In the increasingly competitive world of digital purchasing, there are marketing and user experience improvement efforts aimed at “encouraging customers to purchase products” from your online store. Through these efforts, when the recipient of the marketing message performs a desired action, this is called a “conversion.”
Conversion, influenced by every touchpoint of the user experience, is a critical metric in the marketing conversion funnel. However, conversion does not always mean a purchase. It can be a purchase, but it could also be an email signup.
The important point here is that conversions can occur before a sale and are an indication that a potential customer is moving down the sales conversion funnel.
When planning to set up an online store and increase revenue in e-commerce, you need to perform “optimization” to increase conversion rates, the most crucial metric to follow, which means working to boost conversions.
What is Conversion Rate Optimization?
Conversion Rate Optimization (CRO) is the process of enhancing the shopping experience to increase a specific KPI, usually to boost sales. Conversion Rate Optimization can be carried out on landing pages, category pages, or any other customer touchpoint.
Conversion Rate Optimization is a systematic way to increase the percentage of website visitors who complete a desired action, encompassing various factors that impact the purchasing or customer acquisition process, such as filling out a form, downloading an app, or adding a product to the cart. The CRO process involves understanding how users navigate your site, what actions they take, and what prevents them from completing your goals, and it occurs after a visit reaches your site.
The conversion rate we discuss in this blog is different from conversion optimization for SEO or paid ads, which focuses on who clicks to your site from organic search results, how many clicks you get, and which keywords attract traffic. Therefore, let’s start by understanding conversion from an e-commerce perspective, as it often has a distinct definition depending on the business.
Understanding E-Commerce Conversion Rates
What is Online Store Conversion Rate?
Conversion rate is defined as the percentage of visitors to your website who complete a desired action. To accurately define conversions that align with business objectives, it’s essential to understand your ultimate goal.
An e-commerce conversion rate is the percentage of website visitors who make a purchase from your online store within a specific timeframe. However, this metric is not the only way to measure the success of your online store.
Here are some typical conversions for an e-commerce website:
- Online sales.
- A user adding a product to their cart.
- A user adding a product to their favorites.
- Email sign-ups.
- Social media shares.
- Any KPI that your company values.
“Conversion” is a broad concept, as it can be influenced by every aspect of the user experience on your e-commerce site. Conversion Rate Optimization (CRO) is the process of improving the shopping experience to increase a specific KPI, usually to boost sales.
CRO can be applied to the landing pages, category pages, or any other customer touchpoints on your e-commerce site.
How is the Conversion Rate of an E-Commerce Website Calculated?
Let’s explain this with an example:
On an e-commerce site, a user can make a new purchase during each session. Optimizing conversions ensures they make as many purchases as possible. For instance, if a user visits an e-commerce site three times, that counts as three sessions and three opportunities for conversion.
Let’s take a closer look at the user’s three sessions and their behavior:
- Session: No conversion. The user was exploring and familiarizing themselves with the site.
- Session: The user bought a jacket. That’s a conversion!
- Session: The user returned and bought a pair of summer pants and a jumpsuit. That’s another conversion! However, an important point to note here is: even if the visitor purchases two items in one session, it counts as a single order and therefore as a single conversion.
To understand the conversion rate, we take the number of unique purchase orders and divide it by the total number of sessions.
Let’s share another small example: if your online store receives 5,000 visitors and 50 conversions over a certain period, this means that your store’s conversion rate is 1%. You get your conversion rate by dividing conversions by visitors.
The Key to Successful Optimization
To optimize conversion rates, you need to know where, what, and to whom you are optimizing. This knowledge forms the foundation of successful Conversion Rate Optimization strategies.
Before deciding what actions to take to increase conversions, you must first understand exactly what your current visitors are doing in order to set suitable e-commerce conversion rate benchmarks for your online store.
Where are customers getting stuck, and how are they interacting with your website?
When you examine where your customers are getting stuck and how they interact with your online store, you find the criteria needed for optimization. Once you have identified these criteria, you can turn them into KPIs to measure the success of conversion optimization.
Of course, in all optimization efforts, it’s essential to continuously test customer interactions to understand what works well and is effective.
For more detailed information and to provide a good shopping experience, feel free to contact us to leverage our expertise in omnichannel commerce and marketing solutions.
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