Conversion by Session vs. Conversion by User.

Hotel Revenue Analytics

We all agree (I guess) that Conversion Rate is the most important KPI to assess whether you have been performing well or not through your site and booking engine.

Many hotels use Google Analytics or other tracking tools (Adobe Analytics, Piwik) to track site and IBE data, and CVR is one of those default metrics you can see in your GA account (assuming you use Google Analytics) by default, meaning there is no need to deploy any custom code or special configuration.

ecommerce-conversion-rate

By default, conversion rate in GA, which is labeled as “Ecommerce Conversion Rate” is meant to be by Session, meaning it is the results of the total amount of reservations (Transactions) you got over a certain period of time, divided by the number of Sessions.

So do all major OTAs.

Unfortunately, though, CVR is not as precise as we might think.

Fact is that, on average, only 3% of your potential customers are already in their buying or booking mode.

In other words, 97% of people who could potentially turn into your customers, are not yet at the stage where they are willing to take their credit card out of their wallet and reserve a room.

Now, let’s also say that, on average again, 60% of those potential customers are not even looking at you because they fall into the so-called Unawareness phase, still there is a 40% of people who started their booking journey, yet the majority of them are not ready to book.

This means that prospects may end up visiting your website and booking engine several times (sessions) before actually completing the reservation. And the number of sessions that happen before the booking varies from customer to customer.

Thus, the default Conversion Rate provided by Google Analytics, which is by Session, is quite flawed and poorly reliable.

The below is a picture that I took at the last WorldHotels Annual Conference in Frankfurt. On stage Henrike Lewerenz, Industry Leader TravelX @ Google Germany showed us her last customer journey experience, when she ended up visiting 11 sites, multiple times and over a period of 37 days, before reserving a hotel.

number-of-sites-visited-before-booking

BTW, 11 Travel Sites not including social media. As a matter of fact, the last number I heard end of 2018 said something like 42 sites travellers visit, from the moment they start looking around, to the moment they complete the booking.

At the end of the day, as long as we get reservations, it doesn’t really matter whether prospect take 1 or 5 sessions before reserving, right?

That’s why a Conversion that is computed by user instead of session is more realistic and a way better KPI we could work with.

And here is a quick how-to guide to set up your Conversion Rate by User in 3 minutes with no technical background needed: everything is already there, we just need to create it.

Ultimately, a Conversion by User is nothing but the result of 2 other default metrics you can already see in your GA console: Transactions divided by Users.

Google Analytics allows you to create your own metrics in different ways, one of which is Calculated Metrics, that you can find under Admin > Calculated Metrics (listed under View column).

calculated-metrics

New Custom Metric.

After giving it a name, just select Percent as Formatting Type and enter the following formula: {{Transactions}} / {{Users}}

As you can see it’s very simple, existing metrics are in curly brackets, but as soon as you enter the metric in the formula field, you’ll see that Google automatically suggests you the one to select:

calculated-metrics

So, ultimately this is how the final setup should look like:

calculated-metrics-final-setup

Now, being a non-default metric, default reports in your Google Analytics console do not show your newly created CVR by User.

However, you can use it in any dashboards and custom reports you want to create.

Here’s a simple example with a custom report:

custom-report

Create a new report, or amend an existing one if you have one already.

Under Metric Groups, assuming you are creating a custom report with Type=Explorer, select the metrics you want to add to the report, including the new CVR by User: custom-report

That’s pretty much it:

report-conversion-by-user

What Is Conversion Rate by User Good For?

Obviously, Conversion by User will show higher figures as compared to standard Ecommerce Conversion Rate (by session).

Think for example of 1 customer performing 2 sessions before making a reservation.

The higher this delta between CVR by User and Session, the more sessions it takes to your prospects to turn into customers.

Generally speaking, business travellers have a way shorter booking journey, resulting in a lower delta CVR by User vs. Sessions, as opposed to leisure travellers that take longer before booking.

However, if you happen to see these 2 metrics being very very similar, almost identical, that is a sign of a potential big issue.

Think about the customer journey I explained before: it is a natural thing for travellers to spend a lot of time researching and visiting multiple sites multiple times before booking.

An almost identical value for CVR by User and Session means that prospects likely visit your site only once and never come back.

In other words, you are not being perceived as attractive and appealing.

It is also true that you don’t need a CVR by User to understand that.

Google Analytics already tells you the number of returning visitors in some of its native reports.

However, returning visitors is usually outputted as an absolute value, whilst CVR by User is a percentage and percentages are way easier to understand, even more so if we are talking about what’s supposed to be your most important KPI: your Conversion Rate.

Last but no least, by having access to the data of 200+ hotels, a general rule I learned is that low default conversion rate (by sessions) in your GA console, also turns into a very similar or almost identical CVR by User.

And it makes sense, because of what I just said above: if the hotel is not being perceived as attractive, less likely visitors will return.