- The presentation focuses on improving conversion rates, specifically for landing pages, but the principles can be applied to any user interface.
- Conversion rate is important for growth, as it is one of the main drivers along with churn.
- It is generally easier to work on churn than on conversion.
- Before working on improving conversion rates, it is important to determine if there is a leaky bucket or if there are other areas that need attention.
- Benchmark conversion rates in the industry vary, with freemium software as a service companies averaging around 3%.
- Every interface problem can be solved by closing the knowledge gap between the user's current knowledge and the target knowledge of the interface.
- The call to action should be obvious and close to the "magic moment" that excites users about the product.
- Other important questions to consider when designing a landing page include: What is this? Is it right for me? Is it legit? Who else is using it? How much is it? What's the catch?

- The speaker discusses the importance of explaining how a business makes money when offering something for free
- Users often prefer to have direct contact with a person for assistance, rather than relying on FAQs or documentation
- The speaker provides critiques of two startup companies' websites, pointing out areas for improvement such as clarity of call to action, ease of use, and providing customer testimonials
- The speaker emphasizes the need for clear information about the product and how to get help, as well as transparency about the company's readiness and reliability
- Overall, the speaker highlights the importance of addressing user concerns and making it easy for them to navigate and understand the product.

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.

Transcript and lecture slides here: https://www.ycombinator.com/library/6l-how-to-improve-conversion-rates

This lecture is part of YC's Startup School, a free online program and global community of founders. Register and join the community at https://www.startupschool.org/

Timestamps
0:00 Introduction
1:04 Benchmarks
3:28 The knowledge gap
5:05 How do I get users to push the button?
11:00 Real-world examples

So this presentation on improving conversion rates, it's designed to mostly focus on 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.

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 1 step to the next.

And the thing is, why we care about conversion, right, is because it's part of 2 different aspects of growth, the 2 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 2.

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 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 we should be working on this or working on something else, like putting more things into the top of the funnel.

So basically, this is old school, like before the internet.

If people just release 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, it's about 2%, so stuff that you sort of play on and off while waiting in line.

Most companies, kind of care about this 1, freemium software as a service companies, they range between 1.5 and 5%.

So once I talk to a company and they have pages that are converting at about 3%, and that is from like out of 100 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.

Flickr back in the heyday had a conversion rate between 5 and 10%.

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.

Basically, you're going to TurboTax, you're downloading that software, you are paying for it.

Every conversion rate problem looks like every other user interface problem and the concept or framework that I'd like to use to explain how to solve any user interface problem is using something called the knowledge spectrum.

This was created by a 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 0 knowledge, no knowledge, you don't know anything.

And another side is god-like, all knowledge.

Your product and your user sits on 2 points on that line.

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.

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.

And I, whenever I'm looking at anyone's design problem, I'm 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 it, is to simplify things very, very simply.

And what I imagine is something called the one-button interface.

So let's imagine that we've reduced our landing page, our product, to just 1 button on a page.

The question becomes what do I have to put on this page to get someone to push the button?

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 7 questions, for every single 1.

And then through the series of 7 questions, I look very smart.

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?

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, and 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 D should be as close to 0 as possible from your call to action.

The 6 other questions we're going to go through relatively quickly.

And then we're going to go through 2 examples from people participating in startup school.

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?

99% of time I look at people's websites and they're so filled with MBA, marketing jargon, and talk that there's no sentence that exists on that page that lets me very clearly understand what it is that this company does.

So people who are super in a rush, impatient, trying to solve their problems, they're quickly trying to identify themselves.

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.

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.

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 for 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.

This is the 1 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.

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 feel kind of weird.

There's always a percentage of users who will go to your website, and no 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.

And part of it is some people are just like, I just wanna see if there's a real person behind this.

Or some people are 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.

We are now going to go through 2 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 Surdip School forums, so I feel like we're gonna be okay.

Okay, so the first 1 we're gonna do is meetingroom.io.

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 from 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 Git, 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 actions 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 7 steps to finally get to making a room, but none of these are the actual forms to do it.

And then hopefully you will remember all of those 7 steps in the carousel, and you will walk all the way through it.

So, things that I would recommend would be like, I want to have always 1 button that's very, very clear, that's what I want you to do on any given page.

Number 2, 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.

So 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 virtual meeting room platform, but if I copy and pasted that, I wouldn't quite know.

Also, you see this carousels kind of moving around.

Carousels don't work very well because you're hiding information that I might want to have to answer any 1 of my 7 questions.

And secondly, oh God, I can't figure out.

We do this thing where he calls in an open beta.

And so the legit part here starts getting affected.

And then later on the signup page, it talks about entering into the closed beta.

And so these are all things that indicate is 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 would try to move that straight forward to there.

Down here, we're trying to look for like, Who else is also using it?

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.

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.

So here we get to this point and I realize, 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 1 page over, And if I go for the free, again, we'll go through all this whole process.

And we can see a bunch of non-optimal stuff on this page.

And so they describe themselves as a React code base generator.

And then he has this 1 description, 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, 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 1 of these templates, these screenshots that are supposed to be the button.

So we have sort of an affordance problem.

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 page.

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.

So we're so many steps away from sort of experiencing that.

And also, I feel like it's so not explicit that I might miss how amazing what he's built here is in terms of what he's offering.

1 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.

But there's just not enough information in terms of like FAQs, right, an about page, that just makes me go like, oh, that 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.


Speaker 0: So this presentation on improving conversion rates, it's designed to mostly focus on 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 1 step to the next.

And the thing is, why we care about conversion, right, is because it's part of 2 different aspects of growth, the 2 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 2. 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 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 we should be working on this or working on something else, like putting more things into the top of the funnel. Shareware.

Conversion rates here is about 0.5%. So basically, this is old school, like before the internet. If people just release 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, it's about 2%, so stuff that you sort of play on and off while waiting in line.

Most companies, kind of care about this 1, 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 100 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. Flickr back in the heyday had a conversion rate between 5 and 10%. Adult friend finder. 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'd like to use to explain how to solve any user interface problem is using something called the knowledge spectrum. This was created by a 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 0 knowledge, no knowledge, you don't know anything. And another side is god-like, all knowledge. Your product and your user sits on 2 points on that line.

Just 2 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 I, whenever I'm looking at anyone's design problem, I'm 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 it, is to simplify things very, very simply. And what I imagine is something called the one-button interface.

So let's imagine that we've reduced our landing page, our product, to just 1 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? 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 7 questions, for every single 1. And then through the series of 7 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, and 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 D should be as close to 0 as possible from your call to action. The 6 other questions we're going to go through relatively quickly. And then we're going to go through 2 examples from people participating in startup school.

So 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?

99% of time I look at people's websites and they're so filled with MBA, marketing jargon, and talk that there's 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. They're 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 for 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 1 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 1 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 feel 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 no 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 1. Or some people are 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 7 questions. We are now going to go through 2 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 Surdip School forums, so I feel like we're gonna be okay. Okay, so the first 1 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 from 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 Git, 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 actions 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 7 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 7 steps in the carousel, and you will walk all the way through it. So, things that I would recommend would be like, I want to have always 1 button that's very, very clear, that's what I want you to do on any given page.

Number 2, 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. So 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 1. Second, what is this? So virtual meeting room platform, but if I copy and pasted that, I wouldn't quite know. Also, you see this carousels kind of moving around.

Carousels don't work very well because you're hiding information that I might want to have to answer any 1 of my 7 questions. And secondly, oh God, I can't figure out. We do this thing where he calls in 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 is 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 would 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, when do I get help?

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 1 is going to pricing. So here we get to this point and I realize, 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 1 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. And we 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 1 description, 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, 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 1 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 page.

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 then 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 like it's so not explicit that I might miss how amazing what he's built here is in terms of what he's offering. 1 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, that 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.

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Kevin Hale - How to Improve Conversion Rates