The conversion rate is a fundamental concept in marketing. It represents the percentage of people who purchase a product after viewing it. Online, this can be measured by the number of hits on a website, the number of views of an advertisement, or the number of vital empty shopping carts left. Marketers rely on this metric to assess their ability to convert interest in their product to actual sales.

Coralie Wood, who writes a for Vertical Leap, a search marketing blog, recently pointed out one major flaw in the calculation of conversion rates. Recent research has shown that 90% of consumers use multiple devices to access the internet on a daily basis. Current methods of calculating conversion rates fail to account for this use of multiple devices by single consumers.

Consumers are switching between multiple devices on a daily basis, making it difficult to determine true conversion rates.

Wood points out that the failure to account for this could lead to poor marketing decisions. For example, the conversion rate for a company’s recently purchased tablet ads may seem extremely low, causing the marketing manager to stop advertising on tablets. However, these ads may in fact be successful in driving consumers to research the product further and eventually purchase the product online, using their computers. In this case, cutting tablet advertising may in fact decrease profits despite their apparently low conversion rate.

This emphasizes the importance of accounting for all indirect costs and benefits when making decisions on marketing strategies. To fully understand the profitability of a marketing strategy, managers must assess its effects on multiple aspects of the company.

This principle extends not only between e-commerce devices but between products as well. For example, a car company may release a brand new high-end sports car, and feature it prominently in their marketing. Despite spending a lot to market this new sports car, its sales are low. However, consumers may associate the prestige and style of this new car with a mid-level sedan also produced by the company, causing the sedan’s sales to increase. Therefore, it would be unwise for the company to cut marketing of their high-end sports car, despite the seemingly low conversion rate.

Marketing metrics such as conversion rates are useful tools for providing a snapshot of the performance of a marketing strategy, but should not be solely relied upon when making business decisions.

This holiday weekend, Future Shop and Best Buy stores across Canada ran a promotion that seemed too good to be true. The promotion allowed shoppers to trade in any current generation (Xbox 360, PS3, and Wii U) game and receive either Assassin’s Creed: IV, Battlefield 4, or Call of Duty: Ghosts in return. They were essentially giving away the hottest new releases on current generation systems for free. News of this amazing promotion spread like wildfire, and on Saturday morning, many Future Shops and Best Buys had lines stretching well into the parking lots. I myself walked into my local Future Shop at noon on Sunday with a copy of NHL 07 (which I would be lucky to get $5 for under normal circumstances) hoping to leave with a new copy of Assassin’s Creed: IV (retails for $59.99). Sadly, the store had run out of games shortly after opening for the second day of the promotion.

Shoppers line up at a Future Shop in Toronto to take advantage of this amazing trade-in offer.

Future Shop communications manager Elliot Chun said that the promotion was designed to promote Future Shop’s trade-in game program, and generate buzz during one of the largest months in video gaming in several years. With the Xbox One and PS4 launching later this month, Future Shop and Best Buy wanted to ensure that they were at the forefront of gamer’s minds.

In terms of generating a buzz, I would say that this promotion was a huge success. Not only was it covered by many major media outlets, but is was also spread through social media and word of mouth. Despite this, I think that the cost of this promotion was extremely high. Not only did the companies have to part with millions of dollars of inventory for essentially nothing, but they also likely reduced their sales. Consumers who were willing to get up early and wait hours in lines for this promotion would have likely been willing to purchase these games otherwise, and many of these purchases would have been made at Future Shop and Best Buy.