Quick intro into Conversion Rate Optimization for your eCommerce
When managing an online store you’re always looking for ways to get more sales and more value out of each customer. The first response of probably 3/4 of ecommerce websites is to get more traffic to the site. That is one way, of course, but what if you’re wasting almost 70% of that traffic with irrelevant landing pages, bad user experience, ruptured funnels, insufficient product information and so on then wouldn’t that be a terrible shame?
You might say your conversion rate is 4% or 9% or 15%, which is more than most eCommerce businesses out there but the truth is you should always strive to improve the conversion rate you have now and not focus that much on benchmarks and industry statistics. You can always do better than you’re doing now.
Maybe you’re running advertising campaigns on your own to your online store and they just don’t seem to be performing as you expected them to? Or maybe you’re working with a nice PPC agency that does deliver results but they keep asking for more money towards their ad spend? In order to scale your ecommerce business at the most efficient and cost-effective rate, you need to make sure your website is delivering the very best user experience.
Not sure exactly where to start and what to look for? In this article I will guide your through a small part of my process of eCommerce conversion rate optimization and share with you some of my experience from working on dozens of websites.
You must start with defining your business objectives and KPIs (key performance indicators)
Think about your business objectives for the next 3–6 months. Are they to get more new customers? To increase your return customers rate? To scale your email marketing? This is specific to the point your business is at and will help you plan your optimization efforts accordingly.
When it comes to key performance indicators, for eCommerce, I generally focus on the following:
Ecommerce conversion rate (formula: Number of Transactions/Number of Users x 100)
It is important that we mention Users here and not sessions, as Google Analytics calculates it, for example, as sessions are not necessarily a good definition of an individual and his shopping behavior. When we say users in Google Analytics we are referring to a cookie attributed to a browser. This means if you visit the site 4 times from your Chrome on your computer and purchase once, you will show as 1 user but 4 sessions. So what happens is you treat the same individual as 4 different individuals which will skew your understanding of users’ behavior and how you should act on it.
Another thing to keep an eye out for is your eCommerce conversion rate per device, as well as the amount of traffic you’re getting on each device. Many times I’ve seen site owners focusing on their desktop version of the site when, in reality, they were getting about 70% of traffic on mobile and mobile was converting terribly due to an unoptimized mobile experience.
How do you find out your conversion rate for each device? In Google Analytics, simply select Audience → Mobile → Overview and there you have it. Make sure you select “eCommerce” in the goals section to see your eCommerce conversion rate.
In this example you can see how mobile devices have 29% of all traffic but bring in 0.56% of all revenue in January
Another way to look at your metrics across the board for each device category? Add the segments from the segments library and then you can go through each report and see how they compare.
Click the Add Segment button in the top area of your analytics screen
After that, select “mobile traffic”, “desktop traffic”, “tablet traffic”, click Apply and you will have your three segments applied to your reports. You will see something like this, in our audience overview, for example:
See how your metrics differ from once device to the other and try to identify what could be causing the differences
You should do this for browsers as well and check that you don’t have any outliers in terms of conversion rate across browsers. You might find out your checkout is totally incompatible with Internet Explorer 10. You don’t know until you check.
Average Order Value (formula: total revenue/number of transactions)
Why is the Average Order Value important? First of all, it shows you how high you can go with your Cost of Client Acquisition. In any advertising efforts you are running, you will have a cost per conversion or cost per action. If your average order value is $50 then you know you will be able to spend maybe $25 per each new client. This depends entirely on your COGS (cost of goods sold), overhead, profit margin, etc. This value is also greatly influenced by your returning customers rate — I used to run campaigns that would barely break even on the initial sale as I knew those users would return and purchase for double or triple amounts. The KPI that would tackle this is Customer Lifetime Value but this is a subject in itself which I will address in another article. In the meantime, if you want to learn about this, I think this infographic is the best way to understand it without being really confused.
You can see your Average Order Value in the eCommerce section of your Analytics (make sure you have eCommerce enabled for your analytics views). If you don’t or for some reason don’t want to use that, simply calculate it from your sales reports. Some eCommerce platforms also do that for you in your dashboard, such as Shopify. However, you shouldn’t take the Analytics eCommerce numbers as something to file your taxes from, there will almost always be discrepancies between the exact numbers you have in your sales reports and the numbers you have in your analytics. Anywhere under 10% could be acceptable, anything over shows you have something wrong in your tracking.
This is an example of how the three device segments would look applied to your ecommerce overview in Google Analytics
Shopping Cart Abandonment Rate (formula: number of adds to cart/number of finalized purchases x 100)
Shopping cart abandonment rate matters and we’re looking at it separate from the eCommerce conversion rate as it’s a good indication of our shopping cart performance and how much users trust the products, website, brand and so on. The eCommerce conversion rate shows us the rate at which all users that land on the site convert and the shopping cart abandonment rate shows us the rate at which users that have shown an actual interest in the products convert.
Your products might be very appealing to your users until they reach the checkout and find out they need to pay a shipping fee that’s almost as much as the product they’re ordering. Or they see you don’t accept PayPal or Visa or your payment process is not properly encrypted and they don’t feel safe in handing out their personal details. The reasons here can be many and that’s why we need to look at each step in the buying journey and optimize accordingly.
If you have enhanced eCommerce installed (properly!) you will be able to see a sweet report that will show you drop-offs at each point in the buyer journey and separately in the checkout process. Again, if you have a Shopify store or use another platform that has an enhanced ecommerce plugin, then you should be able to install it with less effort but I strongly recommend using a developer for this. You do it once and it’s a bit of a pain but it’s definitely worth it in the long run.
In the “Shopping Behavior” section of your enhanced ecommerce you will be able to see the drop-offs at each step of the funnel.
In case you don’t have this installed but you need to have a retroactive view on your funnel, you can go about it in a manual way that kind of does the trick. By creating a custom segment for users that reached each step in your funnel you will be able to calculate your drop-off and see where you need to optimize first. Get the number of users on each step and then calculate the drop-off from one to the other.
- All users (all users, you already have the segment in analytics)
- Viewed category page (through RegEx define your category pages)
- Viewed product page (same, you can create a sequence condition and see that they reached the product page from the category page or leave all users that reach the product page)
- Added to cart (best way is to trigger an event when products are added to the cart — see your dev for this if you don’t have GTM installed and can work it out yourself)
- Reached checkout (again, through an event triggered when they reach the checkout. You can also do this as “page” equals checkout but you have to be careful here if you have more steps in your checkout)
- Finalized Purchase (destination “page” on your thank-you page or event, depends on your setup).
Build a retroactive funnel this way so that you can analyze the past performance of your sales funnel
This benefits you in many ways but the number one win is that you get to see what sections of your website need attention first. You might see that people drop off from the landing page, they never really make it to the next step. See if your landing pages are relevant to your traffic, maybe you’re showing ads for shoes but then your users land on your homepage where you’re promoting your latest bags and hats that are on sale. By the way, you really shouldn’t be sending traffic to your homepage on your ecommerce.
Here are some of the main elements I’ve seen make a difference on each of the main steps in eCommerce websites I’ve worked on.
- number one issue is the irrelevant content to the ad the users came from.
- poor quality of product images has to be the number one conversion killer. If your product images don’t look good and don’t show the product entirely, they won’t spark any kind of interest.
- too much clutter on the category page will keep users busy with anything else than clicking through to products
- no filters on the category pages — if your users will have to look through 500 products to find the one they are looking for they will most likely abandon
- long loading time on products — users tend to scroll fast through the category pages so if they face any kind of friction in this, they could lose patience and exit
- non-uniform photos — if your product images have different sizes, layouts, backgrounds etc. it will be very tiring for users to browse through as they would in a physical shop so they won’t spend the time necessary to convert
- I simply have to mention product images again here as I have just been working with a client with stunning products and history of their brand but with really unappealing product photos. The results is that they’ve spent quite some amounts on advertising but people were just not interacting with the products.
- insufficient product information — if you’re selling clothes you absolutely must provide as much information as possible about sizing and fit. Mention the size of the model pictures, dimensions, fabric and care details. Size is important for most of the products sold and it helps to show them next to a standard sized item, such as a chair, desk, lamp, whatever fits with the product you’re selling.
- vague shipping details such as delivery time and pricing. Depending on the products sold, the delivery time could make a big difference. As much as possible, try to offer free shipping as you would be surprised how not charging $5 on shipping matters more than offering an extra discount on that purse which might be worth $10.
- trust is, obviously, very important here. Show all the trust seals you have, encrypted transactions, BBB accreditation, reviews from previous users, this is where the first wave of objections will show up.
- users want their purchases to be risk-free so if you have a money-back guarantee or nice return policy, make sure it’s visible and easy to understand.
- another element that makes a difference on the cart is the ability to change the quantity of the products. I’ve seen use cases in which users had to remove all the products from the cart in order for them to be able to add another product. Very frustrating, needless to say.
- if the cart was the first wave of objections, then definitely the checkout is the tsunami of objections. This is where your users need to take out their wallet and hand you their information. It’s such a personal and sensitive step that you have to absolutely reassure them it’s 100% safe. Use trust badges, antivirus/malware scanning you have, encryption, money-back guarantees. Don’t be too over the top but be sufficient to address any objections.
- any good optimization plan starts with a good definition of objectives and key performance indicators
- always always check your implementation and never follow the numbers blindly
- start with identifying the major drop-off points in your conversion funnel and optimize where you’re losing most money
- segmentation will help you in narrowing down issues and finding solutions faster
- each step of your conversion funnel can be improved as long as you keep an eye for what your users are doing and what’s keeping them from moving to the next step
- A/B test every major change you do and adapt any framework to your own situation. There are plenty of best practices out there but that doesn’t mean they work in 100% of cases.
If you’re still confused or want someone else to do this for you, you can just contact us for a free, no-obligation page evaluation to find out how we can help you reach your business goals.
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