How do you measure the success of your eCommerce business? I believe you keep track of key metrics regularly. There are several business-related data you can measure, but the conversion rates come on top of everything. Conversion rate is an important metric for an eCommerce business, as it proves how well you manage to convert website visitors into customers. In this article, I discuss what a conversion rate is, how it’s calculated, average eCommerce conversion rates by industry and traffic sources, and six essential areas you need to focus on to achieve good conversion rates.
The eCommerce conversion rate explained
In the eCommerce context, conversion refers to the percentage of visitors to your site who actually make a purchase. A high conversion rate means that your website manages to convince users to become leads or customers, while a low rate shows that you may need to try new strategies.
Remember: your conversion rate is more than an indicator of your sales performance—it’s a measure of how well your store satisfies your customers’ needs. Therefore, monitoring your conversion rate will help you receive valuable insights into how visitors interact with your website, allowing you to adjust certain elements to maximize the website traffic.
How is the conversion rate calculated?
Calculating conversion is straightforward and easy. You need to divide the number of conversions you have in a given time period by the total number of users who visited your website or landing page and multiply it by 100%. See the formula below:
Conversion rate = (conversions / total website visitors) * 100%
For instance, if your Shopify store had 7560 visitors and 133 conversions in August, your conversion rate is 17.5%. Simple as that.
What is a good eCommerce conversion rate?
A good conversion rate is unique to your business and is a highly contextual figure which can depend largely on different factors, including industry, product type, traffic source, location, and the supply and demand of purchasers.
For example, if a business sells expensive electronics it isn’t going to have the same conversion rate as one selling cheap fashion accessories. Thus, when measuring your conversion rate, it is vital to consider all of the above contributing factors.
Average eCommerce conversion rates are around 2.5-3%. Anything above 3% should be the baseline target for your online store. Once you achieve that, then you can move on to more advanced conversion rate tactics.
Average eCommerce conversion rate by industry
Good conversion rates are strictly tied to the products or services and how they’re being advertised through campaigns. The image below shows the conversion rates per industry, based on the data collected from IRP Commerce.
Arts and crafts come on top of the list with an average 4% conversion rate. Electrical and commercial equipment stores come next with a 2.70% conversion rate.
A conversion is a volatile metric. Yet, you can use these benchmarks to have a better overview of your own eCommerce store performance and goals, as well as shape your optimization strategies.
Average eCommerce conversion rate by traffic source
As shown below, organic search, paid search, and referral traffic generated the highest conversion rates, while social and display traffic saw significantly low conversion rates.
Source: B2C Retail BenchmarkReport, Q1 2020
Although paid search can put you at the top in a short time span, your visibility and ranking will disappear as soon as you stop paying. Organic search, however, has more staying power and is a more sustainable way to increase both, the quality and quantity of your website traffic.
6 major factors that contribute to a good conversion rate
Here are the 6 factors that’ll greatly impact your eCommerce conversion rates.
1. Frictionless shopping experience
Customers like to make purchases from websites that feel comfortable to them. But how exactly can you help customers make a confident decision? One tactic is to get rid of unwanted registration and compulsory sign-ups which are synonymous with extra hassle and lost sales.
Another tactic for a smooth shopping experience is to allow shoppers to review their baskets before pressing the final button to complete their orders. What if they want to ensure they’ve added what they came to your site for?
Last but not least, I’d suggest allowing your customers to save products for later. You can then send personalized emails to people to remind them to review their cart orders again and complete the purchase.
2. Exceptional customer service
Customer support is usually seen as a cost center, so businesses aim to minimize those costs. But how about I tell you that you’re actually missing out on revenue? Customer service is what drives both engagement and satisfaction, and, eventually, conversion rates.
It should be your priority to focus on creating positive experiences, even real-time support or live chat, if possible. Intercom has found that real-time support generated 15% incremental growth in new business revenue. That’s impressive. Interestingly, live chat happens to be the most preferred customer support channel for customers. Who would say no to immediate help with minimal effort required?
3. Product reviews
When it comes to persuading people to buy, we can’t deny the influential power of product reviews. Did you know that 90% of consumers want to review at least 5 product reviews before gaining trust in a business? People rely heavily on reviews when making purchasing decisions, and most people won’t even purchase if product reviews aren’t available.
You definitely need product reviews on your eCommerce business. Now you need to think about how you can motivate your customers to write product reviews as much as possible.
4. Modern and multiple payment options
Don’t you want your customers to find it convenient to work with you? So, never limit payment choices for your customers, otherwise, they’ll abandon their carts without following through on a purchase. The easier you make it for users to pay you, the more likely you will have more revenue coming in.
Offering modern and different payment methods allows you to appeal to a wider demographic, achieve enhanced brand perception and ultimately maximize conversions.
5. Page speed
Typically shoppers expect pages to load in just a few seconds, and they want mobile sites to load even faster than those opened on a computer. If a website takes too long to load, customers will become impatient and leave your site.
A user is more likely to make a purchase at your shop if your page loads quickly since they can browse your website or view products more quickly. A hefty 70% of shoppers admit that page speed influences their willingness to buy from an online retailer. Go and check how fast your eCommerce website loads and see if you can improve it for higher conversions.
Personalization in eCommerce is the practice of engaging with customers via experiences and content that are highly relevant to them. 80% of shoppers are more likely to buy from a brand that provides personalized experiences. What do digital marketers think about personalization? Well, 98% of marketers believe that personalization strengthens customer relationships.
There are different ways to implement eCommerce personalization. For example, you can geotarget to show the correct language and currency. If a customer visits the website from the UK, show him/her the shipping rates or prices in GBP rather than USD.
Adding elements of personalization to your eCommerce store can be a valuable tactic in forming profitable relationships with customers and boosting your conversion rates.
Understanding your online store’s conversion rate can be valuable for analyzing and improving your business performance. Your eCommerce store will reap the benefits as long as the changes you make to your store are increasing your conversion rates.
Getting long-term results is in your hands. You just need the right mix of techniques and tools. If you’re a Shopify business owner, one tool that will provide you with every possible insight is Google Tag Manager App for Shopify. This easy-to-use tool comes with a seamless workflow and is great for automating your analytics and conversion setup for your Shopify site with over 30 pre-built tags that only take less than 5 minutes to install.