How to Improve Conversion Rates
by Kevin Hale

YC Partner Kevin Hale covers the first principles of conversion, one of the main drivers of growth for your startup, and how you can improve it starting with your landing page.

Watch this if:

  • your conversion rate is less than 1%
  • you're trying to improve your landing page

Transcript

So this presentation on improving conversion rates is designed to mostly focus on, like, landing pages, but all of the principles and ideas that I'll talk about in this talk actually can help you improve the conversion rates of almost anything, any user interface. So keep that in mind. This is a typical example conversion rate funnel. And when you're trying to improve in conversion rate, you're basically trying to improve the efficiency of going from one step to the next. And the thing is, why we care about conversion rate, is because it's part of two different aspects of growth, the two main, sort of, drivers. And so growth is kind of like the balance between conversion and churn. And basically, growth happens as a gap between the two.

Something to keep in mind is that working on churn is actually much easier than working on conversion. So in this talk, we're working on the harder thing. It's the thing that you usually are going to get started. When I talk to a company and I'm trying to help them with their conversion rates, the first thing I usually try to figure out is do we even need to be working on this at all? So the only time you should be working on and improving your conversion rate is because you have a leaky bucket. So I'd like to just talk about a couple of benchmarks in the industry so that we all, kind of, sit on the same page and understand whether, like, we should be working on this or working on something else, like putting more things into the top of the funnel.

Shareware, the conversion rate here is about 0.5%. So basically, this is old-school like before the internet. If people just released software out for free and they just hope that somebody will pay for it out of their own goodwill. This is the conversion rate you can expect. Casual download games is about 2%. So stuff that you, sort of, play on and off a while waiting in line. Most companies kind of care about this one. Freemium software as a service companies, they range between 1.5% and 5%. On average, it's about 3%. So once I talk to a company and they have pages that are converting at about 3%, and that is from like out of a hundred visitors that visit your page, 2% to 3% sign up. I usually say you probably don't need to spend that much more time on this. There's probably other things you should work on instead.

That being said, you can do much better than that. Flicker, back in the heyday, had a conversion rate between 5% and 10%. AdultFriendFinder, so depending on what you're selling, people wanted a whole lot more, so 10% to 22% for sex and end of loneliness. Even better, so these are, if you don't recognize them, children's social networks. And so, basically, this is the conversion rate to get your kid to shut the fuck up, right, to leave you alone. TurboTax Online, the monster, 70% conversion rate. Basically, you're going to TurboTax, you're downloading that software, you are paying for it. It is very, very high intent.

Every conversion rate problem looks like every other user interface problem. And the concept or framework that I like to use to explain how to solve any user interface problem is using something called the Knowledge Spectrum. This was created by an amazing interface designer named Jared Spool, and basically the Knowledge Spectrum says that this represents all knowledge on a spectrum. And on this side represents zero knowledge, no knowledge, you don't know anything. And another side is God-like, all knowledge.

Your product and your user sits on two points on that line. Just two dimensions. Your user sits here at what we call the current knowledge point and your interface, your landing page, the thing you want them to do, sits here at the target knowledge point. And every interface problem that's trying to be solved is trying to close what we call the knowledge gap. That's it. You don't need to go to a complicated design school to know how to solve these problems. You either are going to increase the amount of knowledge that is needed by your user, or you need to decrease the amount of knowledge needed to use your product or interface. That's it. And whenever I'm looking at anyone's design problem and trying to figure out, do I need to increase knowledge, or do I need to decrease it?

So the most helpful exercise that I will use from this once I understand this concept when I'm trying to design a landing page or to improve is to simplify things very, very simply. And what I imagine is something called the one-button interface. So let's imagine that we reduced our landing page, our product, to just one button on a page. The question becomes, what do I have to put on this page to get someone to push the button? What's the minimum amount? And that's what you ideally want to have on there. And is there any information that I put on this page that keeps me from pushing the button or is there any lack of information that keeps me from pushing the button?

Now for every time that I deal with any page that I'm looking at that I'm trying to help improve, I basically go through a series of seven questions for every single one. And then through the series of seven questions, I look very smart. You now can be smart on your own. The first question I ask is what's the call to action? Is the button, is the thing I most want my user to do, is it super obvious? Where do I find it? And the thing to keep in mind about the call to action is it should be really, really close to a concept I like to call the magic moment. The magic moment is basically the experience, the knowledge, the information, the interaction that someone has with your startup. And all of a sudden they get tingly inside, the light bulb goes off, they go, "Holy fuck, I've been waiting for this my whole life. I now get it. This is super exciting. I can't wait to use this." And your call to action should be as close to that magic moment as possible that when I click that button, I'm gonna be taken to that point.

So often I go through a design critique with someone and I'm like, "What's your magic moment?" And then somehow the call to action is like 27 steps away from whatever it is that makes someone feel special or gets really excited about your product or app. So you should be as close to zero as possible from your call to action. The six other questions we're gonna go through relatively quickly. And then we're gonna go through two examples from people participating in startup school to just watch them in action.

The next question is, what is this? What is this magic moment? Right? And my test for this, my litmus test, is like, can I just copy-paste a sentence on this page, this landing page, that I can put into an email and send it to my mom and my mom goes, "I understand what this is?" Ninety-nine percent of the time, I look at people's websites and they're so filled with MBA marketing jargon and talk that there is no sentence that exists on that page that lets me very clearly understand what it is that this company does.

Is it right for me? So people who are super in a rush, impatient, trying to solve their problems, they're quickly trying to identify themselves. It's like, am I in the wrong place? Is this the right product? And the way they're trying to determine that is to see like, is there any reflection of themselves in this or any reflection of their problems located anywhere on the page?

Is it legit? So the threshold is very low here. Just can't look like a Russian spamming website, right? Outside of that, you don't need to overthink this. Thanks to tons of templates and themes out there, you should be able to get over this bar very, very quickly.

Who else is using it? So a lot of people are uncomfortable using a product unless they know that there's something else out there. And you might think it's a variation of legit, but again, this bar is completely different. It's letting me kind of know, oh, a shortcut, is it right for me? And is it legit? And basically a shortcut for trust and people often are trying to say like, "Oh, if so and so is already using this, then I should actually give this a chance."

How much is it? What's the catch? This is the one that so many B2B enterprise companies are afraid to put on their website and which is why we've paired this talk up with pricing. And basically, you should have some empathy. How many times do you go to a website and go like, "Well, I'll use this without knowing how much it costs. Sounds good to me. Let's just do it." No one does that. And so you shouldn't be surprised that your conversion rates are affected because you don't tell people how much it costs or what's the catch? So let's say you're giving away something for free, and really your business model is you make money some other way. You should explain that to people because otherwise, people feel paranoid or worried or it feels kind of weird.

And then lastly is where can I get help? There's always a percentage of users who will go to your website and it doesn't matter that you have all the FAQs, you've written everything down. you've created these beautiful video documentation. They will just go like, "I just wanna ask someone, I just need to talk to somebody. I need someone to tell me directly." And part of it is some people are just like, "I just wanna see if there's a real person behind this." That's number one. Or some people just can't be bothered. And sometimes it's easier for them to just directly ask than navigate through the website. And if you don't make it really easy to find and contact you or make it look like that you were going to help them if they start using the product, they probably won't use it.

This talk is so short. So that's basically it, those are the seven questions. We are now gonna go through two examples of startup school companies that sent their stuff to me, and I don't really have their permission, but they did submit it when they asked to have a design critique done in the Startup School forums. So I feel like we're gonna be okay. Okay. So the first one we're gonna do is meetingroom.io. All right. First question, what is the call to action? What is it that this company most wants me to do? And then what I do is I basically then try to do that thing and just follow it all the way through and just see how far away am I in the magic moment. So these guys create virtual meeting room platforms. So basically, we don't have a copy-paste sentence, but basically it's like, you want to meet in VR space with someone, you can use this to help create that space and create that sort of meeting.

Imagine it is, get a virtual room right now. There's a lot of things that are, sort of, competing with it for all the call to actions on this page. And then we, kind of, don't repeat it down here that reminds me where to go. So let's go to the most efficient, get a virtual meeting room right now. And then on here, we have competing calls to action to download and then we have manage rooms. And then there's a start here to get to your virtual room, which is a carousel that walks you through seven steps to finally get to making a room, but none of these are the actual forms to do it. So you have to then go here and then hopefully you will remember all of those seven steps in the carousel and then walk all the way through it.

So things that I would recommend would be like, I wanna have always one button that's very, very clear. This is what I want you to do on any given page. Number two, I don't think this makes it easy to understand and I can't keep it in my head to follow. It's good that they know all the steps, but I would probably imagine that there's something that's going to help me experience that magic moment much sooner. And what I imagine is that magic moment happens when I finally, like, make a booking and I meet with someone in a room together and we start interacting and we're solving something. And I feel like if I can't do that right away, then I want to have them be able to experience it some way. I would totally add some kind of video. I think they have that, kind of, here that will kind of show it off. This video is kind of long and it doesn't get us to that sort of magical place. So that's number one.

Second, what is this? So virtual meeting room platform. But if I copy and pasted that, I wouldn't quite now. Also, you see this carousel's kind of moving around, carousels don't work very well because you're hiding information that I might want to have to answer any one of my seven questions. And secondly, oh God, I can't figure out...we do this thing where he calls it an open beta. And so the legit part here starts getting affected. It's like, oh, I can't rely on this. And then later on the signup page, it talks about entering into the closed beta. And so these are all things that indicate it's like, I'm not ready for you to experience this. Don't use me for any real meetings is what this sort of telegraphs. And so if this basically works, I woudl try to move that straight forward to there.

Down here, we're trying to look for, like, who else is also using it? So we don't have a list of customers. Instead, we have a bunch of other logos here in terms of featured in a bunch of press, that we have partners, but I don't know what that means. And then we have a bunch of awards, but none of them are actual people using it. And so it's so many logos of other things that it would make me nervous that no one's really using this as a result. And then lastly, what do I get out? We've got an intercom in the lower right. And then we also have no help page, no documentation to quickly, sort of, look at to see how this works.

And then the last one is going into pricing. So here we get to this point and I realize, oh, okay, I see this pricing. If I need 12 people in a room, it's gonna be $99 a month and then I can start sort of working on it. And it's one page over. And if I go for the free, again, we'll go through all this whole process. So a bunch of little things, we just go through all the questions. You can see a bunch of non-optimal stuff on this page.

Let's go to our second example. It'll be a little bit different. So this is a company called Divjoy. And so they describe themselves as a react code base generator. And then he has this...one describes it as, "Use our free web-based tool to create the perfect code base for your next project." So my first question I'm trying to figure out is like, what's the call to action he most wants me to do? And so as I scroll down this page, there's actually nothing that looks like a giant button. And actually, the big thing he wants me to do is click on one of these templates, these screenshots that are supposed to be the button. So we have, sort of, an affordance problem.

And then we go into here and my magic moment is when I get over and realize, it's like, oh, it's not just like landing page templates, but it's like a dashboard. It's like a sign-in page, a pricing bit. It's like the entire project for building a SaaS app is all located here, which I think is really amazing. And nothing just tells me that that's what's all here. And I might not find out until I export code and I hit download and then I'll get the code. So we're so many steps away from, sort of, experiencing that. And also, I feel it's so not explicit that I might miss how amazing what he's built here is in terms of what he's offering.

One thing he does kind of well is like he doesn't have like logos of customers, but he has shown how many people have created or downloaded the templates. So this number kind of sets it up like, oh, there's people actually using this and finding it useful. Down here, he tries to get at this, everything you need is included, and then he adds all this other text, but all that text is there and the odds are your users aren't going to read them. So because it's located into that copy, it gets kind of lost. And then, again, we have an intercom, but there's just not enough information in terms of like FAQs, right, an about page that just makes me go like, "Oh, this is more than a side project." And so, in terms of like how much I can, sort of, invest in this and how much I can rely on this down the road in the future is going to be minimal as a result. Great.