What’s the Most Important CRO Metric? (Hint: Not Conversion Rate)

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Obviously, the ultimate goal of CRO should be to increase sales and quality leads.

But my question for today is: what metric is the best way to approximate the future success of your conversion rate optimization (CRO) efforts. For example, you can measure:

But one metric is more important than all the rest.

I know what you're thinking. Conversion rate is the most important CRO metric you should track, right? Duh? Seems like a no-brainer.

Actually, no.

In my opinion, there's an even more important metric you should be paying attention to; Click-through rate (CTR) is THE most important conversion metric.

I’m not crazy. Here are three reasons why.

1. High CTRs Lead To Higher Conversion Rates

There is a clear relationship between click-through rates and conversion rates. We've seen it over and over.

The higher your click-through rate is, the higher your conversion rate will be. Here's an example of data from just one large WordStream client account. We see this in many accounts, but this is just one illustration. (The data gets murky when you combine accounts, since conversion rates depend on the industry and offer.)

Why do we see this? If your offer can get people excited enough to click, then that excitement tends to carry through all the way to a purchase.

Really, it doesn't matter how you drive those clicks to your offers. It can be through paid search ads, retargeting, social media, video, email, or another marketing channel.

This is what makes improving your CTR so crucial. If you can 2X your CTR, then it’s not uncommon that (on average) you’ll boost your conversion rate by 50% as well!

If you have average click-through rates, you'll have OK results. Do you really just want to settle for OK, though?

You know what else is just OK? Donkeys. Don't be a donkey. Be a magical unicorn!

It's also important to note that CTR will vary wildly by channel and industry. For example, here's a look at the average CTR for Google AdWords on search and display across 20 popular industries:

You can see that the average CTR in the dating & personals industry is more than double that of the legal industry.

Important disclaimer: I'm not advocating to offer free puppies or using other dumb gimmics to raise CTR. I'm talking about finding truly innovative offers that get your target market super excited about signing up for whatever you're selling, right away! 

2. Conversion Rates Are Biased

Bias is a big issue when you're looking at your conversion rates. Basically, all a conversion rate will tell you is the percentage of conversions by people who have previously expressed interest in what you offer.

So let's say someone receives an offer from your company via email. These people already know you from visiting your site for one reason or another at some point in the past and liked what they found. You know this because they've signed up to receive emails from you. They’re even more biased because they’ve decided to open your email and click through to your site.

So what do you learn here from a conversion rate? Well, you've learned what percentage of people who were already in your sales funnel and were already biased toward your product or service have bought from you. That's awesome and valuable information, no doubt.

After all, that's how advertising is supposed to work!

But what would be even more valuable to know is how interesting your offer is to new audiences, not just people who have expressed interest in the past and have now decided to view your offer.

A typical website conversion rate is about 2.35% on average. But the top 10% of companies are seeing 3-5x higher conversion rates than average. How are they achieving such high website conversion rates?

Spoiler alert: it's not because they've changed a button color on their home page or published a new whitepaper.

3. You Can Find Out If Your Offer Sucks

Ask yourself: Why are 98% of the people who see your offer not converting? What could you offer so that a higher percentage of people get so excited that they click through and sign up or buy it now? Think about it – if someone is offering free samples at the grocery store, you don’t pay that much attention to what the person behind the table says; you try the free sample if it looks delicious.

Does your offer actually resonate with your market, and not just the people who already know and like you? This is where CTR is a helpful indicator.

For example, let's say you operate in a small niche market with little to no competition. Right now your CTR is tiny, like 1 percent or lower. But you have a near 100 percent conversion rate.

How important is conversion rate as a metric here? Not so important, right?

If your CTR is low, however, then you know this means people aren't responding to your offer, whatever it is. Your offer probably isn't unique or interesting enough.

If you believe your conversion rate is the most important metric, then you'll believe there's no need to change your offer. And you'd be wrong.

Strap on some rockets and give your click-through rate a much-needed boost! Improving your CTR will help you grow beyond your existing audience and generate more leads or sales.

TL;DR

Ultimately, it's the quality and quantity of conversions that matters. But what are the key input metrics that we should be paying most attention to maximize those conversions?

Conversion rates are obviously important. But click-through rate is the number one CRO metric I pay most attention to.

Not only is CTR proportional to Conversion Rate, CTR gives you an honest view of how your offer resonates with people who aren't already biased toward you. In most cases, your market is much bigger than the people who are already in your pipeline.

You can use the insights from click-through rates to find an amazing offer that more people really respond to – and when you do find an offer with a high CTR, you can then make the focus on making any needed website tweaks to also ensure people convert like crazy after they click through!

Find out how you're REALLY doing in AdWords!

Watch the video below on our Free AdWords Grader:

Visit the AdWords Grader.

Comments

Mark Preston
Jul 06, 2016

I personally think that click through rate and conversion rate are both equally important. Sure, without the click, you won't have any conversions but they go hand in hand and as marketers we need to work towards increasing both.

Larry Kim
Jul 07, 2016

yep they're both important. the point of this article was simply to highlight the relationship between CTR and CVR (which i think isn't really understood or talked about that much) and also highlight the ability of CTR to figure out if your offer is a unicorn or a donkey. this was not to say that CVR isn't important. It's still necessary to do CVR optimization after you've found that strong CTR offer, imho.

roland
Jul 07, 2016

I disagree with you on that; conversion is and always will be the most important metric. CTR rates only tell you how many people liked your display/search campaign. Of course your conversions are going to go up when more people get to your offer, but that is just because of an increase in traffic. At then end of the day it is still your offer and the conversion thereof that matters.

Conversions are sales, Clicks are just eyeballs. You can have an amazingly high click through rate thanks to great artwork or an aggressive campaign, but still have a very poor conversion rate.

The only thing that maybe more important than conversion is tracking and optimising. I know it is not a metric as such, but virtually none of the campaign managers I have spoken to know how to run proper and effective tracking of their campaigns. They look at all their metrics but haven't got a clue where they really came from. They have data, but no insight.

We run campaigns in the dating and personals niche for clients and our CTR's for our display advertising is consistently in the 0.7 to 0.9 range with conversion rates of 18-23%. All because we track and optimise.

Larry Kim
Jul 07, 2016

hi, read first line of article and conclusion.

Adam
Jul 08, 2016

The basic premise of this article is 100% false. Higher CTRs DO NOT lead to higher conversion rates. For example, any time I use the word "free" in an ad I get much higher CTRs and a much LOWER conversion rate because the freeloaders aren't interested in paying.

Larry Kim
Jul 08, 2016

Hi adam, adding the word "Free" to your ad is not changing your offer. You're just adding the word "free" to an ad, pointing to the same offer. This won't work, especially if the product isn't truly free. I'm not suggesting that you try to hack your CTR by offering free kittens or ipads. What i'm suggesting is that you actually change your offer to something that is truly 100x more valuable and would result in much higher CTR because it's so much more valuable. Like instead of a dumb white paper with 1% CTR what is something that would be much more compelling and valuable for your target market? I just think too often we get stuck in a rut optimizing the same things, when, it's often the case that there is tremendous more leverage in changing the offer. A low CTR is a strong indicator that your offer could be better imho.

Ravi Sodha
Jul 08, 2016

I like Impression to conversion rate. It takes into account the CTR and the Conversion Rate in one metric.

Larry Kim
Jul 08, 2016

i like it too. to raise the metric you would have to find some happy medium of raising BOTH cvr and ctr, which i fully support.

Phil
Jul 09, 2016

Hey, just to be sure that I got it right. Let's say there is a display ad promoting WordStream with 0.1% CTR. You improve the ad so it gets 0.2% - and the conversion rate goes up? I.e. without changing anything on the landingpage just by improving the ad, now instead of let's say one customer out of ten you now get two customers out of ten? I do not think that it's the conclusion you are trying to tell us, talking about the offer change etc... but then again, if not, CTR isn't actually that important as you are trying to tell us as at the end of the day, it is again the good old CVR which will tell us the ultimate true about success (or failure) of our CRO efforts.

Seems like the true goal of the article is to tell us: it is better to pay for WordStream solutions to improve PPC campaigns than to give the money to some CRO company, with which I don't agree :)

Larry Kim
Jul 12, 2016

hi phil, thanks for stopping by. if you add the word "free" to an ad, that will likely increase CTR. but if your offer isn't truly free, your CVR will likely go down. That isn't what i was advocating, because that is silly.

Put another way: the concept of growth hacking basically says that there's way more leverage in integrating sales and marketing directly into the product or service that you're selling. For example, uber and dropbox's referral system and addictive experience is much more enticing and valuable than mucking around with conventional landing page elements - because the growth hack pushes people through the funnel far more effectively (higher CTR and CVR).. this "coefficient of vitality" is proportional to CTR and if you have a ridiculously low CTR on your offer, it's very likely that you could do better - that the better offer would have higher CTR (hence lower CPC) AND higher conversion rates.

Phil
Jul 14, 2016

Well ok if you have ridiculously low CTR... sure there are instances where the CTR increase will cause CVR increase but my guess would be that the reason isn't some magic power of the CTR, rather in these instances the offer is so weak that no wonder it's not converting. So sure, there will be cases where improving CTR will improve CVR because the person would just improve something which now isn't working.

But let's say I do have a "healthy" AdWords ad. How could CTR be more important than CVR? I doubt higher CTR can even increase CVR, will only increase the number of visits. Anyway, there's no way to test it properly as unable to guarantee the same conditions for the tests. And if you compare in one account low and hight CTR ads, of course the high CTR ads will have higher CVR! But that's not a proof that there is any direct connection.

J.
Jul 13, 2016

Didn't think about that. Very interesting.
I'll have to check the ctr vs cvr assumption.
But I'm so tired of those cheesy meme images.

Nadya Smolskaya
Aug 11, 2016

Great article! It all makes sense - CTR shows ad relevancy to the keyword + ad quality and appeal to the user. If both parameters are met, this user will surely convert either now or later. (Loved the "Biased" theory and how advertising really works image.)

Jon
Aug 11, 2016

This article is correct, and should be absorbed by your audience if they want to understand how their business works. I think the reason so many comments have misunderstood the learning here is that they are looking at CRO as a low level task. I would guess that marketers who are also business owners would get this article faster than adwords optimizers.

Ali
Aug 11, 2016

Normally WordStream has great content that I enjoy reading. This however was click-bait garbage. Your email link-bait and entire article are examples that CTR is not as important as conversion because you just lowered my opinion of word stream and as soon as I could tell your article was click-bait I'm outta here.

IMO quality wins in the long run everytime. You can get swindle a few clicks in the short term but you'll lose trust and people only buy from those they trust.

JGKelly
Aug 11, 2016

I can see your point.

My challenge however is to get the right people clicking through. I am in a B2B market where the keywords cross over between retail and B2B. So I can easily kick up CTR with crossover KWs but the kick results in very high bounces 90%+/6 seconds on site.

But I suppose the point is to make the offer motivating AND focused so it drives CTR and boosts CR. Hmmm Food for thought.

John
Aug 11, 2016

I find the comments most interesting. IMHO you can't argue with data and Larry has access to a huge amount of data, spread over many industries so I think his opinions carry a lot of weight regardless of how 'out-there' it may seem.
Thanks for the insights!

Michael Aagaard
Aug 12, 2016

Hi Larry - great article, I get your points.

In my experience, both CTR and CVR are nice supporting metrics that help tell a story. But ultimately revenue is the metric that tells you if your optimization efforts are moving the needle.

Moreover, I think it is important to clarify that you're speaking from a PPC angle here.

There are plenty of cases where CTR is not going to be a strong metric. E.g. in my work at Unbounce where I am focused on holistic optimization (not just a single channel), it would be pretty crazy if I were to use CTR (or CVR for that matter) as my main KPI. I have to make sure that revenue and LTV are growing - CTR is simply not going to tell me that.

Moreover, I have run lots of experiments where I was able to increase CTR like crazy while effectively reducing leads/sales.

So IMHO, you have to be careful assuming that an increase in CTR automatically leads to higher CVR, LTV and more revenue.

Michael Aagaard

Brian
Sep 14, 2016

Good and surprising read. I finally found the article I remembered from long ago that semi-refutes it. It's old now from the AdWords blog in 2009. To paraphrase it, 'CR is flat across ad positions' and you could see ad position as a proxy for CTR. Across the accounts I've checked higher CTR does not equate to higher CR though I'd be glad if it did. http://ow.ly/srOj304deVj

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