competitive analysis Archives - The Good Optimizing Digital Experiences Thu, 14 Aug 2025 16:51:17 +0000 en-US hourly 1 https://wordpress.org/?v=6.9 5 SaaS Growth Strategies That Work (Based On Analysis Of 15 Top AI Tools) https://thegood.com/insights/saas-growth-strategies/ Wed, 13 Aug 2025 20:42:36 +0000 https://thegood.com/?post_type=insights&p=110756 The AI boom isn’t just about better technology; it’s about smarter growth strategies. While everyone’s talking about features and capabilities, there is another, equally compelling story that lies in how these tools convert free users into paying customers at unprecedented rates. We dove deep into the user experiences of 15 top AI tools, documenting over […]

The post 5 SaaS Growth Strategies That Work (Based On Analysis Of 15 Top AI Tools) appeared first on The Good.

]]>
The AI boom isn’t just about better technology; it’s about smarter growth strategies. While everyone’s talking about features and capabilities, there is another, equally compelling story that lies in how these tools convert free users into paying customers at unprecedented rates.

We dove deep into the user experiences of 15 top AI tools, documenting over 100 monetization touchpoints, upgrade pathways, and conversion tactics. What we found were five distinct patterns that drive revenue for these leaders.

These strategies aren’t just for AI. They’re blueprints that any SaaS tool can adapt to accelerate its own growth. Here’s what we learned.

The data behind the patterns

Our analysis covered tools spanning text generation (ChatGPT, Claude), search (Perplexity), design (Ideogram, Leonardo.AI), video creation (Runway), and productivity (Grammarly, QuillBot). Each tool was examined across four critical areas:

  • Monetization elements: Upgrade CTAs, limit notifications, premium feature gates, and more
  • Monetization pathways: The specific user journeys from free to paid
  • Pricing and payment screens: Where users actually convert when they decide to upgrade
  • Missed opportunities: Places where tools could be driving more conversions
Monetization doc gif

What emerged were five clear patterns that high-converting tools use consistently.

Pattern #1: The progressive squeeze

The strategy: Start with subtle hints, then gradually increase conversion prompts as users become more invested.

Who’s doing it: Claude, ChatGPT, and Perplexity have mastered this approach.

How it works: These tools begin with gentle upgrade suggestions embedded in the interface. A small CTA in the sidebar, a mention of plan limits in account settings. As users engage more, the messaging becomes increasingly direct.

Claude exemplifies this perfectly. New users see a subtle “Free plan” indicator and a small upgrade CTA. After several conversations, users get friendly notifications about approaching limits. Only when limits are actually hit does Claude present the strong upgrade push with clear urgency messaging.

A screenshot from Claude as an example of effective SaaS growth strategies.

ChatGPT follows a similar pattern but with more touchpoints. Multiple upgrade opportunities appear once logged in, but the real conversion push happens when users try to upload files or access advanced features.

A screenshot from ChatGPT as an example of effective SaaS growth strategies.

Why it converts: Users invest time and mental energy before hitting any hard walls. By the time they reach limits, they’re already committed to the tool and see clear value in upgrading rather than switching to alternatives.

The missed opportunity: Many tools go straight to hard limits without the progressive buildup, losing users who might have converted with a gentler approach.

FREE RESOURCE


How Top AI Tools Turn Free Users Into Paying Customers


Opting In To Optimization

Pattern #2: The feature tease

The strategy: Show users exactly what they’re missing by displaying premium features prominently, then gating access.

Who’s doing it: Ideogram, Grammarly, and Leonardo.AI excel at this approach.

How it works: These tools don’t hide their premium features. Instead, they showcase them prominently with visual cues like lock icons, blurred previews, or “Pro” badges. Users can see the feature, understand its value, and often interact with locked elements that trigger upgrade modals.

Ideogram shows locked features upfront on the dashboard, displays private galleries as gated sections, and lets users click through to see upgrade benefits. When users generate images, editing options appear with clear visual indicators of which features require upgrading.

A screenshot from Ideogram as an example of effective SaaS growth strategies.

Grammarly shows blurred premium suggestions alongside free ones, lets users see statistics with tone analysis grayed out, and provides partial feature previews that create curiosity about the full experience.

A screenshot from Grammly as an example of effective SaaS growth strategies.

Why it converts: Curiosity combined with FOMO creates powerful motivation. When users can see exactly what they’re missing and how it would solve their problems, the upgrade decision becomes much easier.

Implementation tip: The key is showing enough value to create desire while maintaining a clear visual hierarchy between free and premium features.

Pattern #3: The moment of need

The strategy: Present upgrade options precisely when users are most invested and would benefit most from premium features.

Who’s doing it: Runway, QuillBot, and Character.AI time their conversion prompts perfectly.

How it works: Instead of generic upgrade CTAs, these tools interrupt workflows at strategic moments when users are actively trying to accomplish something and would most benefit from premium features.

Runway waits until users want to export in 4K resolution or remove watermarks, both of which are moments when they’re already committed to using the generated content.

A screenshot from Runway as an example of effective SaaS growth strategies.

QuillBot triggers upgrade prompts when users hit word limits mid-task, not during idle browsing.

a screenshot from Quillbot showing an example of saas growth strategies.

Why it converts: Perfect timing equals the highest conversion rates. When users are already invested in a task and premium features would immediately solve their problem, the upgrade becomes a logical next step rather than an interruption.

The psychology: This taps into the completion bias. Once users start a task, they’re motivated to finish it, making them more likely to pay to remove obstacles.

Pattern #4: The transparent countdown

The strategy: Create urgency and build trust by clearly showing usage limits, remaining credits, and reset timers.

Who’s doing it: Perplexity, Grammarly, and Copy.AI have perfected transparent limit communication.

How it works: Instead of surprising users with sudden limits, these tools constantly communicate remaining usage through progress bars, countdown timers, and clear messaging about when limits reset.

Perplexity shows “2 queries remaining today” with each search, giving users clear visibility into their usage without anxiety.

A screenshot from Perplexity as an example of effective SaaS growth strategies.

Grammarly displays credit counts and refill timers for AI features, so users can plan their usage accordingly.

A screenshot from Grammarly as an example of effective SaaS growth strategies.

Copy.AI uses a prominent word count progress bar that updates in real-time, showing exactly how much of their monthly limit has been used.

A screenshot from copy.ai an example of effective SaaS growth strategies.

Why it converts: Transparency builds trust while creating healthy urgency. Users appreciate knowing where they stand and can make informed decisions about when to upgrade rather than feeling tricked by hidden limits.

The trust factor: When users trust that limits are fair and clearly communicated, they’re more likely to see upgrading as a reasonable business transaction rather than being forced into paying.

Pattern #5: The omnipresent nudge

The strategy: Place multiple upgrade touchpoints throughout the interface without being intrusive.

Who’s doing it: ChatGPT, QuillBot, and Ideogram have mastered multi-touchpoint conversion.

How it works: These tools strategically place upgrade opportunities at different points in the user journey, including header CTAs, sidebar reminders, settings page options, and feature-specific prompts. The key is making each touchpoint feel contextual rather than repetitive.

ChatGPT places upgrade CTAs in the dropdown menu, file upload tooltips, model selection interfaces, and account settings. Each serves a different user intent and provides value beyond just asking for payment.

A screenshot from ChatGPT is an example of effective SaaS growth strategies.

QuillBot integrates upgrade opportunities into the workflow, for example, in premium mode selectors, feature benefit explanations, and contextual prompts that feel helpful rather than pushy.

Quillbot upgrade integrations are a good example of effective saas growth strategies.

Why it converts: Repetition without annoyance increases recall and provides multiple chances to convert users at different readiness levels. Some users need to see upgrade options multiple times before they’re ready to act.

The balance: The key is ensuring each touchpoint provides value or information, rather than simply asking for money repeatedly.

The standout performers

While all 15 tools showed growth-focused design, three stood out for their sophisticated monetization strategies:

Claude excels at the Progressive Squeeze, building user investment before presenting upgrade opportunities. Their limit messaging feels helpful rather than restrictive, and the upgrade pathway is seamless.

Ideogram masters the Feature Tease, showcasing premium capabilities so effectively that users understand the upgrade value before reaching any limits. Their visual hierarchy makes premium features aspirational rather than frustrating.

Perplexity nails the Transparent Countdown, creating urgency without anxiety through clear limit communication and value-focused messaging.

Common missed opportunities

Our analysis revealed several patterns where even successful tools leave money on the table:

  • Timing failures: Many tools show upgrade prompts during onboarding when users haven’t yet experienced value, rather than waiting for engagement.
  • Value communication gaps: Some tools gate features without clearly explaining the benefits, leading to confusion rather than desire.
  • Conversion pathway friction: Several tools send users to generic pricing pages rather than contextual upgrade flows that maintain momentum.
  • Limit surprises: Tools that suddenly cut off functionality without warning create frustration rather than conversion motivation.

Applying these patterns to your SaaS growth strategies

These AI growth strategies aren’t limited to AI tools. The underlying principles work for any SaaS looking to improve free-to-paid conversion:

Start with your user journey mapping

Identify key moments where users experience value and where they encounter limitations. These are your conversion opportunity points.

Audit your current upgrade messaging

Are you using the Progressive Squeeze, or do you jump straight to hard limits? Are you showing users what they’re missing with Feature Teasing?

Review your limit of communication

Do users understand their usage limits, and when they reset? Transparent Countdown reduces churn and builds trust.

Optimize your touchpoint strategy

Map where upgrade CTAs appear in your interface and ensure each serves a specific user need rather than just asking for payment.

Test your conversion timing

Are you presenting upgrade options when users are most invested (Moment of Need) or just when it’s convenient for your UI?

What does this mean for your growth strategy?

AI tools are teaching us that successful monetization isn’t always about restricting features; it can be about showcasing value, building trust, and timing conversion opportunities perfectly. The tools growing fastest aren’t necessarily those with the best AI models, but those with the smartest user experience design.

These patterns work because they align business needs with user psychology. Instead of seeing limits as barriers, users experience them as natural progression points toward greater value.

The AI boom provides a unique laboratory for studying growth tactics at scale. These tools process millions of users and can iterate rapidly, revealing what actually drives conversions versus what we think should work.

As AI capabilities become more commoditized, user experience (including monetization design) becomes the key differentiator. The tools implementing these patterns now are building sustainable competitive advantages that will persist even as the underlying technology evolves.

Taking action on these insights

The most successful SaaS companies will adapt these AI growth strategies to their own products before their competitors catch on. Start by analyzing your current monetization approach against these five patterns:

  1. Map your user journey to identify Progressive Squeeze opportunities
  2. Audit your feature visibility to implement Feature Teasing where appropriate
  3. Review your limit of communication to adopt Transparent Countdown principles
  4. Time your conversion prompts to leverage the Moment of Need psychology
  5. Optimize your touchpoint strategy using Omnipresent Nudge best practices

The data from these 15 AI tools provides a roadmap, but implementation requires careful testing and optimization for your specific user base and value proposition.

Ready to apply these AI growth strategies to accelerate your SaaS growth? The Good specializes in analyzing user experiences and implementing conversion optimization strategies that turn insights into revenue. Our team has helped dozens of SaaS companies optimize their monetization flows using data-driven approaches just like this analysis.

Get your personalized monetization strategy audit. We’ll analyze your current user experience against these proven patterns and create a prioritized optimization roadmap tailored to your product and audience. Schedule a consultation with our team to discover how these AI growth strategies can accelerate your revenue growth.

FREE RESOURCE


How Top AI Tools Turn Free Users Into Paying Customers


Opting In To Optimization

The post 5 SaaS Growth Strategies That Work (Based On Analysis Of 15 Top AI Tools) appeared first on The Good.

]]>
Drive and Convert (Ep. 075): Why Industry Benchmarks Are Bullshit https://thegood.com/insights/drive-and-convert-industry-benchmarks/ Tue, 28 Feb 2023 21:05:55 +0000 https://thegood.com/?post_type=insights&p=103168 Listen to this episode: About This Episode: Industry benchmarks are an obvious starting point for anyone looking to set goals. Unfortunately, comparing your conversion rate to the rates of other companies (or the industry as a whole) is meaningless. Unlike studying your competitors, studying your customers is directly applicable. The better you can serve their […]

The post Drive and Convert (Ep. 075): Why Industry Benchmarks Are Bullshit appeared first on The Good.

]]>
Listen to this episode:

About This Episode:

Industry benchmarks are an obvious starting point for anyone looking to set goals. Unfortunately, comparing your conversion rate to the rates of other companies (or the industry as a whole) is meaningless.

Unlike studying your competitors, studying your customers is directly applicable. The better you can serve their needs and create better shopping experiences, the higher your conversion rate will climb. In this episode, Jon and Ryan talk about alternatives such as goal-setting, iterative learning and experimentation.

Listen to the full episode if you want to learn:

  1. Why industry benchmarks should not be your starting point for setting goals
  2. How you should approach measuring conversion rates
  3. What the flaws of self-reporting among competitors is
  4. What factors affect conversion rate
  5. How you can work on continuously improving your conversion rate

If you have questions, ideas, or feedback to share, hit us up on Twitter. We’re @jonmacdonald and @ryangarrow.

Subscribe To The Show:

Episode Transcript:

Announcer:
You’re listening to Drive and Convert. A podcast about helping online brands to build a better e-commerce growth engine with Jon MacDonald and Ryan Garrow.

Ryan:
So Jon, you and I, we’re on calls a lot with people, and we get asked the same question constantly. So I think some of our podcasts are just like, “I’m sick of repeating myself,” so we just need to get this out there and I’m going to be like, “I’m not even going to answer it. Here’s the link. Go listen to the podcast.” You’ve had some calls recently that must have brought this up, because today, we’re talking about industry benchmarks.

Jon:
Yes.

Ryan:
Man, everybody wants to know what all their clients, their competitors are doing and if they are doing as good. It’s funny because most companies I talk to, no matter where they rank in their industry, they seem to always think a competitor has something figured out and are doing better than them. Across the board, you have 70% of the market and you’re like, “That company, they’re beating me on that keyword, so they must know what they’re doing or they must be better than me.”

Jon:
I will happily tell you why. Their data is unreliable and inaccurate. We will definitely talk about that today.

Ryan:
I’m excited because I’m going to send a lot of people this podcast. What we are attacking today, is specifically, kind of across the board, but we’re going to start with conversion rates. I know because CRO…

Jon:
That’s a good point. We’re going to talk about conversion rates because that’s the question I always get, which is, what’s a good conversion rate? But the reality is, I think the philosophy here should apply to almost any data metric in your business. It could apply to revenue, it could apply to your ROAS, it could apply to your customer acquisition costs, whatever it is, in marketing, generally, that’s who’s listening to us, but in any metric in your business. But, specifically, conversion rate is where I hear about this a lot. So that’s what we’ll talk about.

Ryan:
All right. So Jon, what’s a good conversion rate?

Jon:
Let’s just hit it on the head right off the bat, right? I love it. Look, as you said, it’s one of the most common questions we get, so I think it comes up nearly every sales call. I think it comes up in nearly every discussion I have at a conference. When I’m up on stage speaking, somebody asks me, “Jon, what’s a good conversion rate?” I love the question because I’m very opinionated about it, about most things, but definitely about this. People think there’s a mythical number that just can be achieved with the right collection of strategies and techniques, and the reality is, it’s not true. I think most people want to know how they measure success or failure. So they’re saying, “Okay, if I can peg a number here, then I’ll know if I’m succeeding or not.” And they’re looking for a growth ceiling or they’re hoping to identify what is best. They just want to know what’s best so that I can compare to that. I think that’s human nature to want to compare.

Ryan:
Oh yeah, I agree with that.

Jon:
Yeah. I don’t blame the line of thinking.

Ryan:
I like winning.

Jon:
Right. But you can’t win unless you have a goal in what that number is, right? I think industry benchmarks they’re the obvious starting point for anyone looking to set goals, and that’s why we end up here. But unfortunately, comparing your conversion rate to the other companies or just even industries as a whole is just meaningless.

Ryan:
Well, how do you even know what their conversion rate is? Are you going to get access to their analytics as a competitor?

Jon:
Right.

Ryan:
To out fool?

Jon:
Exactly. And are they going to be accurate? They’re not incentivized in any way to tell you a real number or to share that publicly. Okay, so usually I get a follow-up question. “What’s a good conversion rate? Like, Jon, okay, you said all of that. It’s not like… Just tell me what’s a good conversion rate.”
If you must have an answer, I pose the following. A good conversion rate is one that is always improving. Now, Ryan, I know you’ve heard me say that a hundred times.

Ryan:
Oh yeah.

Jon:
But most people I say that to and they stop and pause and like, “Yeah, that’s true. It’s one that’s always improving.” And I would say if you want to be data driven, simply having data and a goal just isn’t enough. It’s how you use that data that’s really going to separate you. And while we all love a good goal, having a singular benchmark that has no context is the opposite of running a good business in my opinion.

Ryan:
I think that applies to almost everything you can talk to around online commerce. You always want to be getting more traffic, you always want to be improving conversion rate, you always want more lifetime value. So I guess it’s like, what’s that Wall Street movie? How much is enough? More.

Jon:
Right. That’s fair. But also think about traffic. You want good traffic. So if you just say, “Hey, I want my traffic to be a certain number.” It’s like, “Well, I can go get you that number tomorrow. Let’s just go get some really crappy paper click ads that aren’t going to convert and get you a return.” It’s the same thing when people say, “Hey, how do I increase sales overnight?” Sell everything for a penny or give it all away or discount heavily. None of those things are optimization. None are sustainable. It all requires context. You need context around your own goals, and so I think the number on its own just isn’t helpful anyways, even if we did have an actual number.

Ryan:
And I look at multiple conversion rates. I know that different traffic converts differently, and so if I’m expecting to drive more top of funnel traffic, my overall conversion rate’s going to go down on the site. But if my core brand terms still convert at the same rate, great. I’m still capturing that effectively, but I know that I’m driving more top of funnel stuff right now to grow my brand, and I expect conversion rate to drop, even though I’m growing my business.

Jon:
100%. There are tons of cases where a falling conversion rate could be the expected outcome. Say that you’re a brand that sells through a bunch of channels, your own website, Amazon, retail, big box stores, other small retails, whatever, right? But you sell these channels because increased exposure. So you’re trying to get shelf space so that people see you. If you remove all of your products from those additional channels and only sell through your website, customers may seek you out online, they may not even know you exist. So they could find a similar product elsewhere, wherever they prefer to shop. Your conversion rate would decrease and your revenue would fall.
But another example is we can… Perhaps we can imagine a situation where a low conversion rate can help meet your organizational’s goals. Maybe you want a low conversion rate. Yeah, it’s possible…

Ryan:
Mind blown.

Jon:
Ive seen it. You know what? I’m in the business of increasing conversion rates, but sometimes it doesn’t make sense. You’re a new brand, you don’t care about your conversion rate, you’re just trying to get awareness.

Ryan:
Or if you do, you’ve got problems. Throw that out the window for now. You don’t need to that at an early stage startup.

Jon:
Exactly. If you just try to get a massive conversion rate and nobody knows who you are, what’s the point? You got to just get people to get awareness.

Ryan:
You send your mom to buy and you got one for one, 100% conversion rate.

Jon:
There you go. Yeah, that’s always the trick. Yep. Just have every family member buy, your conversion rate goes up. That’s what I’ll tell people next time.

Ryan:
Your brand does not grow at all, but you got a really cool conversion rate and you should take that to the bank and get a loan on it because you have good conversion rate.

Jon:
There you go. I’m sure every banker would approve that loan. So here’s the thing, Ryan. I think, how many brands have we worked with that are just trying to build an audience, right? And you’re going to monetize it tomorrow? I mean, how many times have you and I, on this podcast, talked about how you’re happy to break even on customer acquisition because you know that you can turn them into a future customer again and it won’t cost you anything, and so it’s that lifetime value metric.
There’s a lot of things at play here that may not make sense for you or whoever you’re comparing yourself to, to be thinking about conversion rate because maybe that is a new startup that’s getting all the press and their conversion rate’s really low because they’re getting a ton of traffic, but none of it converts. If you compare yourself to their conversion rate, then you’re going to be like, “Oh, we’re set. We have the best conversion rate ever.” Probably not the case.

Ryan:
Are there any additional helpful questions for it that a business owner or a marketing team can be thinking through when they’re trying to see, “All right, conversion rates going up and down. How do I decide some of those metrics that you’ve thrown out, that context?” I guess.

Jon:
Yeah. The reality here is that there’s a ton of reasons why you don’t want to be paying attention to your competitors, but there’s a ton of metrics in there. Let’s talk about all of the metrics first, and then I definitely want to touch on why you shouldn’t be tracking your competitor’s metrics around these. We have a whole infographic up on our site that would give you a ton of context. It’s about all the ways that you can influence your conversion rate and all of these benchmarks. If you go to thegood.com, search for benchmarks, and you’ll find a great article with this amazing graphic that has all of the things that can influence conversion rate, which I think is important, Ryan, because if you are only focused on a singular metric in a vacuum, then you’re missing so much context and you’re missing all the other things that could influence that one metric.
And so there are a ton of things that influence conversion rate or provide context to somebody’s conversion rate number. As you’re looking out at benchmarks and competitors, you’re not going to have all this information. So what am I talking about? Well, it could be product, as simple as have you found product market fit? If you’re a new brand and you’re sending a bunch of traffic that’s not converting, maybe you don’t have product market fit, right? Your price, right, are you charging more or less to your competitors? Are there fees, shipping? What else people should be thinking about there? Variations and options. Are you offering a colorway that is not very popular and your competitors have a colorway that is expanding? Shrinking product lines, right? Are you removing and calling your product lines and your competitors have a thousand SKUs when you have 10, right? That can affect conversion rates.
Market conditions. I mean, we’re going through that right now with market corrections all over the place. Retail partnerships are under this, right? Do you have distribution deals? Are you in Costco? People see you there and then go online and buy. Competitors. How many competitors do you have? What kind of competitors do you have? Economic conditions as a whole? So all of these things, can people even afford your product or do they have extra money to spend? This is where a lot of e-commerce brands got themselves in trouble recently because over COVID, people had more spare money because they weren’t traveling, they weren’t going out, etcetera, and they would buy things online and everybody was buying online. So ads were expensive, and it was one of those things where you could get people to your site, cost a little more to do it, but you were going to break even.
Now, less people are buying online because they’re back at retail and ad costs are still expensive. So your customer acquisition went up.
Which leads me to acquisition strategy context around are there paid placements? Are you doing influencers, partnerships? What’s your PPC spend? So if you’re doing pay per click, are you spending a ton of money and is the strategy just to get people to the site and break even? Or is the competitor strategy that they’ve been mandated by the CFO that they have to hit a certain metric on return on ad spend? That takes me to ta traffic quality. I mean, you can see there’s a ton of these, right? What’s the quality of that traffic even coming to your site?
What about the site content? Does your competitor have a lot of great content on the products that help people do research and understand if the product’s the right fit for them and you don’t? Or even fulfillment. What happens after the conversion? Do you take two weeks to ship and your competitors have a next day shipping option? So all of these things can really go into it and provide context, and I think most people don’t look and think about it holistically, they’re thinking about what’s my conversion rate? And it’s just missing all that context.

Ryan:
Especially if you just take a look at your analytics, any one of those columns you can focus on, but it’s going to cause issues in what you’re doing overall on your site. Just like, I still get questions about bounce rate for some reason. Why do you like certain pages? You can look at that and decide if you made a change, and maybe people stay on this page longer. Maybe they find exactly what they want, maybe get them to click somewhere else. But again, bounce rate can be impacted by so many various things, just like conversion rate can, and it’s understanding the 30,000-foot level when you’re looking at numbers, I think, which is just important to realize. If you focus on conversion rate, I’m going to show you a business that’s going to get beat quite often because they’re focusing on one metric that doesn’t actually grow the business.

Jon:
Yeah, that’s exactly it. And we could do a whole episode on why I dislike the term conversion rate optimization. It really shoehorns everybody into worrying about one metric. And, to me, it’s not accurate. There’s a lot of metrics that you want to influence. The industry as a whole, when people look for conversion rate optimization, they just think, “Oh, I’m going to impact conversion rate.” The services that we impact at The Good are really much bigger than that. Ultimately, conversion rate is one that you want to impact, for sure, but it’s on the list. It’s not the only one, right?

Ryan:
Yeah.

Jon:
Average, I mean, order value…

Ryan:
Part of success.

Jon:
[inaudible 00:13:12]. Right, exactly. There’s so many things there.

Ryan:
Yeah. If you double your AOV and your conversion rate only goes down by 10%, you just had a massively successful change on the site.

Jon:
Yes.

Ryan:
But your conversion rate dropped 10%.

Jon:
Yep. It’s that context that really can help people understand the impact that this has.

Ryan:
So you’re not a fan of looking at competitors for benchmarks. Would that be a fair statement?

Jon:
It is. I guess it is, and thank you for teeing me back up on that. Look, here’s the reality, Ryan. When you try to look at a competitor, what are you trying to do? You’re trying to say, “What’s the ceiling? What’s the maximum point that I can get to?” Or, “I’m competitive and I want to beat whatever everyone else is doing.” But who’s to say that your competitors have identified that peak and that there’s not room to grow beyond that? So let’s just do this. Let’s, let’s imagine for a minute that, without a shadow of a doubt, you know what the conversion rate average is of your industry. I’m just going to put it out there. If you are 100% sure you know it, more power to you. I pose, it does not matter. Here’s the thing. You could know your own conversion rate is higher, and guess what?
You’ve won. You can stop. You never have to touch your site again. You now have a better conversion rate than your competitors. Why even continue? You’ve won. I mean, that’s bullshit, right? The reality is you’re not going to stop. Why do you care what the benchmark is? You’re going to continue to get better every day anyways, ideally, right? Again, a good conversion rate is one that’s always growing. So, even if it’s higher than everyone elses, you still want to push it higher, so it doesn’t really matter. And to me, that shows that everyone else’s conversion rate is just irrelevant for your purposes because you’re going to strive to just beat yourself anyways. So why do you care what a competitor has? All in all, focusing on a competitor, whether you’re looking at one or the aggregate, it’s just not helpful, and I think it’s a distraction, personally. So I think competitive research is helpful, but it should not dictate your strategy.

Announcer:
You’re listening to Drive and Convert. A podcast focused on e-commerce growth. Your hosts are Jon MacDonald, founder of The Good, a conversion rate optimization agency that works with e-commerce brands to help convert more of their visitors into buyers. And Ryan Garrow, of Logical Position, the digital marketing agency offering paper click management, search engine optimization, and website design services to brands of all sizes. If you find this podcast helpful, please help us out by leaving a review on Apple Podcasts and sharing it with a friend or colleague. Thank you.

Ryan:
Now, I love looking at competitors for ideas. For me, it’s a brainstorming thing. I know that I’m often not the smartest person in a room or in an industry, but if I can look at… A competitor might be like, “Damn, that’s a good idea.” It becomes like, what could I do that would beat that or be better for my customers or overcome that or copy it?

Jon:
The greatest source of what you should test, could be from your competitors. I think it should be an equal fit of your competitor research and your customer research. If you’re talking to your customers, they’re going to tell you what they want, and then you can test that. If you look at your competitors, and we’ve talked about this before, you have no idea if that tactic is working for them. They could be testing it, it actually could be hurting them, and they don’t know. I mean, there’s so many unknowns there, and you’re never going to have all the answers, so it’s something that you should test. But I think there’s a huge, huge, huge, huge flaw of self-reporting among competitors

Ryan:
Because I mean, if you go to a conference for a specific industry, you will hear like, “Oh yeah, the average conversion rate in our industry is X.”

Jon:
Great.

Ryan:
Okay, well…

Jon:
It’s false.

Ryan:
In theory, you should be able to trust it, but you’re telling me I can’t.

Jon:
It’s an outright lie, and here’s why. I don’t think most of the people are trying to lie, but, Ryan, I can tell you, I will never name names, but I will tell you the number of brands that have come to us, and I’ve heard say, “Our conversion rate is X,” publicly. And then I look at that data and I’m like, “How are you calculating that?” Because there’s no way I get the number to come out to that. Usually it’s like, “Well, I don’t know.” Maybe it’s some other data set that they just wanted to look better than what they actually are, or they’re going to hang out with their peers and say, “Oh, our peers all say they have this conversion rate. We want to have that too.” I think all in all, Ryan, my point here is that self-reporting is just ripe with incorrect data for a number of reasons.
First, your competitors, they have no incentive to offer accurate information. None. Why would they tell you what their conversion rate is? What’s the benefit for them, other than ego? And so in that stance, it’s not going to be accurate. In most cases. I don’t think brands want to report on a conversion rate that’s low. They don’t want their stakeholders, investors, or employees to lose faith in the organization. If it’s low, they’re not going to tell you. And if it’s high, they’re only telling you to brag about it. And even then you don’t know if it’s right. And then a lot of people tell me, “Oh, well, I got this from an independent third party, a publication.” Well, here’s the thing. Publications, they can’t just obtain conversion data. There’s no online source that you could just go and to a specific website and say, “Oh, yeah, these are all 100% accurate.”
These publications, they all resort to an obscure calculation to work it out for themselves based on revenue and site traffic and all these other things, again, that unless it’s a public company, they’re missing a lot of data. So it’s an algebra equation that’s just not quite going to be accurate. There’s always a variable there they don’t know for sure. And, lastly, even if a competitor offers their true conversion rate, you have to wonder if they calculated it correctly. You just don’t know. Are they making incorrect assumptions? Are they including things that shouldn’t be included? Would it be higher or lower if they used other criteria, or do they even calculate it the same way you do? So you’re comparing apples and oranges. That’s just not helpful. So there’s too many things here that just don’t add up for you to really truly be measuring against benchmarks, and hence benchmarks are bullshit.

Ryan:
Even Google, if they looked at an analytics account, they could see a conversion rate, but there’s so much beyond just in an analytics conversion rate that they don’t. Analytics doesn’t know fraudulent orders. And I have a client in the coin space in the gold bullion space, tons of fraudulent orders that Google Analytics sees as, “Yep, those are good ones. Count that revenue.”

Jon:
Yep.

Ryan:
20%.

Jon:
I have never seen a Google Analytics account that has matched a big commerce or Shopify admin.

Ryan:
That’s another thing. You don’t even know if it’s set up correctly. So yes, their analytics may be saying this, but the number of analytics accounts that are set up correctly is probably less than 50%. [inaudible 00:20:15] talking to it.

Jon:
I can guarantee you it’s less than 50%.

Ryan:
So, good luck. Even if your competitor was giving you the right answer, the analytics, it also changes. Maybe they only looked at one day. Great. Anybody can have a conversion rate from one day. But did you look at six months? Was it three months? Was it one month? Was it promotional period, non-promotional period? Stupid. That’s what it is. It’s bullshit.

Jon:
It’s bullshit, that’s exactly right. It’s the only word. I love the English language because there’s a word for everything, and this is one of them.

Ryan:
Well, so what did we do then? We can’t benchmark competitors. So what do we do?

Jon:
Focus on your customers and your own growth. Just look inward. Focus on yourself. As the owner or manager of an e-commerce store, look beyond conversion rates. Stop comparing yourself to competitors and focus on your own customers. I’m competitive, I love sports. I will tell you, conversion rate optimization, it’s not football. You’re not trying to win the game by scoring more points. In fact, you know what? Your opponent scores doesn’t matter at all. You’re not even playing the game. Get off the field. Just worry about yourself. Go to practice every day, get better, get 1% better every day and you will improve.
So set your own goals, experiment based on your own site’s data, maybe do some competitive research, but for ideas there. But focus on learning and doing that in an iterative fashion. Getting better every day is looking at your own data, how to improve yourself and your business every day and has nothing to do with your competition. So, if you really want to achieve your true, true, true success, it really is all about focusing on your conversion rate, setting your goals, running your experiments, and just keep moving it upwards and focusing just on collecting the right data.
And I think that’s going to help keep you growing. And just remember that your organization is unique. There’s no other e-com site that is a exact replica of yours, and if there is, you might have a lawsuit or something on your hands. But the reality is, the ones you’re tracking against, they’re not your same exact site. So comparing yourself to your competitors by focusing on their benchmarks is just an, it’s a distraction. It’s ineffective, and I think I go back to your customers, provide all the information you need to grow your brand. So that’s really where you should be focusing.

Ryan:
Got it. And if you really like winning, just call Jon or I. We’ll give you some number that you’re beating. Just say you won. I mean, yeah, and if your benchmark, “Oh yeah, 0.2% conversion rate, good job. You’re at 0.4, you’re winning.”

Jon:
Maybe that’s why I get these calls and everyone asks me the first time, they’re like, “Jon, what’s a good conversion rate? Where should I be?” They just want to feel good, right? Maybe that’s it.

Ryan:
Yeah. Everybody wants to think they’re doing a good job, and which is, again, I’m not faulting people for having the questions. It’s if you keep having that question where you’ve been asking an agency the same question for years, you haven’t evolved or developed to grow your business, and there’s a reason you’re bouncing from agency to agency because you’re trying to find somebody that tells what you want, but at the end of the day, it fails because they didn’t actually challenge the way you’re thinking. I did have a question, though, on one of your comments was, good conversion rate’s one that’s always increasing. But, in theory, you’re not going to get to a 100% conversion rate. Even Amazon, with probably the largest CRO team on the planet, they can’t have a 100% conversion rate because I shop on it. And I go on there and then don’t buy something.
I promise I will always do that, Amazon, you’ll never get to a 100% because of me. And you’re not Amazon if you’re listening to this, probably, and so I know that conversion rates are going to go up and down. It’s almost like a, I think of it as like a up plateau up plateau or even down and then go back up, because as I…

Jon:
Seasonality?

Ryan:
Double more traffic in. So how are you constantly improving if it gets good enough that I can afford more non-brand traffic and I dump a bunch more in, and then my, making numbers up people, but my 2.5% Conversion on the site drops to 2.2% because I dumped a bunch more top of funnel stuff on there.

Jon:
Yeah, 100%. You’re right. It’s funny. The number one smart alec response I get to this is, “Well, 100% is a good conversion rate.” It’s like, okay, yeah, right.
Have fun. See you later. The reality is, is there’s no better time to start going back to optimizing when you have new to funnel traffic. So if you were widening that funnel with branded terms, things like that, that are going to be a little more, or unbranded terms, I guess, right? Where you’re going to have more people who you’re reaching that aren’t specifically looking for your particular products, you’re going to help solve their need. But that’s a great time to go back to customer research and be looking, how are these people interacting? What do I need to do to change my site up a little bit? And this is where you can’t optimize once and be done. You’re always continually optimizing, right? Even, there’s external factors here too. I mean, the internet’s always changing. Devices are always changing. Payment methods, consumer habits. I mean, just look at the changes we’ve been through in the cycle we’ve been through over the past three years.
Crazy. Everyone went online to, now it’s still up there, but the reality on all of these things is, the trend line is usually heading in the right direction, and that’s what you want to be looking at. Look for patterns, look for seasonality, look for that overall trend line. It doesn’t matter if your conversion rate dropped week over week. It matters if it dropped year over year, month over month, maybe, depending on volume, and how quickly you move. If you’re like a Shine or a H&M where you’re coming out with a release of clothes every couple of months, and once that sells out, you’re not restocking it.
Okay, you need to be moving more quickly looking at data real quick. But if you’re somebody who has a product that you’re going to keep selling for a year, two years, three years, five years, does it really matter what happened week over week? Probably not, right? Unless you’re trying to run some massive sale. Even then you’re going to see a blip in your conversion rate in the long term, in the cycle, you’ll see some dip or a growth there. That’s usually what happens every holiday. So you’re right, it’s a matter of continuing the trajectory and understanding that there’s going to be ups and downs and plateaus, and you’re going to continually try to just watch the trajectory and improve that.

Ryan:
I like it. Thank you, Jon, for getting this topic out there, because I’ll probably follow up with another paid search bullshit thing that we can do one of these on.

Jon:
I love it. Yeah. Well, I’ll get off my soapbox once again, but thanks for hearing me out here, Ryan. Appreciate it.

Announcer:
Thanks for listening to Drive and Convert with Jon MacDonald and Ryan Garrow. To keep up to date with new episodes, you can subscribe at driveandconvert.com.

The post Drive and Convert (Ep. 075): Why Industry Benchmarks Are Bullshit appeared first on The Good.

]]>
Why Industry Benchmarks are Bullshit https://thegood.com/insights/ecommerce-benchmarks/ Wed, 02 Nov 2022 22:10:59 +0000 https://thegood.com/?post_type=insights&p=101976 “What is a good conversion rate?” is one of the most common questions we get from clients. In fact, it comes up once in nearly every project, as if there’s a mythical number that can be achieved with the right collection of strategies and techniques. You’ve probably Googled something like, “What is a good conversion […]

The post Why Industry Benchmarks are Bullshit appeared first on The Good.

]]>

Key Takeaways

By the end of this article, you should have the knowledge and resources to “check the box” in these areas…

  • Why competitor data is unreliable and inaccurate
  • The value of studying your customers over your competitors
  • Goal-setting, testing, and learning are better alternatives to benchmarks

“What is a good conversion rate?” is one of the most common questions we get from clients. In fact, it comes up once in nearly every project, as if there’s a mythical number that can be achieved with the right collection of strategies and techniques.

You’ve probably Googled something like, “What is a good conversion rate for auto parts ecommerce?” or similar. You want to know how to measure the success or failure of your optimization efforts. You’re looking for a growth ceiling, hoping to identify the version of your website that performs the best.

We don’t blame you for this line of thinking. Industry benchmarks are an obvious starting point for anyone looking to set goals. Unfortunately, comparing your conversion rate to the rates of other companies (or the industry as a whole) is meaningless.

We know you want to be data-driven, but simply having data and a goal isn’t enough. How you use that data is what separates a typical company from an exceptional one. And while we love a good goal, craving a singular, decontextualized benchmark is the opposite of organizational maturity.

In this article, we explain why comparing your conversion rate with industry averages and competitor data is impossible and unwise. Then, we give you some super smart alternatives to a typical conversion rate benchmark.

Understanding the Dynamic Nature of Conversion Rate

Most ecommerce store owners and managers ascribe to a particularly reductive view of conversion rate. They assume up is good and down is bad; up means more revenue, and down means less revenue. They toil to boost their conversion rate and fret when it falls. But this kind of thinking ignores the dynamic nature of a conversion rate.

Like many marketing metrics, the number on its own isn’t helpful. The number requires context. Any discussion of conversion rate should focus on the question, “Why?” Why did it change? Why is it good or bad for you? There are plenty of cases where a falling conversion rate could be the expected outcome of building your brand ecosystem.

For instance, suppose your brand sells through multiple sales channels, including your own website, Amazon, big box stores, and other brick-and-mortar retailers. You sell through those channels because the increased exposure creates higher revenue.

If you were to remove all of your products from those additional channels and only sell through your website, some customers would seek out your online store directly, but many wouldn’t. They would find a similar product that meets their needs wherever they prefer to shop. In this case, your site’s conversion rate would increase, but your overall revenue would fall.

Similarly, we can imagine a situation where a low conversion rate could help you meet your organization’s goals. A new brand, for instance, may not care about its conversion rate as it focuses on building awareness. They might purchase billboards, acquire social visits, and invest in other far-reaching but hard-to-track marketing endeavors. Countless ecommerce organizations care more about their share of voice than the percentage of users who convert into customers (at least for a while). They want an audience today that they will monetize tomorrow.

This makes conversion rate benchmarking particularly problematic. When you compare your conversion rate to your competitors, there’s no opportunity to explore the “Why?” There’s no way to pinpoint the causes of change. Your competitors operate in a completely different ecosystem with maturity and marketplace dynamics that make comparison meaningless.

Furthermore, conversion rate benchmarking implies that there’s a ceiling to be reached, a maximum point where your ecommerce site operates at peak performance. But who’s to say that any of your competitors have identified the peak? How can you be sure there isn’t room to grow beyond what anyone has achieved?

Imagine, for a moment, that you know – without a shadow of a doubt – the conversion rate average of your industry. You also know that your own conversion rate is higher. You win! No need for optimization, right? Of course not. Even if your conversion rate is higher than everyone else’s, you still want to push it higher. This means everyone else’s conversion rate is irrelevant for your purposes because you’ll strive to beat yourself anyway.

All in all, focusing on your competitor’s conversion rate (whether you’re looking at a single competitor or the aggregate of an industry or sector) isn’t helpful. In many cases, it’s actually a distraction. Yes, some competitive research is helpful, but it shouldn’t dictate your strategy.

In the next two sections, we’ll talk specifically about the limitations of benchmarking yourself against your competitors and your industry: lack of context and questionable accuracy.

Lack of Context: Contributing & Limiting Factors of Comparing Conversions Rates

One reason your competitors’ conversion rate metrics aren’t comparable is that they lack context. That context is affected by dozens of contributing and limiting variables, such as the differences between brands, their organizational maturity, acquisition strategy, product mix, and dozens of other factors. In fact, it only takes one difference to make comparison impossible.

Suppose your organization sells eyeglasses for smart professionals and high-income earners. Another eyeglass vendor offers affordable options targeted at young people and families. In this scenario, the different products, price points, and target audiences create such a difference between the two organizations that comparing conversion rates (or any metric, for that matter) is unhelpful. It’s like comparing apples to snow shoes. There are just too many uncontrolled variables.

benchmarking: all the factors that impact a conversion rate

The following is a list of many limiting and contributing factors that affect how your site converts. This might seem like an exhaustive list, but there’s even more to be considered (if you can believe it). You may identify factors that relate specifically to your products, audience, and business model. As you read each item, consider how your brand differs from your competitors.

Product

  • Product features
  • Price (including fees, shipping, etc.)
  • Variations and options
  • Expanding/shrinking product lines
  • Audience target

Market conditions

  • Appetite for the product / need variability
  • Retail partnerships (partnerships, distribution deals, etc.)
  • Competitors (number and type)
  • Education around the need
  • Brick and mortar availability
  • Economic conditions

Acquisition strategy

  • Referral program
  • PPC spend and strategy
  • Third party endorsements
  • Unbranded keyword strategy
  • Billboard strategy
  • Social media presence
  • Retargeting strategy
  • Paid placements
  • Partnerships

Traffic Quality

  • Promotions (time and strategy)
  • Email program (timing, list size, send frequency, etc.)
  • Search engine discoverability (blog, SEO strategy, etc.)
  • Brand awareness
  • Word of mouth
  • In-person (physical) visibility

Site content and efficiency

  • Ease of decision-making (bundling, cost, etc.)
  • Brand values alignment
  • Product descriptions
  • Popups and overlays
  • Load time
  • Ease of navigation
  • Competitive differentiators
  • Product discovery
  • Proof in numbers
  • Price to value
  • In/out of stock products
  • Site bugs, errors, and disruptors
  • Social proof
  • Shipping (speed of fulfillment, options, etc.)
  • Confidence (guarantees, certifications, etc.)
  • Ease of product selection
  • Price point (in general and vs. competitors)
  • Payment options
  • Incentives
  • Competitor advertising
  • Third-party guarantees

Fulfillment

  • Fulfillment timeline
  • Order communications (post-purchase emails/texts, etc.)
  • Unboxing experience
  • Shipping partner execution
  • Unforeseen weather
  • Product quality and functionality
  • Expectation-setting during pre-purchase
  • Order accuracy
  • Conflict resolution
  • Surprise and delight
  • Incentive to return to site

As you can imagine, those variables create distinct differences between you and your competitors, making comparison pointless. It’s best, therefore, to plan and execute a strategy without trying to imitate your competitors because you are different.

Questionable Accuracy: The Flaw of Self-Reporting Among Competitors

In order to compare your organization’s conversion rate to the conversion rate of another brand, you would first have to convince the other brand to release that data, either to you or some publication that combines it together as an industry average. This kind of self-reporting is rife with incorrect data.

First, your competitors have no incentive to offer accurate information. What’s to gain by releasing honest numbers? If their conversion rate appears high, it may convince the market that the ceiling is higher than expected, causing other brands to invest deeper into optimization. Ultimately, the reporting brand could lose sales.

Nor do brands want to report a conversion rate that’s too low, lest their stakeholders, investors, and even their employees lose faith in the organization. They don’t want people banging on their door, demanding to know why the company performs so poorly.

Besides, true conversion rates aren’t impressive numbers by any means. They are usually just a low, single digit. Without understanding what that really means in terms of revenue and in regards to site traffic, it’s easy for the uninformed to misidentify a good conversion rate as low performance.

Therefore, the true conversion rates of your competitors are usually kept hidden. Whatever they publicize is often a sanitized, public-friendly version that avoids causing any problems. In most cases, however, your competitors don’t publicize anything at all. When a publication surveys them for their performance metrics, brands typically refuse to answer.

What’s worse is that when some publications can’t obtain conversion data for the companies they want to report on, they resort to some obscure, ad hoc calculation to work it out for themselves. They’ll grab whatever data they can (such as revenue and site traffic volume), make some assumptions, and then publish their best guess. As you can imagine, these estimates are woefully inaccurate.

Furthermore, even if a competitor offers their true conversion rate, you have to wonder if they calculated it properly in the first place. Do they make incorrect assumptions about what should or shouldn’t be included in their conversion rate? Would it be higher or lower if they used different criteria? Most importantly: Do they calculate their conversion rate the same way you calculate yours?

For instance, suppose Acme Soap (a fictional company) offers a special user account for wholesale partners to place wholesale orders directly through their ecommerce platform. These kinds of sales aren’t usually calculated with the conversion rate because those buyers aren’t the same as traditional shoppers. You might wonder how Acme Soap converts so high, when in truth, they’re just using bad math–including wholesale purchase with their direct-to-consumer ecommerce conversion rate.

This means that any conversion rate offered by another organization is, at best, inaccurate, and at worst, deliberately dishonest. Short of getting yourself hired by one of your competitors and making friends with whomever guards the marketing data, there’s no way to obtain a volume of reliable conversion rate numbers on similar organizations.

Enjoying this article?

Subscribe to our newsletter, Good Question, to get insights like this sent straight to your inbox every week.

Beyond Comparisons: Focusing on Your Customers and Your Own Growth

As the owner or manager of an ecommerce store, we recommend looking beyond conversion rates, never comparing yours to your competitors’ data, and focusing on your own customers. Optimization isn’t football. You aren’t trying to win the game by scoring more points than your opponent. In fact, your opponents’ scores don’t matter at all.

Instead, we suggest thinking like a runner. Your goal is to beat the clock, build your own muscles and take every advantage available to beat your best time. When you manage to improve, simply set a new goal, and begin work anew. If you’re focusing on every opportunity to improve like an Olympic athlete would, someday when you are forced to look at competitors, they’ll be left in the dust!

What kinds of advantages and opportunities can you collect? Knowledge from your customers. Unlike studying your competitors, studying your customers is directly applicable. The better you can serve their needs and create better shopping experiences, the higher your conversion rate will climb.

To that end, there are some better questions you can ask that will give you a deeper understanding of your organization’s performance, help you learn more from your customers, and shed some light on what to do to move forward.

Does this mean all benchmarks are pointless?

Not all benchmarks are bad. Competitor and industry benchmarks are pointless for the reasons we explained above, but your own benchmarks are highly valuable. After all, you have to know where you’re starting in order to gauge the effectiveness of your optimization strategy.

Furthermore, drilling down two individual metrics is a better method of benchmarking then looking at your overall conversion rate. For instance, consider the conversion rate of your product details pages or the conversion rates of individual acquisition channels. Studying these metrics is far more actionable because you can quickly generate experiments to improve them.

Is competitive analysis useful at all?

Yes, absolutely. Understanding your competitor’s behavior is useful, but there are healthy and unhealthy ways of looking at your competition.

A healthy way of competitor analysis, for example, would be social listening, where you investigate comments made online about your competitors, and then use those sentiments and themes to inform your own campaigns and messaging. For instance, if your competitor’s customers complain about a common product defect, you might change your product listings, ads, and offers to emphasize how your products lack that defect.

In a case like this, you would be analyzing your competitors while still focused on yourself . You’re like Kobe Bryant, studying tapes of your basketball heroes, identifying what was effective or ineffective (based on traceable outcomes), and adapting their moves to the unique skills you have as a player.

Unhealthy competitor analysis involves blindly copying your competitor’s messaging, strategy, and tactics. In these cases, you aren’t learning or seeking to answer the “Why?” question. You’re just looking for a shortcut, hoping what works for them will also work for you.

Have we reached the limit of our DTC touchpoint?

The problem with identifying a ceiling is that it’s only a ceiling until you push it higher. Growth of a metric is always possible, but you have to consider the cost. Some optimizations offer diminishing returns. Others cost more than they’re worth.

Besides, customer learning never stops. Ever. It does not matter how clearly you grasp your customers’ wants, needs, desires, and problems. There is always something more to learn, which means there’s always a way to improve their experience.

How do we value success?

Putting a value on optimization efforts is actually simple. Will the revenue generated from the optimization program be greater than its cost? In this case, it’s important to think beyond singular sales. A generic conversion rate calculates the rate that visitors make a purchase, but there are other factors that paint a clearer picture of success, such as lifetime value, basket size, average revenue per user, etc.

What is our goal conversion rate?

Once you know your own conversion rate, and have vowed to ignore the metrics of your competitors or the industry, this is the most obvious concern. It’s a great question, too, because it leads you into actionable strategies that can actually push the needle.

Setting a top-level goal for your conversion rate is problematic because, like we said earlier, you’ll always want it to be higher. Instead, it’s better to set goals for individual experiments. These goals will depend on the nature of the experiment (some optimizations will move that needle more than others), your product, and your audience.

Goal-Setting, Experimentation, and Iterative Learning

Instead of using industry or competitor benchmarks, it’s smarter to focus on yourself. This lets you deal with one ecosystem where the variables are controlled, so you can make changes, measure the results, and then deduce reasonable answers to the question “Why?” Ultimately, this means that optimization is an entirely internal process.

First, it’s important to have clarity regarding your bigger business goals. This will help you design specific conversion rate goals that serve your broader purpose. For instance, an organization that’s trying to develop a broad network of retail partnerships may only be willing to Increase its conversion rate if it doesn’t cannibalize sales from other channels.

1. Goal-setting

Generally, we suggest focusing on two kinds of conversion rate goals: 1) Goals that help your visitors research your products or services and 2) Goals that help your visitors purchase those products from you. Everything else is secondary to the desires of the customer. This customer-centric view is key to the success of your organization.

In order to adopt a customer-centered approach, management will need to accept an iterative mindset that recognizes the value of testing and data-based decision making and you’ll likely need to employ the services of a digital experience optimization specialist.

Identify goals that elevate the quality of your customers’ research and buying activities. Listen (to their words and the data of their session) to what they want and give it to them. Do they search for a particular type of content? Perhaps the right content will help. Do customers drop out of your long checkout workflow? Perhaps streamlining it will keep them engaged.

2. Experimentation

Experimentation is one pillar of digital experience optimization. Many ecommerce store owners and managers dive into this part of the process by emulating what they see their competitors doing, without setting proper goals or even understanding the purpose behind a particular strategy or tactic.

Admittedly, experimentation is a tedious and laborious process without the help of a practiced optimization specialist, especially in the beginning. Changes are often small and seemingly short-sighted, but they can add up to big improvements over time.

3. Iterative learning

This is the part of the process that isn’t available when you simply duplicate the strategies and tactics of your competitors. It’s also arguably the most valuable piece of the process because it provides you with the information you need to set better goals and run better experiments in the future. In the same way that your investment account grows faster due to compound interest, learning also expands exponentially.

Imagine that you learn that some of your customers want a subscription version of one of your products. You experiment with a subscription and find it to be successful. Armed with this knowledge, you might explore subscription options of other products, play around with offering bulk sizes, or create a box-of-the-month offering. In cases like this, learning begets more experimentation, which begets more learning.

This is the genesis of the answer to the “Why?” question that we at The Good believe is so critical to the success of any optimization plan.

Getting Started

We recognize that our philosophy of benchmarking represents a shift in thinking. It’s tempting to use your competitors as tools to judge your own success or failure within your industry, but these comparisons are always inapplicable and inaccurate.

In order to achieve true success, it’s best to focus on your own conversion rate, set goals, design experiments to creep it upward, and – most importantly – collect valuable information (that only applies to your business and customer) that can help you keep pushing.

If all of this sounds too difficult to manage, you aren’t alone. Countless ecommerce professionals lack the time and experience to implement a truly effective optimization program. You’ll find it cost-effective to outsource this function to a team of specialists. Otherwise, you’ll be leaving money on the table.

The Good offers a custom-built Digital Experience Optimization Program™ that helps you identify why your website is not meeting your goals and how to improve.

Remember: Your organization is unique. Comparing yourself to your competitors by focusing on their benchmarks is an ineffective distraction. Your customers provide all of the information you need to grow your brand.

Behind The Click

Behind The Click

Learn how to use the hidden psychological forces that shape online behavior to craft digital journeys that delight, engage, and convert.

GET YOUR COPY

The post Why Industry Benchmarks are Bullshit appeared first on The Good.

]]>