The prospect ratio is rarely examined, yet it is of critical importance. At a glance the prospect ratio tells us how successful the site is as a sales tool. It has an even more critical role once we have acquired the conversion ratio, because this can tell us if our final form design is OK.
The conversion ratio is officially defined as the percentage of total visitors who complete the target action. In practice I have come to regard this definition as too vague for practical application, since it includes people who bounced from the landing pages.
When I am analyzing what happened inside a site, I don't want to include people who didn't make it beyond the landing page. Integrated Path Analysis looks at the percentage of prospects who went on to completion.
To avoid confusing this with the traditional standard for conversion rate, we call this the "prospect conversion rate." This is the reciprocal of the officially-defined abandonment rate. The abandonment rate is the percentage of people who put things in a shopping cart but bail out at the credit card page, or who view a contact form but do not fill it in.
Shopping cart abandonment rates are typically between 40 percent and 50 percent, while contact forms can be up over 80 percent or as low as 20 percent. Our prospect conversion rate is the percentage of people who did not abandon.
Multiplying the cost-per-prospect by the prospect conversion rate provides the most important number possible in any web analysis: the cost-per-acquisition (or cost-per-sale). We absolutely need to know cost-per-acquisition for any website. If it is too high, it will eat up all our profits and we'll go out of business. The lower it is, the better.
Deriving a conversion ratio based on those who saw the target action page tells us immediately about the quality of the design of that page. The people we are measuring here are those who had qualified in terms of meeting all the criteria but didn't commit.
While not every one of them abandoned the page because of the design of that page, improving that design will always increase the percentage of conversions, often by a very large amount. It is not uncommon to see improvements of 300 percent or more from a single design change. Since this is the final measure of sales, improvements in the conversion rate translate directly into increased sales.
By working at the end of the path, the conversion rate becomes a fulcrum by which we can lever the overall sales success of the entire online business.