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E-business Optimization

Understanding Order Conversion Rate - Part One

by Chris L. on 1/25/2011 2:00:17 PM MST


Whenever the subject of conversion rate is discussed, most are quick to mistakenly consider the metric as a reflection of the shopping cart or check out process.  Fact is, most variables that influence the conversion rate are higher up in the funnel than most people realize.  In this multi-part series, we’ll dissect what conversion really is, the factors that influence it, and ultimately suggestions on how to improve it.

Part I – Three Primary Steps to Order Conversion

Every interaction your potential customer has with your Web site will factor into the overall conversion rate.  The method in which customers arrive to your site, the entry page and a myriad of other variables influence the decision making process and ultimately their propensity to buy.   

In an attempt to simplify measuring the conversion funnel, we have analyzed a large sample of shopping cart data for the time period from January, 2008 through December, 2010.  Included in this sample where a wide variety of products, promotions, seasonal specials and other factors that may have an influence on the rate of conversion.   What we found was a relative uniformity in the slope of conversion funnel.  Granted, certain types of products may, on average, convert at a higher rate (for example, specialty coffee will convert at a higher rate than office furniture due to the competitiveness in the market).  However, the components that lead to the conversion remained relatively constant.

In the end, we boiled conversion into three key steps in the funnel.  They are,

  1. 1) Engagement – the opposite of bounce rate.  This metric shows us how often a visitor looks at more than one page on your web site.  The assumption being that if they look at more than one page, they have at least engaged with your brand, offer, call-to-action and/or products and seek more information.
  2.  2) Decision – the percentage of visitors who put a product into the shopping cart.   This seemingly innocuous metric is perhaps the biggest driver of order conversion rate and has perhaps the most variables associated with it.
  3. 3) Completion – the percentage of visitors who complete an order after placing item(s) in the cart.  This is the opposite of “shopping cart abandonment”.

There has been much discussion over the past several years about what the “average conversion rate” is for ecommerce.   Aside from online florists and major brands that spend oodles of marketing dollars on direct marketing, TV and radio, the consensus seems to be that an average conversion rate is in the 2-3% range.  Our statistical model and analysis agrees with this range.  The key to going from “average” to what we would call a “healthly” conversion rate of 2.8-3.5 percent lies in the success of all three steps of the funnel.  If any step under performs, the overall conversion will degrade, exponentially. 

The chart below shows the effects of minor fluctuations in three steps vs. order conversion rate.  You’ll see the smallest of change higher up in the funnel can lead to massive changes in conversion rate and online revenue.

Interestingly enough, it is possible to have one step lag while another steps excels, thus masking a potential problem in the overall order conversion funnel.

For example, an extremely attractive web site may have a high engagement rate. However, when the visitor views a product they realize the price is too high and tend not put anything in the shopping cart.   By analyzing these two steps independently we can identify the problem at the “decision” step and make corrections to dramatically improve conversion rate on a site that may otherwise look to be performing at an acceptable level. 

In subsequent parts of this series we’ll delve into what factors and variables affect each step and ultimately how to improve performance of each.  In addition, we’ll uncover how different types of traffic may convert vs. others in order to make the most of an ebusiness marketing buget.
 




E-business Optimization

Establishing Industry Authority to Increase Consumer Confidence and Conversions

by Jessica L. on 1/14/2011 12:00:00 AM MST

The world of e-commerce is a nearly exponential array of options for the online shopper. Through search engine optimization, social media presence, word-of-mouth and conventional media, online retailers are able to target their audience from numerous angles. With so many variables and options available, the online shopper can be a hard catch. The highly competitive nature of e-commerce forces sellers to put forth a tremendous amount of effort to capture sales. Even with the most attractive website, competitive prices and user-friendly interface, a conversion can be lost if the user does not feel confident in your organization or product.

Whether your website is new, or you're an established online retailer who is noticing a drop in conversions, the best search engine marketing, branding and viral media may not be enough to turn visits into purchases. Even with massive strides in secure online transactions, a potential customer will always feel a level of uncertainty in the backs of their minds when adding your items to their online shopping cart. By establishing a strong sense of authority over your subject matter and product, a potential customer will be much more at ease knowing they are purchasing from a reputable and trusted source.

How to Establish Authority

Depending on your product or service, there are numerous ways to establish authority and instill trust and confidence in visitors. Here are a few ideas to help:

  • Product or service descriptions need to be absolute. Make it very clear what the customer can expect and word these descriptions clearly. Be straight and to the point. If your market is highly competitive, focus on why your product is the best, without slandering your competition.
  • Provide facts and resources to back up your claims. For example, if you offer a product that can be used on the consumer's body, provide clinical statistics in plain English so the consumer can trust that the product is safe and proven to yield the results you claim. Using before and after photos, offering clear instructions and photos of the product in use will help back up these claims.  If you are offering a service, explain in detail what the customer can expect, the time line they’re looking at and the relationship they will have with you.
  • If your brand or product has been endorsed or mentioned in any mainstream, trusted media, make very clear mention of this! Let familiar names vouch for you.
  • Ask for and clearly display customer testimonials. If a visitor can see that others have worked with you and are satisfied, they'll feel more inclined to buy.
  • Utilize social media marketing, blogs and articles to speak about your services. You don't need to try to sell the product, but discuss your expertise in your field to reinforce your authority on the topic. Speak about developments in your industry, how you plan on addressing a changing market, etc.
  • Of course, provide honest and engaging customer service. Give your visitors a quick turn-around time for any questions they have. Make it worth their time to interact with you. Make return, privacy and satisfaction guarantee policies easily accessible. Clearly indicate secure shopping cart and credit card encryption measures.

Remember, your website is a source of information, just as much as it is a source for purchasing your services or product. The key is to present it not only to attract buyers, but completely encompass your topic to suggest that you are the best source available for customers to bring their questions, curiosity and ultimately, their money.

By presenting your organization as an ultimate authority on your subject and product, customers will feel much more confident in doing business with you. Having all the pieces of the puzzle clearly put together will help answer a customer's questions before they need to be asked. Make your website an experience for the visitor that will not only secure their business, but bring them back to you as their trusted vendor of choice.




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