In the highly competitive world of eCommerce, one of the most significant challenges facing businesses is converting website visitors into paying customers. The number of such visitors is presented as the conversion rate.
In this blog, we’ll explore some of the conversion rate strategies for eCommerce businesses, including website optimization, pricing strategies, and more. These strategies can increase customer satisfaction, boost sales, and ultimately get ahead of the competition, no matter the industry.
Before describing the strategies how for increasing the conversion rates, Let’s start with the definition of what conversion rate really is.
What is the eCommerce conversion rate?
Conversion rate is a metric that measures the percentage of website visitors who take a desired action, such as making a purchase, filling out a form, or subscribing to a newsletter. In eCommerce, the desired action is usually completing a purchase. The conversion rate is measured based on a given period of time, e.g., weekly or monthly. To give an example, your store’s conversion rate is 3 % when 30 out of 1000 visitors have purchased a product.
eCommerce conversion rate = orders/visits to your website
According to Irpcommerce.com, the average conversion rate in eCommerce is around 2 percent. It’s important to note that while this is the average, some eCommerce businesses may have conversion rates that are much higher or lower depending on a variety of factors, such as the quality of their website, the effectiveness of their marketing campaigns, and the overall user experience they provide. A conversion rate above 3% should be the baseline goal for your eCommerce store.
Depending on the data source, this metric can be called slightly different like ‘eCommerce conversion rate’ or ‘completed order rate’ or ‘transaction rate.’ Nonetheless, they all mean the same thing.
Why is it important to increase the eCommerce conversion rate?
As an eCommerce business owner, one of your primary goals is to increase your conversion rates. But why is it so important? Firstly, by tracking website conversions, you can gain a better understanding of your users and what they want and need from your business. A low conversion rate on some product pages, for instance, might suggest that you need to provide more detailed product descriptions or more information about your product’s benefits. On the other hand, a high conversion rate on a landing page’s call-to-action (CTA) is a sign that you’re effectively persuading your audience.
Secondly, understanding the user experience (UX) is key. Analyzing your online store’s conversion rates can help you identify weak points and blockers that are hindering your users’ experience. A low conversion rate might indicate that your users are having issues with some parts of the website, while a high conversion rate means you’re managing it properly, and maybe it is worth applying this approach in other parts of the store. By prioritizing changes and optimizations based on your conversion rate data, you can improve UX and increase conversions, ultimately leading to greater success for your eCommerce business.
Metrics that help measure eCommerce conversions
When it comes to eCommerce, tracking your website’s performance is crucial to understanding how your business is doing. Measuring eCommerce conversions is a great way to assess your website’s effectiveness at turning visitors into customers. Apart from the simple equation mentioned at the beginning, there are many metrics that help to measure your website’s performance. Here are some of the key metrics that can help you to measure eCommerce conversions:
1. Average order value
Average order value (AOV) measures the average amount spent per order on your website. It is calculated by dividing the total revenue by the total number of orders. For example, if an eCommerce website generates €10,000 in revenue from 100 orders, the AOV would be €100 (€10,000 / 100). This means that, on average, customers are spending $100 per order on the website. The AOV is an important metric, as a low number of it indicates indicate that customers are not purchasing enough items or that the prices are too low. On the other hand, if the AOV is high, it may indicate that customers are usually purchasing multiple items or that the prices are too high in comparison to the competition.
2. Bounce rate
This metric measures the percentage of website visitors who leave your site after viewing only one page. A high bounce rate can indicate that visitors aren’t finding what they’re looking for or that your website is difficult to navigate. But don’t worry, the answer to that problem is described in the next section,
3. Return on Ad Spend
Return on Ad Spend (ROAS) is a crucial metric for any business that invests in advertising. It measures the profitability of a marketing campaign by calculating the revenue generated for every dollar spent on advertising. A high ROAS means that a campaign is generating more revenue than the cost of advertising, while a low ROAS means that the campaign is not generating enough revenue to justify the cost. While ROAS can vary widely depending on the industry, market conditions, and advertising channels, it is an essential metric for businesses to track and analyze.
4. Click-through rate
Click-Through Rate (CTR) is used to measure the rate at which users click on an advertisement or a link. It is calculated by dividing the number of clicks by the number of impressions or views and is expressed as a percentage. To give an example, 1% CTR means that for every 100 times the ad was shown, it received one click.
5. Cost per acquisition
Cost Per Acquisition, also referred to as CPA, is a metric that shows the cost of acquiring a new customer or generating a sale. For instance, if an eCommerce business spends $1000 on a Facebook ad campaign and generates 50 sales, the CPA for that campaign would be $20 ($1000 divided by 50 sales).
6. Cart abandonment rate
As the name indicates, this is the number of shoppers who add items to their online shopping cart but fail to complete the purchase. By analyzing the reasons for cart abandonment and implementing targeted strategies to reduce it, businesses can improve the overall customer experience and increase profits.
5 ways to improve eCommerce conversion rates
As the world becomes more digital, having a strong online presence is crucial for businesses. Due to that, simply having an eCommerce website is not enough. You need to ensure that your website is designed and optimized in a way that encourages visitors to make purchases. The process of improving eCommerce conversion rates is professionally called conversion rate optimization (CRO). By implementing the strategies listed below, you can drive more sales, increase customer loyalty, and build a successful eCommerce business.
Optimize website navigation
The first main factor influencing conversion rates is intuitive website navigation. Clear and user-friendly navigation helps visitors find what they are looking for quickly and easily, resulting in a better user experience. This, in turn, can lead to higher engagement and increased conversions. To optimize website navigation, it’s important to simplify the menu structure, use descriptive labels for links, and ensure that the most important pages are easy to access. In addition to that, it is a good idea to use search functionality by implementing a search engine and utilizing “breadcrumbs” – a navigational aid that helps users keep track of their location within a website. They typically appear near the top of a web page and provide a clickable trail of links that show the user’s path from the homepage to the current page.
Improve website design
The first impression matters. The first thing the visitors will see is the design of the website. Try to make it appealing and use it to draw attention to the products. Implement your own ideas, test different layouts, and use high-quality images to create a website that will encourage customers to buy in your store. Furthermore, keep the product pages consistent and up to date.
As more and more people are shopping online on mobile devices, it is also important to create a design that is mobile-friendly. To do that, it’s important to use a responsive design that adjusts to fit the screen size. This ensures that the website is easy to navigate and view on any device. It’s also essential to simplify the design and layout of the website for mobile users, reducing the number of elements on the page and making sure that buttons and links are easy to tap with a finger. Too much information on the screen may be annoying.
Utilize customer reviews
The next step is to make use of customer reviews. Nowadays, they are a must-have on the website. Encourage your online shoppers to leave reviews after they receive a product, as they are a testimony that the products are trustworthy and worth buying. Additionally, customer feedback is a great way to check what are the potential weak sides of the website and what segments needs improvement. Respond to any negative reviews in a professional and courteous manner, showing that the business values customer feedback and is committed to addressing any issues.
Implement an effective pricing strategy
Well-thought prices of the products are vital in the eCommerce business. Even if your website looks awesome, overpriced products will still discourage visitors. The right pricing strategy can help to attract potential customers and persuade them to make a purchase. To implement an effective pricing strategy, the first thing that should be done is to get familiar with competitors’ prices. This will help to adjust the prices to the current state of the market. Second of all, promotions, discounts, and bundle deals are great ways to incentivize customers to make a purchase. For example, awarding loyal customers with discounts will encourage them to stay and even recommend your store. Thirdly, give online shoppers multiple payment options (Paypal, credit card, debit card, etc.). Last but not least, if the eCommerce store is selling internationally, consider accepting multiple currencies as the payment option.
Enhance the checkout process
The checkout process is the last step in online shopping. A poorly designed or complicated checkout process can lead to cart abandonment and lost sales. To enhance the checkout process, it’s important to simplify the process as much as possible with clear and concise instructions and minimal form fields. To do so, it’s a great idea to implement one-click checkout. It is a streamlined checkout process that allows customers to complete their purchases with a single click without having to enter their payment and shipping information every time they make a purchase. Another feature that can improve conversions is guest checkout in the eCommerce store. It is crucial not to force customers to do something, in this case, creating an account. Finally, eCommerce stores can offer free shipping over a certain amount and free returns of products to increase customer satisfaction.
By making the checkout process more accessible and streamlined for customers, you’re opening yourself up to repeat visits and a greater customer experience.
Tracking the conversion rate is crucial for the success of any eCommerce business. Nonetheless, it is hard to answer the question of what is a good conversion rate as it varies depending on the industry and goals. The best way to keep the business growing is to have a conversion rate that’s higher than what you had before (e.g., last month). By using the metrics described in this blog, it is possible to analyze the customers’ behavior and see what segments of the website need improvement. Moreover, the strategies for conversion rate optimization listed above, like optimizing the website navigation and implementing the pricing strategy, can boost the overall performance of an online store and help in its further development, ultimately leading to great success.
If you have any questions regarding the creation of an eCommerce store or choosing the right technology to do it, feel free to contact us!