This Matters MORE Than Your Conversion Rate
“So what’s your sales conversion rate?”
If you’ve been around the marketing game for any significant length of time, no doubt you’ve either heard somebody ask that question, you’ve been asked that question or you’ve seen somebody talk about their sales conversion rate, right?
Sales conversion rate is what percentage of visitors to your marketing campaign actually purchase the product.
If you had 100 visitors and one person bought, that’s a 1% sales conversion rate and from the beginning of time, marketing time, everybody has been taught to focus on improving sales conversion rate but here’s the reality.
Today, there is a far more important metric that you should be focusing on, a metric that can radically change the amount of media buying that you could do, traffic generation that you could get.
There’s a number that you should be focusing on that can radically change the sales game and the number that I’m referring to is average order value – AOV.
Average Order Value
Is A More Useful Metric Than Conversion Rate
Average order value is simple.
It’s the average amount of money that a new customer spends with you when they go through your marketing campaign.
Some people might spend $50 with you.
Some might spend $100 with you.
Some people might spend $10 with you.
Maybe you end up with a $60 average order value.
$60 is the average amount that a new customer spends with you.
Well, the average order value ultimately determines what is it that you can spend to acquire a new customer.
If you have an average order value of $60, that means you can spend $60 to acquire a new customer and you’re really acquiring a customer for free, right?
You’re breaking even but you’re acquiring a customer for free.
If you get that average order value up to $70, right, you’re increasing the average transaction size.
You’re presenting them with more offers.
You include a bump offer, an upsell offer, a downsell offer, a cross-sell offer.
There’s a variety of things that you can do to increase average order value.
If you get it up to $70, now you can spend $70 to acquire a new customer.
So you can use more expensive channels.
You can do things that your competitors can’t do.
So you’ve got a lot more control over your marketing, over your media buying when you are focused on average order value.
The big takeaway is this:
It is a lot easier to increase average order value than it is to increase sales conversion rate.
What a lot of marketers don’t understand is going from a 2% sales conversion rate to a 4% sales conversion rate might seem like a small increase.
It seems like well, it’s only 2%.
It’s not 2%, it’s doubling the sales conversion rate.
Whereas if you go from a $40 average order value to $50 average order value, that could radically change the game.
That could take you from not being able to use a traffic source to being able to use it.
That could allow you to do things from a marketing perspective, afford things that you couldn’t afford to do before that you can now and it’s a lot easier to increase average order value by $5, $8, $10, $12 than it is to increase sales conversion rate.
So look, if you want to do more marketing, if you want to do better marketing and more importantly, if you want to get better results –
I encourage you to focus more of your time, energy and effort on increasing average order value rather than increasing sales conversion rate.
So if you found this post, I’ve got a book that you’re absolutely going to love.
It’s called Unconverted.
Here are some of the things you’ll learn inside –
- The secret driver behind Rich Schefren’s 29 page report that generated over $3 million in sales – in only 7 days
- How to create buying demand for your product out of thin air
- How to get your prospects emotionally excited about the pay-off and benefits they can experience from your product
- How to create demand for your product or service where it didn’t exist before without making the “average marketer’s mistake”
- How to establish the beliefs your prospects need to have in order to buy from you
- The #1 deal-breaker in your marketing campaign, no matter how good your headline or ad copy is
- And much, much more!