E-sellers attempting to scale online eventually begin to focus on the art of sales conversion rate optimization.
Why is this such an important area of focus for online merchants who want to grow?
When discussing e-commerce conversion rates, a conversion is said to occur when an individual makes a purchase from your online store.
An e-commerce conversion rate, then, is the percentage of people who have bought from you within a particular time period.
While this metric is only one way to measure the success of your online store, succeeding in optimizing your conversions will boost your sales, revenue, and return on your marketing investment.
What is Sales Conversion Rate?
Technically, someone making a purchase only represents one type of conversion.
When someone adds a product to their online shopping cart, includes an item on their wish list, signs up for your newsletter or shares your ecommerce site on social media, those can also be considered conversions under certain circumstances.
However, by focusing solely on sales conversions (that is, those who have successfully made a purchase), you get an actual determination of how successful your e-commerce business truly is. The more sales you earn, after all, the more success your business is said to have.
Therefore, conversion rate optimization should focus on the amount of purchases if you truly want to identify your e-commerce store’s current levels of success.
The Sales Conversion Rate Goal
You may find yourself looking at your current sales conversion rate and lamenting that it’s not high enough, but not so fast. The truth is, the average e-commerce conversion rate hovers between 1% and 2%.
Of course, as Brandon Weaver so eloquently stated in a piece for Instapage:
“A good conversion rate is one that’s higher than it is now.”
If your e-store is currently delivering that range of conversion rate, you’re doing well. If not, you have some work to do.
You can use a conversion rate calculator or you can use a few other methods to calculate your conversions.
Let’s look at a few of those techniques now.
How to Calculate Sales Conversion Rate?
Before we get to the methods for boosting your conversion rate, let’s calculate this metric for your e-commerce website.
The first step is to log into a website tracking platform like Google Analytics. A tool like GA will provide you with all the data you need to more precisely calculate your site’s conversion rate.
First, you’ll need to know how many individuals visited your e-store, regardless if they bought from you or not.
Next, you’ll need the number of buyers during that same period.
Finally, you’ll divide the buyers by the visitor account, then multiply that number by 100.
Sales Conversion Rate Formula
Here’s that same formula broken down more simply so that you can plug-in the numbers from your own Google Analytics account.
(Number of Conversions / Number of Clicks) x 100
Here we are calculating the amount of people who have visited your e-commerce store after clicking a PPC ad, for example. So, if 5000 prospects clicked on your ad in a 30-day period and 50 made a purchase, ((50/5000) X 100 )that’s a conversion rate of 1%.
How to Calculate Sales Conversion Rate in Excel
To effectively calculate your e-commerce site’s conversion rate in Microsoft Excel or Google Sheets, you’ll want to create three columns.
In Column A, label the cell Conversions.
In Column B, the cell should be called Clicks.
Column C will then be reserved for the total we’re trying to identify, the Conversion Rate.
Columns A and B will be blank, as those will be the locations for your conversion data, the conversions and clicks your site receives respectively.
Column C will contain the formula [=(A2/B2)]. Unlike the formula above for calculating the conversion rate, you don’t need to multiply by 100. You simply hit the [%] icon in the top menu to convert your rate to a percentage.
Once complete, your Excel doc should look like this.
Importance of the Conversion Funnel
When attempting to improve your conversion rate, you will want to take a serious look at your conversion funnel.
This is a representation of the buyer’s journey and goes from the Awareness stage to the Interest Stage before entering the Desire and Action stage.
An illustrated conversion funnel looks something like this.
Otherwise referred to as the acronym AIDA, this path to the purchase has been studied by marketers for decades.
During the Awareness stage, prospects are just beginning their research with your brand and offerings.
During the Interest stage, prospects are more on the hook. Your funnel becomes narrower at this stage because many of those Awareness stage prospects sloughed off, which means the individuals who are left have a higher degree of interest than those initial prospects.
During the Desire stage, it’s up to your brand and the content you distribute to build even more interest in what you have to offer. Here you’ll want to make it very difficult for prospects to say no to a purchase by conveying your unique value offering clearly and in no uncertain terms.
Finally, you’ll want to spell out an Action — what you hope for your prospects to do — which is most likely buy from you.
Once you’ve identified the steps of your funnel, you’ll want to engage in conversion funnel optimization, where you ensure every stage is streamlined and designed for maximum lead response.
E-commerce Conversion Funnel
An e-commerce conversion funnel is an excellent way to break down the buyer’s journey so that you can identify roadblocks and opportunities for greater conversions.
Essentially, a conversion funnel in e-commerce is the route your customers take from their first instance of awareness about your brand to actually committing to a purchase.
However, e-commerce funnels aren’t only reserved for new customers. To be effective, your conversion funnel should include strategies for customer retention, cross-selling, upselling, and subscription-based models, for example.
Keep in mind that your e-commerce conversion funnel can consist of multiple touchpoints across platforms before buyers commit.
For instance, a prospect may see your ad on Facebook. That leads to a Google search, then a website visit. Later, the prospect sees a retargeting ad on their Instagram account, clicks on your website, and finally makes a purchase.
While it may seem disjointed, this buyer’s journey is incredibly common in today’s interconnected digital world, and therefore you’ll need a 360-degree view of your buyer’s journey in order to maximize your conversions.
In other words, it helps to be aware of all the touchpoints prospects may use on their way toward becoming a customer. That’s the only true way to sketch your funnel and engage in e-commerce conversion funnel optimization for best results.
Sales Conversion Rate Statistics: What is the Average E-commerce Conversion Rate?
In the United States, the average conversion rate for e-commerce store owners is a little higher than the CR for regular websites, at 2.63%.
If your e-commerce conversions are nowhere near that figure, not to worry.
The key is to uncover what might be holding your conversions back, then put steps into place to raise them over time. With enough consistent effort and an ear for listening to all consumer concerns, you can boost your conversion rates to match or beat the national average.
Here are seven steps to take right now if higher e-commerce conversions is your primary objective.
How to Optimize Your Sales Conversion Rate in 7 Key Steps
Here is how to increase conversion rates when yours leave a lot to be desired.
#1 User Personas
If you’re not getting the conversions you expect, it could be that you’re not as familiar with your audience as you could be.
Knowing your audience requires you to sketch a buyer persona that breaks down the ideal customer’s age, location, industry, budget, needs, and problems.
The thing is, you may have more than one buyer persona. The best thing you can do for your business and conversion rate optimization efforts is to learn as much about your audience is possible, sketch out your buyer personas, and use that data to tighten up your e-commerce campaigns for higher conversions and returns.
Over 60% of retailers cite customer retention as their biggest obstacle, and for good reason. Research shows that e-commerce store owners are nearly 70% more likely to spend more time on new customers than those who have already committed to a purchase.
However, spending time on customer retention should pay off nicely, since 66% of US consumers tend to spend more on businesses they’ve already made a purchase from.
Furthermore, it can be up to twenty times costlier to acquire a new customer than to keep a current one.
You can retain more of your customers by focusing on those that are the highest converters. Stay in touch with them the best you can post-purchase.
You can invite them back while giving them plenty of reasons to return, such as discounts, loyalty membership perks, and other offers that will entice them to recommit to buying from you.
You are also encouraged to speak to your customer service team to try and identify any ways in which your company can improve its customer retention program.
#3 Landing Page Optimization
If your conversion rate is suffering, don’t automatically toss out your landing page and start fresh, as many marketers are apt to do out of frustration. It could be that a few tweaks here and there are all that are needed to maximize conversions and boost your bottom line.
Instead of removing the page altogether, try to look at your e-commerce landing pages with fresh eyes. If you can, see the pages through the eyes of your buyer persona.
There are many reasons why a landing page is failing to convert. It could be that your headline needs to be more emotionally-driven, your CTA might need to be more direct, or maybe your design is too off-putting. It also could be people are confused by too many options.
When in doubt, always go with a lean landing page user experience (UX). Include just enough elements to entice buyers to make a purchase.
Any excess images, navigation links, and verbiage can detract from the overall goal, which is to inform prospects and convert them quickly before they have a chance to change their minds and bounce.
Part of landing page conversion rate optimization is ensuring everything is as streamlined as possible for a three-click-maximum purchase.
#4 Customer Value Optimization
Your offer may not be very clear to the prospects you’re attempting to convert. What value are you offering? This unique value proposition should be clearly spelled out so anyone can understand.
If you take the time to assess your buyer persona, finding those sales features that appeal most to those individuals will become an almost intuitive task in nature.
By conducting this type of deep market research, you can pinpoint the very value your customers expect and how much they’re willing to pay for that value.
Nearly half of all online shoppers say that they prefer websites with personalized recommendations. Alternatively, 74% of e-commerce customers report feeling frustrated by content that doesn’t match their interests.
The first step to personalizing your e-commerce store for your audience is to segment your audience by their interests, problems, and other commonalities. For example, you can segment your customers by new visitors and previous buyers so that you can send unique and enticing messaging to each group.
Once you learn more about your buyer personas, you can tailor your verbiage to meet their unique desires, answer their questions, and entice them to make a purchase.
Your web copy should be written as if you are speaking to your audience directly.
Some companies go so far as to provide dynamic content on their landing pages and websites. This uses segmentation to show differing web page content to various types of prospects.
For instance, your website may speak to new visitors or return buyers, depending on who landed on your website.
Dynamic content can be targeted to consumers based on their specific interests, company role or title, industry, and customer life cycle.
You can attempt to compete now by adding personalization elements to every touchpoint possible, from emails and landing pages to ads and website copy.
If prospects feel as though you’re speaking directly to them, they’ll be more likely to become loyal and buy.
#6 Segmentation Strategy
When you have various buyer personas sketched out, you can then begin to determine what each segment wants in a value proposition.
Fleshing out your buyer personas is the most difficult part. Once you know all the details, identifying the key features and benefits of your offerings should be an intuitive affair.
You are also encouraged to send surveys to current clients who fall within your target market segments to continue fleshing out your buyer personas as time goes on.
After all, segments may change preferences, develop new problems, and so on.
Only by keeping on top of your segments and giving them the necessary attention over time can you identify opportunities for improving conversions for each of your segment groups.
#7 AB and MVT Testing
Even with intensive market research, your landing pages, ads, and overall message may be lacking in some way. Perhaps the colors of your website aren’t as eye-catching as they could be or your value proposition could be a bit clearer.
When in doubt, test. By testing the various elements of your website, you can determine which combination of elements greases the skids to maximum conversions.
A/B and multivariate testing represent two methods for determining what your audience truly responds to. A/B testing is where you take one element of a website and you tweak it in some way. You will then show the old version and new version to your audience while determining which version is the most successful.
For instance, let’s say that you have a landing page that isn’t converting as much as you’d like. You can test two different headlines with the same landing page by showing a different version of the headline to the same audience at different times.
When you tabulate those results, you’ll see clearly which headline generated the most conversions.
Multivariate testing is where you test a combination of elements on your site in conjunction with one another.
Various online tools allow for A/B and multivariate testing. These platforms let you determine which elements are successful with your audience in real-time.
One of those tools is Crazy Egg, the first developer of the highly-useful A/B testing tool, heatmaps.
Take Advantage of These Crazy Egg Features
You have a number of site testing tools at your fingertips with Crazy Egg, such as heat maps and visitor session recordings.
A heatmap is a visual representation of where people tend to click, hover, and otherwise take action on your website.
By using heatmaps, you can identify common issues with your site, and possibly identify opportunities for improving pages for higher conversions.
For instance, if you notice that people rarely click one of your navigation menu items, you can remove it for a more streamlined effect. The fewer options you give visitors, after all, the more likely they are to take the path you recommend.
Crazy Egg even makes it possible to record real-life visitor sessions. You can then watch these sessions to get an idea of how visitors navigate through your site.
Similar to heat maps, site recordings give you an opportunity to identify roadblocks and create opportunities for more e-commerce conversions over time.
These are just two of the tools offered by this revolutionary platform.
You’re encouraged to try it if you want to engage in website testing with the highest-level tools available to marketers today.
Common Sales Conversion Rate Mistakes
When attempting to boost your conversions, make sure you’re not committing these common user errors.
Not Letting a Test Run Long Enough
When A/B and multivariate testing using Crazy Egg or another platform, ensure you are collecting enough data before making important campaign decisions.
While Crazy Egg and others do provide fast test results, you’ll want to hold off before tweaking your campaigns to any significant degree.
Some marketers recommend that you wait seven days before making any campaign changes based on your A/B test results.
Only by continuously testing your campaigns can you get an idea for long to leave a conversion rate test in motion before committing to an alteration of any kind.
Testing Random Things
Be clear about your intentions when testing various website elements.
To do so, you’ll want to form a hypothesis for your test. For example, headline A will be more popular than Headline B could be one of your hypotheses.
As long as you don’t go into testing while treating it as a guessing game, and you’re clear about the proposed outcomes of your tests, your time won’t be wasted.
Treating Low Traffic Websites the Same
Every website has its own issues as far as conversion rates are concerned. Never assume that because one headline caused a landing page to convert better than you can replicate those results across landing pages.
Every e-commerce website you operate should be thoroughly vetted and tested using the advice contained herein. There are far too many variables at play on individual sites to create blanket statements for them all.
For that reason, it’s best to treat every website with fresh new eyes as you attempt to increase their e-commerce conversion rates.
As an e-seller, it should be a relief that current sales conversion rate statistics are fairly low. 1% to 2% is a good number to shoot for and shouldn’t be incredibly difficult to achieve.
Sadly, only about 30% of business owners are reportedly satisfied with their conversion rates. If you’re unhappy with your rates, you now have key advice you can put to good use starting right now.
By developing user personas, being clear about your value proposition, introducing more personalization, and focusing on new visitors and return buyers alike, you can boost your conversion rates to meet or beat the national average.
Then, with Crazy Egg, you can continuously test your website over time to boost your rates even more.
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