Building eCommerce Success: Understanding Conversion Rates
Online merchants evaluate their ecommerce success with a flood of data recorded online. While the internet's impressive tracking abilities simplify data collection, it takes a motivated and committed site owner to regularly analyze the numerous variables of an ecommerce success strategy. The fundamental ecommerce focus on conversion rates requires attention paid to a simple equation with a staggering number of variables.
Merchants evaluate their ecommerce success with a flood of data recorded online. While the internet's impressive tracking abilities simplify data collection, it takes a motivated and committed site owner to regularly analyze the numerous variables of an ecommerce success strategy. The fundamental ecommerce focus, conversion rates, requires attention paid to a simple equation with a staggering number of variables.
eCommerce success requires an aggressive analysis of visitor abandon points on websites, an uncovering of possible reasons behind the departures, and strategic planning to convert more visitors into paying customers. Every online merchant's goal is to create a wider base for their visitor funnel chart.
Conversions = eCommerce Success (Maybe)
In its most general form, conversion rate refers to a number of desired actions divided by the total possible number of desired actions. This formula creates a percentage of visitors who complete a desired action. For ecommerce merchants, conversion rate most often refers to the percentage of visits that convert to purchases, although there are plenty of other behaviors that can be labeled as conversions including downloads, signing up for a newsletter, providing contact information, or leaving comments on a site.
Conversion rates vary across products and websites. Higher-priced items typically have lower conversion rates, while lower-priced items, upsells (add on sales per order) and last-minute purchases often produce remarkably high conversion rates.
A website that receives more brand search traffic may have higher conversion rates than one relying on SEO traffic since consumers are to a great extent "pre-sold" on the brand, verus still in the comparing stages. Although some market experts will venture to speak in generalities about "typical" conversion rates (for example, anything under 1% needing attention, 1-2% being average, and 2.5+% good), most are quick to hedge these statements and admit strong variability.
Conversion rate factors not only depend on how a company defines the terms of the equation, but also how the terms are reported. Different analytics and tracking tools can lack consistency in reporting data.
The common standard for session timeouts and cookie lifespan would need to be considered. Ultimately, conversion rates spell ecommerce success when retailers bring customers to their sites and persuade them to buy. Companies are more likely to achieve this ecommerce success by focusing on unparalleled customer service and regularly integrating consumer feedback rather than spending too much time making comparisons to "industry standards."
The Foundation Of eCommerce Success: Data Analysis
In order to generate ideas for maximizing conversion rates, online merchants must know the ins and outs of their websites' activity. It's imperative to utilize tracking programs like Google Analytics to monitor site conversions. (A good shopping cart program like Ultracart integrates Google Analytics along with many other conversion tracking programs, simplifying data collection.) These programs will reveal trends that merchants can use to identify areas of improvement and begin a plan for ecommerce success. Essentially, the merchant needs to follow the customer's path from initial generation to conversion and test one variable involved against another to continuously improve or optimize the process.
For example, an online merchant who notices a desirable amount of traffic, but low conversion rates should examine whether the traffic is relevant to the site's products or services by examining the source of traffic (i.e. which keywords, pages from referral sites, etc). If a clear match exists, this data may suggest a website design or navigation issue, poor product descriptions or portrayal, non-competitive pricing or even non-functioning web pages (i.e. 404 errors).
It's also important to identify where website traffic is coming from (Google, Bing, Yahoo, referrals, and different geographical regions). If conversions are higher from one of these major sources, resources can be redirected toward the more successful vehicles, for instance targeting PPC traffic to urban areas versus rural, or putting more money into PPC from one search engine versus another.
Similar to the higher conversions from those searching for a brand, if visitors enter a site through a product reference on another website's page, they are more likely to convert than someone entering via a general search phrase.
Understanding traffic sources allows for more customized marketing. For example, merchants can set up funnel visualization in analytics programs to reveal where visitors are dropping off, which provides clues to website abandonment motives. Win-loss analytics examines internet data to determine who visitors are, identify the products they search for and what factors either persuaded them to buy or deterred them from buying.
Programs like Google Analytics help merchants gain more eCommerce success since they can provide both "big picture" and more specific (i.e. product or keyword level) views of where visitors are and aren't turning into customers. This visitor flow chart is a macro view of where the visitors to this website are dropping off. This allows the merchant to start testing different points of this process (such as different landing page variations) to try improving. For instance, this merchant would do well to test alternatives to the pages in the third column which represents the "1st interaction" after they reach the merchants home page.
eCommerce Success Tips:Increasing Conversion
While there are exceptions (such as when an internet retailer has a proven high conversion rate or when the retailer suspects the traffic sources are producing highly unqualified visitors), in general it is a better return on investment to put resources into increasing conversions from existing traffic than to pay for increased traffic. When companies develop such an ecommerce success plan for higher conversion rates, they spend less by focusing on converting the visitors who leave their sites rather than dumping all their resources into obtaining more site traffic. Generally eCommerce merchants wanting to boost conversions will:
- Focus on convenience with easy navigation and simple checkout processes and test/optimize that process by creating funnel tracking
- Monitor search queries on their sites and search engine referrals looking for patterns in such factors as bounce rates, pre-conversion statistics (like newsletter signups), differences in geography, seasonality and other variables
- Test variables with higher performance against new variations such as different offers, page design elements like call to action buttons and different checkout processes.
- Run PPC ads to trial different marketing strategies because the traffic can be controlled and segmented to help increase test speed and accuracy
- Include recommended and related products and monitor the result in average order size as well as conversion
- Utilize creative remarketing campaigns to capture potential lost business, testing various creative approaches as one does with front end traffic acquisition
- Create variations in landing pages to collect visitor information and test them against existing pages to see what, if any, improvements are gained (Use of AB and multivariate testing functions like UltraCart's UltraROI program can help speed this process. Also engaging a web design source like Ultracart's custom web design service with experience in web page testing can speed up the process.)
- Encourage regular customer feedback and post customer reviews and testimonials when collected (Use of "contextual" surveys like Xurtle can increase participation by including specific questions about a product on the page featuring that product.)
- Engage visitors with contests and forums.
- Place trust seals on all pages and associate them near buying phases such as "add to cart" buttons
- Post several different ways for customers to contact the merchant including live chat, toll free support numbers, email contacts and even fax numbers (for some industries that still use them like medical offices)
- Engage visitors when they hesitate through a live video chat option with a customer service representative. To earn customer trust and respect, the representative should address their visitors by name and begin the conversation with a specific and relevant question such as "I notice you are searching for a netbook. Can I help you find one that meets your needs?"
- Include employee pictures and specific profiles to increase the relationship between potential buyer and seller
- Respond immediately to customer inquiries
What Really Makes For An eCommerce Success And What Doesn't
In a recent ecommerce success survey, retailers who experienced higher conversion rates attributed the increases to analytics tools, sales and clearance pages, customer ratings and reviews, increased site search options, and offering multiple product images. Conversely, they named less effective forces as implementing mobile media customer ratings, wish lists and gift registries, daily deals or discounts, and side-by-side product comparisons.
Perhaps the most fundamental principle of the ecommerce success formula is that there is no simple principle. Conversion rates are the product of many variables; therefore, retailers must customize an ecommerce success plan based on their companies' goals and resources. And once a plan is developed, it must be constantly evaluated. Customers' needs are not static. Committed retailers must battle to keep up with an ever-changing consumer landscape.