What is a Good eCommerce Conversion Rate?
We all want to increase conversions, but it’s not always easy to know where to start. Learn more about what good conversion rates from your eCommerce site are and ways you can improve performance.
The reality is that eCommerce businesses are becoming the main hub for businesses. This means the way of capturing the activity of current potential customers is increasingly important. Through conversions, conversion rates, and tracking, you can take your business’s growth to new heights. This article discusses what conversion rates are and how you can improve them.
What is a Conversion Rate?
To best understand what conversion rate is good for you and your business, it is important to understand what a conversion rate is. In this section, we discuss what a conversion rate is and the standard for average conversion rates for eCommerce retailers.
As a business, you are constantly looking to sell a product or service so that you can gain revenue. Part of growing revenue is finding new customers, but to do that, they must be attracted to your business. For the purposes of eCommerce, all interactions are digital. A shopper has found you from a product listing (e.g., social media ad), clicked on that listing, been taken to your site, and then bought a product or your service. This desired action is called a conversion or conversion event.
Conversations are important in eCommerce because, in the digital space, it is hard to have a personal connection with your consumer to convince them to buy your product/service. In a traditional brick-and-mortar store, you would be able to see your customer outside, lull them in, have a conversation, and ultimately lead them to purchase something. In eCommerce, conversions, their rates, and tracking are important to better understand who your customer is and tweak your marketing plans so that they find you and purchase from your online store.
Within eCommerce, a conversion rate is the percentage of customers who have completed a conversion event. It is calculated by taking the number of customers who have clicked on a particular ad or tracked item and dividing it by the size of the original audience. Here is an example of calculating a conversion rate:
You have run an ad campaign on Instagram that reaches 20,000. Out of the 20,000 people, 500 people have clicked on the ad. Divide 500 by 20,000 and the conversion rate is .025 or 2.5%.
A conversation event may not be the actual purchase of your service or product, but it is a key product indicator (KPI) that you have decided to track to complete that goal of a purchase.
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What is a Good Conversation Rate for your Website?
The average eCommerce conversion rate is between 1% and 2%. So, anything above 2% should be the goal for any business owner. If a rate is below 1%, serious changes need to take place.
Using the example above, the business owner knows that 2.5% of people who saw that ad, clicked on it. They can use that metric to analyze how well the ad did. Since the average conversion rate is 1-2%, they have a good conversion rate but can improve.
Why are Conversion Rates Important?
Conversion rates and tracking them are important because as a business owner, you can follow metrics to see if your business and marketing strategies are working. Without the data, you are taking shots in the dark hoping that your plan is working.
Tracking conversion rates are a great tool in the digital and eCommerce website space because you can track unique visitors over multiple channels and have several conversion events. Using the example previously, you can track the Instagram ad and the number of people who clicked on the ad to go to your site, but you can also track how many people clicked on the ad and purchased something. Additionally, you can track the same ad on Facebook. The result is that you can see which campaign or channel is working in your favor or not and where you are excelling or losing customers in the various stages of your sales funnel.
It is important to note that conversion rates can be used as a tool to understand your business’s success, but they must be tweaked constantly and should only be tracked in ways that are beneficial for your business. For example, if you have a small business with one product, then creating multiple campaigns with many different conversion events to track will be too much and will not serve you. Be smart in how you use your conversions, and it will work for you.
How to improve your conversion rate
Going back to the example we have been using, 2.5% for an Instagram ad isn’t too bad, but it isn’t great. So how can it improve so you achieve a higher conversion rate and capture the most customers as possible? Here are some ways:
Update your eCommerce Site
You may find through your research that your eCommerce site is not functioning to its maximum capacity and as a result, customers are dropping off quickly leading to low conversions. Here are some ways to improve your site:
Is your online store competitively priced? If not, it is time to reevaluate the costs for your goods and services. As an online retailer, you will likely need to ship products to the customer, and with big box eCommerce sites like Amazon offering free shipping, you may want to do this as well. Finally, using limited-time coupons is a great way to catch the eye of a new consumer.
When the user enters your site, is it easy to find what they are looking for? If not, then think about how you can update your website’s structure and “look” (e.g., images and video) so that using the site is easy for the user (including the checkout process), making it possible to complete a purchase.
Now it is common to use shopping cart abandonment software to keep the customer on track to continue a purchase, even after they have left checkout or left the site altogether. Live chat software or bots are also great to easily answer questions so that the consumer doesn’t have to reach out to you.
Changes to your Channel
If all is running well on your eCommerce store, then perhaps it is a good idea to change how your ad campaign is going on your channel, in this case, Instagram. Here are some tips to improve:
For each channel you use, you should personalize it for the user who goes there. In the case of Instagram, you would make sure that the picture is eye-grabbing, and the messaging is clear. We also suggest adding testimonials in your posts and ads, so that the user is drawn in by the personal experience of customers.
Grabbing the Users’ Attention
In the sea of online retail stores and services that your customers can choose from, you will need something to grab the attention of the user. Your business should have a unique selling proposition (USP) that makes your service or product different. Lean into your USP when creating ads or updating your channel’s campaign. It is also important to use “calls to action” (CTAs) sparingly. Nothing is more annoying than reading an ad or social post where they say “click here to do X, Y, Z, A, B.” Your customer isn’t sure what you are asking for and ultimately does not engage with your site at all.
Conversion Rate Optimization
You will want to make sure that your conversion rate optimization (CRO) is being used to its full potential. In the case of Instagram, the posts and ads that you create are optimized for websites and mobile devices (e.g., android vs iOS). You should also ensure that your Search Rate Optimization (SEO) is functioning as well as it can to increase conversion.
If you have done everything already listed and your conversion rate still hasn’t improved, it may be time to completely rethink your strategy. In this case, here are a few things you can do:
Review Conversion Rates Against your Strategy
Perhaps the reason your conversion rates are low is that your strategy is off. In the continuing example, Instagram was the channel that was chosen. However, perhaps your ideal shopper isn’t on Instagram. If your conversion rates are not hitting their benchmarks, evaluate your conversion rates, the data associated with them, and readjust.
Expand over Multiple Channels
If your conversion rate is ok but not great, it might be fine to keep it as is and start thinking about expanding your strategy to multiple channels, like other social channels, Google Ads, and commercials. Your business might be ready to expand its growth significantly, which means that your strategy and reach will also need to expand. Using A/B testing, you can experiment with different channels to figure out which one is best suited for you.
It’s an Ongoing Process
Ultimately, conversion rates are intricately connected to your business plan and should be something you are constantly improving. However, if you find that you do not have the time to dedicate to improving your online store’s conversion rates, UpCity has that taken care of for you. Check out our listings of eCommerce developers who have the time and expertise to take your business to the next level. You can also read our article on how to find the right developer here.