Conversion Wednesday – Advanced Bounce Rate Math

By Nik
TOPICSConversion

httpvhd://www.youtube.com/watch?v=jyDTo24D0LE&feature=youtu.be

Today I’m going to review some advanced math on what we call bounce rate. Bounce rate doesn’t just tell you whether your customers find an entry page relevant, it’s a compass for where your investments will give you the highest return – and with so much more impact than you may think!

Alright, let’s start with the core numbers. Here, we’re analyzing a section of a mythical site – a section would be something like “all product pages” – or every page in a particular category of a site. The numbers we’re working with are: 90,000 visits, 60,000 that bounced, 15,000 total add to carts, 1,000 sale actions – and finally, a resulting $10,000,000 in revenue from this activity. We’re going to move quickly, so keep up!

Those numbers already start telling us a story. When we analyze the entire funnel – 67% of visitors are bouncing, which is higher than 50% – keep that in mind, because the fact that it’s over 50% is really important in terms of what that will tell us in the end for our investment analysis. The rest of the math is simple, 17% of visitors added to cart, and then they continue to reduce like a fine sauce into the 1% of visitors that made a purchase. That’s a lot of tail off and loss through the funnel!

So what I find interesting is when you analyze a funnel as if there were no bounces at all. So we saw in the last slide that 67% of visitors bounce – well here, we’re looking at the 33% that didn’t bounce. This tells you so much about how well you do when a visitor finds both the entry page, and the site-wide experience worthy of their time. Here, if a person liked what they saw on the entry page, and they were interested in what the rest of the site may offer, they were very highly inclined to make a purchase. 50% of people who engaged the site and did not bounce, ended up adding to cart! Furthermore, the conversion rate with these non-bouncers was 3%!

As a result, the average value per visit of a bouncer versus a non-bouncer is a 3-fold difference. A visitor, on average, contributed $111.11 per visit after all the fallout possibilities play out – the 67% that bounce, the 83% that don’t add to cart, the 99% that didn’t make a purchase. By contrast, when a visitor engaged the site and didn’t bounce, their value was over $300 at $333.33. That’s a huge difference! That’s something to write home about. It starts to make you think about how much more impactful your site would be if you reduced your bounce rate. Well… let’s make some calculations to answer that conundrum!

So this is what I find to be a magical finding. In the case that we’re looking at, the bounce rate was 67% – which is over 50%. As a result, when you compare the impact of 1 of 3 options: either increasing conversion rate by 15%, or increasing average order value by 15%, or decreasing bounce rate by 15% – which one do you think would make you more money? Bounce rate seems like it’s so early in the funnel, that it should be a no-brainer – decrease in bounce rate would have the lowest impact.

Wrong! The first time I got these results, I was a bit shocked as well. In this scenario of a 67% bounce rate, it is nearly twice as impactful to your revenue when you decrease bounce rate by 15% versus increasing conversion rates by 15%.

Here’s the math. For increasing conversion rates by 15%, you simply multiply the revenue currently earned by 15% – which is $10,000,000 times 15%, resulting in a sum of $1,500,000. Not bad! For decreasing bounce rates by 15%, you calculate how many new non-bouncers you would have – 15% of the 67% that originally would have bounced – so 15% of 60,000 visitors, which equals 9,000 new non-bouncers. Each non-bouncer adds $333.33 in revenue – so by multiplying 9,000 against $333.33, you net an additional $3,000,000! Pretty, pretty good.

When doing your math, you’ll almost always be shocked by how much money can be made by investing in conversion optimization. Just remember, that you’ll build a deeper understanding of impact as you test and learn over time.

Does this work the same all the time? Nope. Bounce rate was a more significant factor because the bounce rate was above 50% to start with. If you started with a bounce rate of 33% – so in the same scenario, there were 30,000 of the 90,000 visits resulting in bounces – then your math would change. In that case, the impact of decreasing bounce rates by 15% would only be $750,000, while an increase in conversion rates would continue to be $1,500,000. Then again, the non-bounce in this situation is only $166.67, compared to the $333.33 from our earlier example.

Again, bounce rate is a compass, its value indicates a lot – it is not by any means the most valuable lever for revenue improvement every time around. If you need a quick rule of thumb though, follow this rule: “If your bounce rate is above 50%, a 5% decrease in bounce rate is more valuable that a 5% increase in conversion rates”.

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