Information is traveling faster than ever. We all live busy lives where we try to squeeze every last drop out of the clock. Some would say it is only logical that we expect information from the web or our favorite app to be “instantaneous”.
Actually, there are many studies stating that fast web applications and web sites perform better than their slower competitors. Cloudflare research indicates that:
- A website that loads in 2.4 seconds or faster sees conversion rates of 1.9%
- A website that loads in 5.7 seconds or more sees conversion rates of 0.6% or less
These results do not seem to be vastly different however they can have a great influence on your overall potential. But why?
What is the importance of conversion rate?
Understand what “conversion rate” is? Skip to the next section.
No, I don't know what the heck “conversion rate” is and why it is important. Simply stated a conversion rate is the percentage of users on your site that performs an intended act.
SO... What is an intended act? Well, that all depends on your goals and they can be almost anything. Some of the most common types of intended acts are: making a purchase, submitting a form or creating a subscription – you get the idea.
How do we calculate the Conversion Rate?
The formulas used to calculate "conversion rate" is as follows:
To Calculate Conversion Rate in Percentage:
(Number of Conversions / Total Visitors) * 100% = Conversion Rate in Percentage
(38 Conversions / 2000 Visitors) = 1.9% Conversion Rate
To Calculate Number of Conversions:
(Conversion Rate in Percentage / 100%) * Total Visitors = Number of Conversions
(1.9% Conversion Rate / 100) * 2000 Visitors = 38 Conversions
To Calculator the Total Visitors Needed:
(Number of Conversions * 100%) / Conversion Rate in Percentage = Total Visitors
(38 Conversions * 100) / 1.9% Conversion Rate = 2000 Visitors
How does the conversion rate affect your bottom line or success?
Let’s review the previous conversion numbers in a “perfect world” (yeah, we know this doesn't exist on the internet but please amuse us).
Company “SLOW” Scenario:
- Company SLOW sells widgets, each costing 25.00 euros.
- Company SLOW's intended act is a Sale or Purchase
- Advertising spend per visit is 0.50 cent euro
- Advertising budget per week is 500 euros
- Organic traffic, referral traffic, direct traffic, (etc.) averages 4000 visitors per month.
- Our website's average loading time is roughly 5.7seconds
Company “FAST” Scenario:
- Company FAST sells widgets, each costing 25.00 euros
- Company FASTs intended act is a sale or purchase
- Advertising spend per visit is 0.50 cent euro
- Advertising budget per week is 500 euros
- Organic traffic, referral traffic, direct traffic, (etc.) averages 4000 visitors per month.
- Our website's average loading time is roughly 2.4seconds
Please keep in mind we do not live in a perfect world so for simplicity we must be excluding things like shopping trends, warm/cold audiences, ad strategy, etc.
As you can see, we only have to consider the loading time of each company’s website. Everything else is consistent. Using the conversion information above in addition to the Cloudflare research we can now determine:
Monthly Revenue of Company SLOW:
- Total Visits: 6000
- Load time: 5.7seconds = 0.6%
- Monthly Conversions: 36
- Monthly Net Revenue: 900.00 Euros
- Monthly Advertising Spent: 2165.00 Euros (500 per week * 4.33 weeks or one month)
LOSS: (-1265.00 Euros)
Monthly Revenue of Company FAST:
- Total Visits: 6000
- Load time: 2.4seconds = 1.9%
- Monthly Conversions: 114
- Monthly Net Revenue: 2850.00 Euros
- Monthly Advertising Spent: 2165.00 Euros (500 per week * 4.33 weeks or one month)
WIN: 685.00 Euros
As you can see the company “SLOW” is in trouble. In our basic example, they are operating at a loss simply due to the performance factor of load speed. As a whole, performance will not make you successful on the web but it can be the difference in success or failure in this example. Speed of load is affected by many things but one thing is for sure - every millisecond counts as all of these components are a small piece to a larger whole.
Performance is becoming more relevant even in our analytics and search engine tools. For instance, Googles latest launch of the Light House tool and their implementation of Speed Beta in the search console tool web application are the perfect examples.
