What is a Good Conversion Rate?

eCommerce folks often ask the same question about conversion rates – what’s a good conversion rate to have?  The answer unfortunately is elusive, as it varies from merchant to merchant and industry to industry segment.

2.9%

2007 Article in Target Marketing cites 2.9% as the average conversion rate. Most numbers that you see fall somewhere around the 2-3% range, which hasn’t changed much for a decade.  However, the answer isn’t that simple.

Context matters

You can’t really look at your site and say “I’m at 2.0%, I must be doing poorly.” I’ve seen viable businesses that sell high end goods (greater than $1000 AOV) doing just fine at 1/10th of one percent.  On the flip side, some businesses run north of 10%, all the way up to 40% in some cases.  Those high numbers are often for a reason – for example the 40% data point is Schwan’s which has a lot of repeat customers who are there to just re-order goods that they already know about.  So again, context really matters.

Filter on Average Order Value (AOV)

One interesting way to look at the data is to plot conversion rates by a site’s Average Order Value (AOV). At some level it’s pretty intuitive – it’s easier to get someone to buy when the purchase price is $1, than when it’s $1000.

The chart shown here has some actual website conversion rates plotted against their AOV.  We see a cluster of sites in the $100 or less range who are seeing rates of less than 2%.  These sites are often struggling to make ends meet.  In the green band we start seeing a bunch of sites with higher conversion rates and/or higher AOV. These companies are generally doing brisk business.  In the blue are some outliers who are really excelling by having reasonably high AOV combined with reasonably high conversion success.

good conversion rate

Again – we’ll mention that even here, it all depends.  If it’s costing you a fortune to get that inbound traffic, it doesn’t matter if you are getting double digit conversion rates. However, using the AOV might get you a bit closer to understanding if the conversion rate on your website is under performing or is providing an ROI.