test is Silly

Ladies and gentlemen, this is the Great Conversion Rate Optimization Fairy Tale. Once upon a time, a self-professed marketing guru told you it’s really important that you optimize your site. They shared one example where the author changed the button color, or the font spacing, or the image. Lo and behold, the advertiser’s conversion rate jumped by 2-7%.

AB Testing

Amazing, right?! Um, no, not really. These are really basic, run-of-the-mill A/B testing best practices. Yes, you should be doing these optimizations on an ongoing basis, and you’re probably going to see small, single-digit increases in your conversion rate – but it’s not likely to shoot you into the 10% or greater conversion bucket.

Let me show you what happens with those gains generated by these small tweaks on your page. Here’s an example of a landing page split test; the gray line on the bottom is the first page version we were running. The blue line is the second version we ran against it. In the beginning, the new page far outperformed the old. Awesome, right?

Graph Comparison

Except as you can see, the gains were not long lasting. In fact, the “better” page would eventually plateau. We began running 20 to 30 tests at a time and saw this pattern across our tests. We call this a premature testing dilemma. You see an early lead but shortly down the line, the early lead disappears.

This isn’t true all of the time, of course. However, we found that in the majority of cases, small changes like line spacing, font colors, etc. = small gains. If you want big, serious, long-lasting conversion gains, you need to move past these spikes that last only a couple of days or weeks.

Why does this happen? Often, it’s because the total volume of conversions you’re measuring against are low to start with. If you’re looking at 50, 100 or even 200 conversions across your entire test, small changes can seem more impactful than they really are. A couple of conversions might mean a 4% conversion increase if there are only 50 conversions total, because your sample size really isn’t big enough to start with.

It’s Time to Stop Moving the Chairs Around 

When it comes to landing page optimization, you can stay really busy doing small things that have little impact. It’s like rearranging deck chairs on the Titanic. We need to move past this mentality to the big tactics and optimizations that will dramatically change your performance and fortune.

First, we need to know:

What is a Good Conversion Rate?

Hint: it’s a lot higher than you may think.

Conventional wisdom says that a good conversion rate is somewhere around 2% to 5%. If you’re sitting at 2%, an improvement to 4% seems like a massive jump. You doubled your conversion rate! Well, congratulations, but you’re still stuck in the average performance bucket.

In this analysis, we started with all accounts we can analyze and went back a period of 3 months. We removed those that didn’t have conversion tracking set up properly, those with low conversion volumes (<10 conversions/month), and low volume accounts (<100 clicks/month), leaving thousands of accounts for our analysis. We then plotted where the accounts fit in terms of conversion rate.

Conversion Rate Distribution

So what is a good conversion rate? About 1/4 of all accounts have less than 1% conversion rates. The median was 2.35%, but the top 25% of accounts have twice that – 5.31% – or greater. Check out the far right red bar – the top 10% of AdWords advertisers have account conversion rates of 11.45%.

Remember, this isn’t for individual landing pages – these advertisers are accomplishing 11.45% conversion and higher across their entire account.

Clearly, this isn’t some anomaly; this is perfectly attainable. If you’re currently getting 5% conversion rates, you’re outperforming 75% of advertisers … but you still have a ton of room to grow!

You should be shooting for 10%, 20%, or even higher, putting your conversion rates 3x to 5x higher than the average conversion rate. Aspire to have these landing page conversion rate unicorns in your account.

But Conversion Rates Are Lower in My Industry…

That’s entirely possible. We segmented conversion rate data by industry to see whether these insights held true for all marketers. Here’s what we found in an analysis of four major industries:

There’s a lot of flux there; e-commerce has a far lower average conversion rate, especially compared to finance. However, check out the Top 10% Conversion Rates. They’re 3 to 5 times higher than the average for each industry, so we can see that the rule holds across the board, regardless of industry.

The flip side, of course, is that if you’re in a high-performer industry like finance, 5% really isn’t a fantastic conversion rate. If you’re comparing yourself to the average across all industries, you’re really deluding yourself into thinking you’re doing better than you are. In truth, the top 10% are doing almost five times better.

Even if the average conversion rates are lower in your industry, the top advertisers are outperforming you by 3-5x or more.

F%@# Conversion Rates

Wait, what??

Stay with me here. Higher conversion rates, on their face, seem awesome. However, if you’re converting less qualified leads, you’re actually throwing MORE money away, because those leads cost you money.

I want you to focus on landing page optimizations like the above that move you in the direction of higher quality, more qualified lead generation, not just more conversions.

Key Points to Consider

So what have you taken away from this? I hope you can get the following to stick and use these tips to guide a more holistic, effective conversion rate optimization strategy – the kind that will boost your conversions, but bring better lead quality, as well.

  1. Most landing page optimizations are like moving around the deck chairs on the Titanic. Small changes = small gains.
  2. Insanely focused and strategic landing page optimization brings 3-5x the conversions AND improves lead quality.
  3. In some industries, even 5% conversion rates aren’t that impressive. If you’re stuck in the 2-5% conversion rate bucket, you have a ton of room to grow.
  4. Get creative with your offers and test multiple different offers to find the one that resonates best with your audience. If you want to get really crazy (you know you do), find different offers that can help you qualify leads in the process.
  5. Identify the obstacles keeping prospects from converting and get those roadblocks out of the way by changing the flow. Test different variations to find out exactly which path to conversion works best for your audience.
  6. Use remarketing to recapture people who showed intent but didn’t convert.
  7. Test smarter, not more often. You need to test 10 unique landing page variations to find 1 top performer, but this goes far beyond changing a font color and calling it a landing page variation.
  8. Trim the fat in your account and ditch your lowest performers. Focus your energies on the top 10% of landing pages that earn 80% of traffic.
  9. Always, always keep your eye on the prize, which is making more sales or generating leads most likely to convert to sales.  Don’t let high conversion rates take precedence over lead quality or you’re going to spend more qualifying leads. You need to find the sweet spot where everything works like a well-oiled machine.

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I’d like to thank Larry Kim and WordStream for the above contribution.   Photos by WordStream.

If you have any questions or comments about the above article or if you would like to learn more about how our SEO Marketing Team can help you with your PPC campaign, please add your comments below.

Until next time, this is Manuel Gil del Real (MGR)