Sally Kavanagh from Atracks.co.uk has a published a great case study on how to select appropriate keywords for a site by finding an appropriate balance between search volume and conversion rates.

This builds upon yesterday's post discussing whether conversion rates for individual keywords matter. They do, and Kavanagh's post explains how they can be used to find the sweet spot where a site gains traffic from both SEO and PPC through terms that provide the most value.

The case study looks at a the performance of a site that sells calendars online:

‘personalised calendars’ may have produced the most traffic (1980 visitors), but it did not produce the most sales, with a conversion rate of only 1.16%. ‘Create a calendar’ on the other hand produced the most sales (240 sales) and ‘dog calendars’ produced the highest conversion rate at 67.34%. Going back to my point about the need for both quality and quantity of visitors, I need to look at both the actual level of sales and the conversion rate. There is no point putting all my effort into a keyword that converts every time (ie has a conversion rate of 100%) if only one visitor a month uses it! A balance must be struck between quality and quantity.

The biggest mistake I see here comes from companies that focus too heavily on ranking high for the most generic term in their industry. While it's not a bad thing*, it's often done with no regard for more relevant and higher converting terms.

Best case scenario: every page of your site pulls in traffic for relevant search terms. The most general page on your site (normally, the homepage) targets generic terms, while internal pages rank well for more specific terms. PPC should be used to drive traffic to the most appropriate pages. Don't drive traffic from really specific search terms to the site's homepage.

* This certainly isn't a bad thing since a site that ranks well for a generic term likely has high PageRank, making it relatively easy to rank well for less competitive terms if your site is thoroughly indexable.