Clarification Number 1: Efficiency and effectiveness are not the same
Many translate efficiency as “doing things right” – usually the optimal cost-benefit ratio is meant. Energy = costs. Protecting the environment = benefit. A washing machine that consumes 20% less energy is more efficient. She does things better, better – in the sense of our goals.
Effectiveness is often translated as “doing the right things” (to achieve a goal). When it comes to doing laundry and protecting the environment, that might mean hand washing. Not the optimal cost-benefit ratio – but possibly the maximum right in terms of environmental protection. (or would non-washing be even better?)
Why do we do it all?
Peter Drucker would have known that the goal of Conversion Rate Optimization is to improve efficiency. Maximum economy. An optimal ratio of costs and benefits. The best compromise with the optimal contribution margin as a goal. Getting more and more out of what’s already there. Step by step make the sales engine of the website a little more efficient and thus more competitive.
There are people who claim that “Conversion optimization is too short”. I have not understood this criticism of the idea of conversion optimization so far. After all, whoever claims that conversion optimization is not effective has not understood the difference between effectiveness and efficiency.
Clarification # 2: Missionaries, lead generators, and online retailers have only one goal – conversion.
“Conversion” describes what business administrators call a value creation process.
Turning an (expensive) paid visitor into a customer or lead creates value for a business. Costs will be of benefit (who would like to reread the efficiency …). The benefit consists of sales, contribution margin and the value that a winning customer represents
[Did I just declare “conversion”? PFUI bah, the level in this blog is dropping …]
But now it becomes important:
The conversion is the primary value creation process of most companies. The conversion rate describes the efficiency of this core creator process.
But not the effectiveness.
It’s just like washing machines: washing twice as much laundry with the same energy is twice as good as before – but not the best.
A conversion rate that is twice as high means: twice as much revenue at the same cost, a much higher contribution margin.
For all Schnellmerker: The contribution margin, however, can be optimized in many other ways: less returns, higher repurchase rate, better lead quality, lower costs, and and and …
Therefore, I claim that the conversion rate is not the best measure (in terms of effectiveness) (clearly, it also describes the efficiency). In any case, the conversion rate is not the best.
Clarification # 3: Conversion Rate Optimization is not Conversion Optimization
I really wanted to go out there.
It’s a small but nice difference. Only a small word is missing. But it describes the difference between efficiency and effectiveness. Conversion optimization means doing the right thingto improve a company’s primary value creation process. This is the most important, strategic task of any company. Those who do not work every day on their competitiveness are already doomed to failure – there can be nothing more important than this task.
The conversion rate describes “only” the efficiency of this process. It is always right to improve the conversion rate – but not always the right one.
Therefore, the term “Conversion Optimization” has opposed the “Conversion Rate Optimization (CRO)”. CRO considers “only” the efficiency. Conversion optimization describes one or more levels further the goal of the process – the conversion – and leaves open, which measure is necessary, in order to be able to measure the goal attainment.
In the above-mentioned article on numbers from hell a few weeks ago, I say nothing else than that there are better ratios than the conversion rate to measure the achievement of an optimization process goals (eg contribution margin).
Therefore, I would like to give the above mentioned three tips to all conversion rate fools, would-be experts and logic editors of the web industry.
And because I know that a few people still believe that scrolling – like masturbation – will someday eradicate humanity, here’s the summary at a glance :
- Efficiency and effectiveness are not the same – and it is important to understand that
- The conversion of visitors to customers – from customers to regular customers – from repeat customers to fans, etc. – is the most important value creation process in every company (even in the church)
- The optimization of the primary value creation process is the only thing more important
- The conversion rate describes the efficiency of the process – not the effectiveness
- Scrolling is always stupid
The power may be with you!
PS: Another bonus tip to think about … with addition may like to be a number zero – the result remains the same. When multiplied, a single zero is enough to set the overall result to zero.
Yield = Visitor x Conversion Rate x Cart Value x Margin – Cost
For example, if you claim that “without visitors you do not need a conversion and therefore the generation of traffic is probably more important” or “Who has less costs, has already won” may like to use Wikipedia again under the terms “multiplication”, ” Logic “and” stupidity “look up.