The success of high-performing online shops doesn’t happen by chance. Those who want to follow in their footsteps, first have to define what “success” is – for each individual business case. Because every shop is different, has different goals and – who would have thought it?! – different products. These goals must be clearly defined in advance.
Whether it’s affiliate programmes or advertising with Google Shopping – multichannel strategies such as idealo, real and eBay all offer options and opportunities. Each of these “solutions” can contribute to an increase in turnover. Professionals also use the term “performance”. However, very few companies know how to get it right. In this blog post, we cover the absolute basics that every shop operator should know.
What is "conversion rate"?
The conversion rate is a common term in online marketing and ecommerce to describe the relationship between the overall traffic and the conversions achieved. The calculated value is usually given as a percentage. In the ecommerce sector, a conversion is usually understood to be an actual sale. Though this doesn’t necessarily have to be the case. Calls, downloads and contact requests can also be conversion goals.
How do you calculate the conversion rate?
There are various ways to calculate the conversion rate. The simplest is to divide the number of conversions by the total traffic (e.g. impressions), for example:
5 conversions / 1,000 Impressions = 0.5% conversion rate
This figure, however, is rather “impure” as it includes all impressions, such as access via your own IP address, multiple accesses by one person or accesses by search engine bots. In order to better calculate the conversion rate, we recommend using KPIs other than impressions, such as the number of unique visitors. In this case, the calculation would be as follows:
(Number of conversions * 100) / Number of unique visitors = conversion rate
(5 conversions * 100) / 600 unique visitors = 0.8% conversion rate
When analysing the conversion rate, it is important to not only use the right KPIs, but also sensible/comparable time spans. The conversion value is rarely consistently stable and can be influenced by many factors. This means that for nearly all online shops, it is not worth comparing the conversion rate of November or December (Black Friday and Christmas) with that of August (holiday period).
What is a good conversion rate?
As with many other KPIs, there is no general answer to this question. Many factors have an influence on the conversion rate: industry, strength of competition, price segment, complexity of the product, usability of the shop, etc. Online marketers generally expect an average conversion rate of 1%. This would mean that for every thousand unique visitors to the online shop, 10 would place an order. This figure is very generalised and serves as more of a rough estimate.
There are many shops – especially those specialised in niche products – that achieve a conversion rate of more than 15%. The broader the product range, the more difficult – but not impossible – it becomes to achieve this sort of figure. Experience shows that anywhere between 6 and 10% is a good conversion rate in ecommerce.
Collecting and analysing data for conversion optimisation
Shops must go through a number of steps in the conversion process in order to be truly successful, or even just to achieve set goals. Only by measuring various key figures and KPIs with established analysis tools in combination with shop-internal KPIs will you see changes in the shop in two time spans of equal length relative to the initial situation.
The following key figures are traditionally collected for conversion optimisation:
- Number of visitors
- Bounce rate
- Dwell time
- Number of pages/visit
- Number of orders
- Return rate
These are the fundamental key figures that need to be continuously collected for conversion optimisation. Various tools can be used to collect the KPIs, such as Google Analytics or Piwik. Shopware offers its own customers a clear KPI evaluation as standard. It’s not only important to collect the numbers, but also to question them: Am I measuring the right key figures? Are the key figures important for my targets? Can the spikes in data be attributed to the marketing or conversion measures, or are other factors responsible? Only once you have taken a closer look at the data collected, can you establish a basis for successful conversion optimisation.
User experience crucial for conversions
Examining the data from the analysis tools raises new questions, which in turn lead to the formulation of concrete measures. However, caution is advised: When viewing the data, often times only the pure data reference is used. However, it is much more important to acquire data in combination with user behaviour in front of the monitor. Online shoppers are human beings, not computers, and would like to be treated as such, i.e. to be emotionally engaged. Only then will they buy.
Let us relate this to the offline world, i.e. to a brick-and-mortar store. Here we find that all senses are engaged in order to generate a purchase: visual perception with the eyes, auditory perception with the ears, olfactory perception with the nose, gustatory perception with the tongue and tactile perception with the skin. Appealing to the senses online is only possible to a limited extent. But here, too, you can work with audio-visual, content-based and visual elements in a clever way to significantly increase the likelihood of the user making a purchase. In online marketing jargon, this is referred to as content marketing.
But again, caution is advised! The use of disruptive elements within a story or on a landing page should not be exaggerated, nor should crazy colour overlays be used. For users and potential customers sitting in front of their computer screens, it’s all about the essentials of perception, and that is exactly what should be addressed with the correct dose of stimuli.
The following fundamentals have proven to be levers for successful conversion optimisation:
A streamlined design leads to better conversion
In order to encourage users to see the corresponding product or the advantages of the product at first glance, all elements or colours not required in the first step should be removed.
The right choice of words (in content marketing & on landing pages)
Words such as “must”, “should” or “but” are off-putting to readers as they have a negative impact. It’s also better to turn a “problem” into a “solution”.
Prices & discounts increase the conversion rate
Whether it’s the homepage, the category page, the article detail page, the planned landing page for a product or a bundle, it’s always crucial to establish a reference to the product and the price. Reductions (was €19.99, now €9.99) must be clearly communicated. Displaying too many products at a discount too frequently in the category overview, however, can quickly lead to over-stimulation.
Trust creates more conversions
A simple yet very effective measure to increase conversions is to display trust badges throughout the shop, right up to the checkout process. These demonstrate the trust shown in the shop by other customers. Classic “guarantees”, such as the 30-day money-back guarantee, also help to increase conversions.
A reference to data protection helps with conversion optimisation
Adding a phrase such as “Your data will not be forwarded to third parties” shortly before the “order” button also improves trust and significantly increases conversions, even more so if supported by a small icon.
Monitoring conversion optimisation measures
The next step is to monitor the measures implemented in order to determine their effectiveness. Analyse the KPIs defined in regular intervals and ask yourself the following questions:
- Have the activities implemented fulfilled their purpose?
- Were there any measures that worked particularly well?
- Which measures took up a lot of time and money?
- Was there an ROI (return on investment) and how high was it?
Answering these questions, among others, makes it easier to restart the entire process in an optimised way and therefore increase the success of your online shop in a continuous cycle.
So-called A/B tests are an appropriate and simple way of making before-and-after comparisons. They enable you to try out different variations on the target pages, e.g. different banners, colour combinations or texts. A/B tests enjoy great popularity among online marketing specialists. They help to measure and evaluate changes on a website objectively and quantitatively, and have already helped determine that website visitors don’t always behave the way they themselves imagine. A/B tests are very easy to implement nowadays, using the free Google Optimize tool, for example.
Conversion is still a process and can be divided into different areas. Many small details can cause a break in conversion. In most cases, however, it is simply due to the lack of a fixed goal and the resulting lack of prospects for optimisation measures. After all, the goal of a shop is “to sell customers well-rounded products!”
About the Author
As a conversion consultant, speaker on the topic of conversion and founder of Overheat mouse tracking, David Odenthal has been an entrepreneur for more than 10 years. His goal? To “make conversion great again!”