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Tim Ferriss on Why High Conversions Could Be Killing Your Sales

By Jason Quey, last modified on February 24, 2018

You’ve seen the headlines:

“53 Ways to Increase Conversion Rate”
“What Is a Good Conversion Rate? (It’s Higher than You Think)”
“39 Quick Ways to Increase Your Website’s Conversion Rate”

Higher conversion rates are important to every business. Or is it?

One challenge we face as marketers is the greedy high of a huge one-and-done transaction. Hit the front page of Reddit, drive thousands of visitors to your site in an hour. Add a content upgrades and boost conversions by 785%. Discount a product and see a huge spike in sales.

But are those actions killing long-term value for your business?

Sol Orwell found reddit to be one of the least converting platforms for Examine.com. Derek Halpern suggests coupons will destroy your business. (Do you remember what happened to JCPenney in 2012? Yeah).

What about high conversions?

The Danger of Targeting The Wrong People

Tim Ferriss Two12 High Conversions Killing Sales

At 211 degrees water is hot. At 212 it’s boiling. Thus, 1-degree can make all the difference in your business.

A month ago, 75 entrepreneurs came to Boulder, CO. We wanted to know the 1-degree that would cause our business to go from good to great. In classic Tim Ferriss fashion, Tim set out to buck conventional wisdom to help us optimize our results.

Most was information I had heard before:

  • Niche down to a precise target market.
  • Find your 1,000 true fans and create 10x content they crave.
  • Be precise in your writing.

Then he mentioned something that radically changed my perspective on CRO. At times, Tim will use a lower converting landing page over the leader, that may perform twice as well.

Tim explained:

“We’ll do a bunch of testing. And here are the three top performing pages.

[But] the best performing page might have some characteristics that seem off…

Maybe it’s a few too many exclamation points or a few too many caps that give me a slight feeling of the marketing heebie-jeebies.

And I’m starting to think, ‘Next thing I know, this thing is going to have yellow highlights and be 30 pages long.’

Even if that page performs twice as well as the one below it I intentionally choose the second one.

Why?

Because it’s not just about maximizing conversions. Ask yourself – who do you want to convert?

The question I ask myself is, ‘If I only knew five hedge fund managers who each have billions of dollars and are extremely brilliant, would they land on this page and go, “Ugh” and bounce?’

If the answer is yes, then that’s not a highly converting page for me. I care more about those five people than a blanket statement of high conversions and not qualifying and getting as many people as possible.”

Perhaps you now have the same thought I do, “Okay, that’s great in theory Tim, but how will I know I have the ‘right’ five people? You’ve got a huge email list and can play those kind of odds.” After pondering this question for a season with no real answer, the solution nearly smacked me in the face a month later:

Dave Gerhardt and Justin Brooke on lead gen
“Getting 100 leads a day at avg $1.20 a lead.”

Like a good marketer, we were curious. The discussion continued:

Daniel Gold and Justin Brooke on lead gen
“I don’t look at conversion rate. Just cost per lead and earnings per lead. Our avg lead value is $8ish and these leads are $1.20ish.”

Here’s the quick-n-dirty story on why conversion rates are so deceptive:

“I run an ad agency and one of my clients was not getting a good ROI like our other clients.

When I looked at their lead gen page, I noticed it created a lot of curiosity but didn’t qualify the lead very well.

I asked them to split test a page our company made for them against their’s [sic].

30 days later they wrote me to tell me their page was the winner. Their page had a 35% conversion rate while mine only had a 24% conversion rate.

I quickly wrote back and said, “Can you check revenue stats for each page?”

They replied, “Ok nevermind your page crushed ours in sales. We only made $4,500 from our page, but leads who came through your page spent $13,000!”

Source: Why Your Conversion Rate Is a Liar & a Thief

Yes, the quantity/quality debate isn’t an obvious trade-off. Sometimes, getting massive traffic from reddit can lead to news sources picking up your article. Other times, you learn about the damage of coupons through experience (as I witnessed in my eBay business). You’ll win some, you’ll lose some.

All I ask is that you remember this: By targeting the wrong people, you can get higher conversions, but you could be killing your sales. When possible, optimize for sales, not conversions.

Comments

  1. Tim Starchuk says

    November 8, 2016 at 3:21 pm

    Thanks for this insight Jason!

    Reply
    • Jason Quey says

      November 9, 2016 at 2:48 pm

      Glad you enjoyed it Tim! Hope to hear again from you soon. 🙂

      Reply

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