The Surprise Discovery Wayfair Made About Organic Rankings And Conversions
After a Google algorithm update boosted its rankings, e-commerce retailer Wayfair discovered that ranking #1 is even more crucial than previously thought. Wayfair's Alex Stein shares his findings.
After a recent Google algorithm update, Wayfair (where I’m an SEO manager) learned that traffic from a #1 organic ranking converts much better than traffic from lower rankings.
We’ve always worked under the assumption that organic visits were created equal. We assumed that whether we got 100 visits in ninth position or 100 in second, they would act more or less the same on-site. Based on some recent research, we were forced to rethink that perspective.
In May of 2015, after the Google Quality update, Wayfair moved into first position for a large number of our target high-volume keywords. All were core furniture and décor keywords that we’ve been focusing on for years. A trend that we noticed as we did our month-over-month and year-over-year comparisons was that our organic revenue growth rate far outpaced visit growth rate.
To better understand the discrepancy between our organic revenue and traffic growth, we took a note from the SEM world’s much-contested theory that higher positions are correlated with higher conversion rates.
[pullquote]A 34% increase in conversion is pretty cool, but do you know what’s even cooler? A 160% increase.[/pullquote]
We hypothesized that our organic first-position rankings attract visitors who convert at a higher rate than for other positions. Our assumption was that those clicking on the first search result were closer to purchase; therefore, they were less likely to bounce back and forth price-checking or looking at the different feature options for each product.
Gathering The Data
We gathered a sample set of keywords for which we moved from at least fifth position into the first. We wanted to give the data set more clarity by looking at keywords (which, in this case, means landing pages) where we saw a clear jump from ranking on the bottom of the first page or high on the second page directly to position one day-over-day and saw a concurrent jump in traffic.
That way, we could be more confident that any changes to conversion rate we observed were a result of the jump in rankings and not other factors.
Additionally, we only looked at search terms with significant search volume (5K+), as well as pages with thousands and tens of thousands of visits per month. After eliminating seasonal and low-volume pages from the mix, we ended up with a sample set consisting of dozens of pages. What we found makes a pretty compelling case for putting in the extra effort to get into position one.
Overall, we saw the following:
|Visitor Volume % Gain||26%|
|Revenue % Gain||69%|
|Conversion Rate % Gain||34%|
A 34-percent increase to conversion rate is a huge jump for a business of any size. Aside from a conversion rate improvement, we also tracked significant bounce rate decreases, increases in pages viewed per session and similarly big benefits to add- to-cart rates.
A 34% increase in conversion is pretty cool, but do you know what’s even cooler? A 160% increase.
We made the assumption that the incremental organic visits came from our new #1 rankings and saw that those visitors were 160 percent more likely to convert to purchase. This makes sense — users who are clicking on the first result in search are likely closer to purchase, while users who are bouncing around the first and second pages are price comparing and in the consideration phase of their shopping.
To illustrate the lift:
|Page A @ Position 6||Page A @ Position 1|
|Average Conversion Rate||10%||13.4%|
What This Means For SEOs
You might be thinking, “I’ve always aimed for the #1 ranking, so what difference does this make?” Well, if you’re good at your job, then you’re using data to model revenue opportunities. Particularly for those of us in the B2C e-commerce industry, the 34-percent conversion boost translates into tens of thousands in incremental revenue compared to previous top position estimates.
For example, let’s say you want your “Cotton Candy Machine” page to rank for the keyword “cotton candy,” which has 33,100 searches per month on average (according to the Google Keyword Planner). Let’s assume a 30 percent organic CTR for the #1 spot, a 10 percent conversion rate and a $100 average order value. Using the traditional method, your monthly revenue opportunity is around $99,300.
Since we now know that the average conversion rate will jump to 13.4 percent if you’re ranking first, the actual revenue opportunity is $133,062. That’s a significant jump in revenue and might justify the cost of a vendor, an additional employee or a graphic designer to create that piece of linkbait you’ve been thinking about. Where previously you might have been happy ranking above the fold, now it makes financial sense to put in additional effort to grab the #1 position and the extra revenue that comes with it.
Now multiply the scenario above by 1,000 for all the keywords that you’re managing, and that’s an additional $33M that wasn’t included in your previous estimates.
On the flip side, it means that when you lose #1 rankings, you’re also losing high-converting visitors. As you model out costs associated with site changes that will cause you to lose rankings, you should calculate the disproportionate revenue loss from losing the first position.
Along the same lines as the example above, let’s say that your company is going to change the “Cotton Candy Machines” page URL during a site update, and you’re pretty sure that you’ll lose first position because you have links pointing at the old URL.
If you fall to third position (assuming a position #3 CTR of 12 percent), your revenue isn’t just moving from $133,062 to $53,225. Since you had #1 rankings, you’re under the impression that your conversion rate is 13.4 percent, which is higher than it actually is. You’re losing those first position visitors and the sweet, sweet conversion boost, so your revenue will actually drop down to $39,720. Again, in aggregate, that can add up to serious revenue losses, which you should communicate to clients and internal stakeholders as accurately as possible.
We hope that this example gets you thinking about how you’re evaluating SEO performance. It has already helped us make more informed, data-driven decisions, and we think that it can do the same for you. We’re lucky to work in an industry that prides itself on sharing information — so if you do research that contradicts or supports our findings, we’d love to hear about it.
Opinions expressed in this article are those of the guest author and not necessarily Search Engine Land. Staff authors are listed here.