One of the most important performance indicators for an online store is the conversion rate.
The importance of conversion rate in eCommerce
When companies implement strategies to increase sales, they often focus solely on attracting traffic. This entails an ever-increasing investment in advertising, the costs of which have skyrocketed in recent years due to increased competition. However, there is a way to improve the profitability of eCommerce, orienting our actions towards the conversion rate of your online store.
Why is conversion rate important in eCommerce? What are the advantages of investing in improving this indicator for your company, and what factors help you to achieve it? Find out the answers to your questions below.
What is the eCommerce conversion rate?
The conversion rate is a performance indicator that shows the percentage of users who have completed a purchase. That is, they have responded positively to our CTA and have entered our checkout, making the payment of their order. For example, an eCommerce that has a conversion rate of 1% means that 1 out of every 100 users makes a purchase.
Seen in this way, you might think that when you invest more in attracting traffic, you get a higher number of sales. And although this is so, the conversion rate is not fixed and immovable but evolves depending on the number of users who come to your online store and whether they end up buying a product or not.
Therefore, as an example, an online store that has a conversion rate of 2% and has 1000 daily visits would get an average of 20 sales per day. However, by making marketing efforts to attract more traffic and get 2000 visits per day, the conversion rate could decrease if, for example, a good segmentation of the campaign has not been done so that it could drop to 1.75%.
Consequently, even if you managed to increase the number of sales, the increase in your advertising costs would not have a proportional impact on the conversion rate you had taken as a reference. This could result in investing more in advertising and achieving more sales, generating less profit, depending on a sum of factors (the % increase in advertising costs, the average revenue per sale, etc.).
How to improve your conversion rate
Conversion Rate Optimization (CRO) techniques aim for an online store to achieve a higher percentage of sales. That is, a higher volume of users who enter your website to complete a purchase. To achieve this, there are several elements that can be influenced.
- Improve your online store loading speed: the longer it takes for your web content to load, the more users will leave.
- Optimize your web design: there are techniques aimed at creating designs that offer a positive user experience.
- Recovering abandoned shopping carts: you can use email automation tools like Klaviyo to send an automatic email reminder to users who have added a product to the shopping cart but have not checked out.
- Customize the checkout: simplify and make it more intuitive, avoid long forms with many fields, provide 1-click purchasing, etc.
- Offer discounts for first-time purchases: by doing so, you can ensure that the first users who arrive from your advertising campaigns receive an attractive offer that will encourage them to buy.
All these actions can make you get more sales while maintaining constant web traffic.
Why it is important to increase the conversion rate
Many eCommerce tend to focus on quantity and not quality. But there are several reasons why it is very important to pay attention to conversion data.
1. Advertising costs have risen
The greater the digitalization and growth of eCommerce, the greater the competition. And the more companies start using advertising platforms (Google Ads, Facebook/Instagram Ads...), the higher the customer acquisition costs.
The Covid-19 pandemic has also prompted many companies to develop their online sales channel, at the same time as the percentage of users shopping online has increased.
2. It is increasingly difficult to capture the user's attention on social networks
The increase in the number of advertising messages has an impact on user response. Social network users tend to filter ads and reduce their level of engagement during mass advertising.
Newer generations have shorter attention spans. There are also profound demographic differences in the advertising reach of new generations.
Traffickers are aware of this reality, so increasingly sophisticated ads are required to capture the attention of the user, whose time is now much more scarce, as they have an excessive volume of stimuli.
3. Optimizing conversion improves marketing effectiveness
The purpose of applying conversion techniques is to optimize the effectiveness of your marketing actions. If you manage to attract potential customers but do not have a website that is well-optimized for conversion, your advertising investment will be less effective, and your customer acquisition costs will be higher.
Acquiring each of your customers has a cost derived from all your SEO, advertising, email marketing, etc. Marketing costs have also increased in recent years due to increased competition. All your marketing actions will be more effective if you get a higher percentage of users to complete their purchases.
4. Improve your brand and user experience
Online stores that apply conversion optimization techniques also improve the user experience. Users will have a better perception of your brand if they can find answers to their questions, the products are well categorized, there is an intelligent search engine that allows them to find what they are looking for, and the purchase process is simple, clear, and intuitive.
5. You get more profitability
More conversions mean more sales, which ultimately leads to increased profits. As a result, your business can be more profitable and have greater sustainability, reducing the risks of relying on advertising channels without applying CRO measures.
At Webmefy, we use data analytics to optimize conversions in your eCommerce. Boost your business results with an online store that has better conversion rates so that you can maximize your marketing efforts. Interested in talking about it? Book a meeting with us today.