For eCommerce brands, a conversion rate is simply the percentage of website visitors who purchased something from your store.
And so, to work this out you need to divide your conversions by the total number of visitors. Let’s say during a specific window you receive 10,000 visitors and achieve 100 sales.
100 divided by 100,000 = 0.01.
Multiply this by 100 to turn it into a percentage, and you have a conversion rate of 1%.
Now, we referred to a ‘conversion’ as a sale. But it could be any number of things you want visitors to do.
- Sign-up for your newsletter
- Download an e-book
- Any other KPI you are using as a measurement for success.
Therefore, everything you do needs to be with the aim of trying to improve your conversion rate for a specific KPI – sales, being the dominant one. Essentially, improving your conversion rate allows you to get more sales with the same amount of traffic. And so, when it comes to things such as advertising spend, you’ll get more value from it – a greater ROI.
Other metrics to measure
In addition to how well you can convert traffic into sales, there are other metrics that you need to make sure are performing well, as these too will play their part in helping to improve your conversion rate. This includes things such as:
- Bounce rate: this is the % of people who are leaving immediately after landing on a page of your site. A high bounce rate clearly isn’t good because people aren’t finding what they thought they would find by clicking on a link to your site.
- Exit rate: simply, this lets you know the last page viewed by a user before they left the site. If there is a specific page that users are dropping off from, you know you need to do some serious optimisation work for it.
- Average session duration: this shows you how long people are staying on your site. This is good for measuring consideration. As generally, people need to be on there long enough to make the decision to convert.
Google Analytics is a useful tool to employ to measure these types of KPIs. You can expect another article dedicated to this, so we won’t go into any further detail for now.
What is a good eCommerce conversion rate?
Time then to get around to answering the title question of this article, what is a good eCommerce conversion rate?
The example we used at the start gave us a 1% conversion rate. Is this any good?
Well, no – not really. The industry average for eCommerce stores is 2.5-3%, with anything above 3% generally regarded as good.
However, while an industry benchmark is useful to have for measuring your performance, a universal benchmark for eCommerce conversation rates shouldn’t be taken as gospel. As a brand’s conversion rate isn’t driven solely by the quality of the store’s online user experience; there are other factors that can influence the conversion rate, too.
Factors that influence a conversion rate.
Price of the product – the more expensive the product, the more the consumer considers the purchase.
Traffic sources – A small brand that relies on traffic from existing customers or referrals/word of mouth will have a higher conversion rate than a bigger brand which is trying to introduce more new customers (higher traffic) to their brand for the first time. And so, in this context, it doesn’t mean the latter brand is doing worse because they have a lower conversion rate. But they should of course, always be looking at ways to improving it…
How to improve your conversion rate
This is known, unsurprisingly, as Conversion Rate Optimisation. Essentially this is coming up with hypotheses as to why consumers aren’t converting on your website and then running A/B Tests (two different versions of a webpage) to see if the hypotheses are true.
Here is a dedicated article on A/B Testing that’s worth reading once you’re done with this one. Constant testing and conversion rate optimisation are crucial for continually improving the performance of your website, your conversion rate and ultimately increasing sales. That brings us nicely to our own call to action…
How Success Path can help.
Our AI-powered conversion engine is fed up to 92 inputs based on conversion optimisation best practices and creates multiple dynamic variations to test in real-time.
Traffic is evenly distributed between the variations and the signals are analysed and scored to quickly identify the highest converting combination for your web page.
This entire process is managed by your dedicated conversion specialist throughout the duration of the experiment to ensure your business has the greatest chance of growing in revenue.
In essence, letting intelligent AI do all the heavy lifting and testing, so you can get to the best version (higher conversions and sales) of your site, faster. And who wouldn’t want that?
