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The Four Pillars of eCommerce Conversion Rate Optimization

Want More Revenue? Focus on eCommerce Conversation Rate Optimization!

This pillar page focuses solely on how to increase your revenue by focusing on a solid conversion rate optimization strategy. Over the 20+ years we have been in business, we've built thousands of eCommerce campaigns and hundreds of websites. With each new client, we always come back to "how is your website converting your audience into customers". You can spend thousands of dollars in PPC, meta shopping, emails, etc, but if you're driving an audience to a website that isn't converting, you're simply leaving money on the table, and lots of it. 

Good news, we've boiled down the main key areas you should focus your CRO on into 4 sections, with actionable tips you can put into place today to see improvements in your overall conversion rates and increase in sales. 

You can also download this pillar page so that you can use to form your eCommerce CRO strategy and prioritize what your team needs to do today to make sure you're hitting your revenue goals tomorrow! An increase in conversion rate from 1% to 3% can be a matter of hundreds of thousands of dollars in additional revenue. 

Before we dive into the 4 pillars, let's quickly define what CRO isn't, and what it is. 

CRO is an art and needs a team of experts looking at all areas of conversion to increase the percentage of website visitors that take a desired action.

It's not: 

  • plugging in a few tools and hoping they work
  • using your "gut" to tweak parts of your website
  • changing button colors without dat
  • focusing ONLY on cart and checkout

It is: 

  • data-driven
  • a focus on high-impact areas
  • creating a website that works better for YOUR customers, not you
  • improving conversion points, including sales
  • dependent on a team of experts, and not thinking one person can do it all

Let's get started, shall we? 

CHAPTER 1

What is the Value of eCom CRO?

You’ve spent a great deal of time building marketing campaigns, fine-tuning media creatives, audiences and media budget all to push your audience to a website that isn’t converting. CRO should be a key focus in order to increase the value of each customer acquired through these means.

A well executed CRO strategy can mean the difference between acquiring customers at a 1% conversion rate vs. 3%. This has a direct impact on your ROI and the success of your business.

Consider the following example:

Scenario A: You spend $100,000 on marketing and advertising to drive 100,000 visitors to your website. Of those 100,000 visitors, only 1% is converting into paying customers. If your average order value is $250, your revenue = to only $250,000. Your profit margin after fees is only $150,000. 

Scenario B: You spend the same amount on marketing and advertising to drive 100,000 visitors to your website. Converting at 3% and your revenue jumps to $750,000 with a profit margin of $650,000. 

In this example, Scenario A would be considered a poor CRO strategy while Scenario B would be considered a strong CRO strategy. The reason being that for every dollar spent on marketing and advertising, Scenario A is only generating $150,000 in profit while Scenario B is generating $650,000 in profit. 

The question is, do you want to be a Scenario A or Scenario B company and how do you get to a Scenario B company?

Keep reading to find out! 

 

CHAPTER 2

What Conversion Metrics Should I be Tracking?

When you’re running an ecommerce business, conversion rate optimization (CRO) should be a top priority. After all, what's the point of generating traffic to your site if those visitors aren't converting into customers?

There are a lot of different conversion metrics that you could be tracking, but which ones are most important? And how often should you be analyzing your data?

To help answer these questions, let's take a closer look at conversion metrics and how to use them effectively for CRO.

What Are Conversion Metrics?

Conversion metrics are simply measures of how well your website or app is performing in terms of conversion rate. In other words, they tell you how many visitors are taking a desired action.

How often should you be analyzing your conversion metrics? 

  • Seasonality (Christmas, Black Friday, and other big events during the year can affect your conversion metrics dramatically.) 
  • Data Volatility (Some metrics can change on a week to week basis while others are pretty steady. Think about the most important metrics in your business and keep the focus on those.) 
  • Ability to take action (How quickly can you act on your insights? Do you have the resources/permissions to implement changes rapidly? Is it even worth it to take quick action?)
  • Length of the sales cycle (Customer buying journeys differ from business to business. Think about yours and give yourself a realistic timeline to gather enough data to see if a change is affecting the bottom line.) 

When you’ve identified how often, let’s break down what you need to be looking at. 

Our partner, Shopify Plus, is the gold standard of ensuring you’re tracking the right metrics and they provide a great deal of information on what CRO metrics you should be tracking, which are defined as:  

1. Interactions per visit

What is it? 

Interactions per visit is an important metric because it helps you understand how users are interacting with your site. This information can be used to influence user behavior in your favor. By understanding what type of content users like, where they spend the most time on your website, and what kind of interactions they have with your site, you can optimize your website to convert more visitors into customers.

Why is it important?

Tracking these interactions puts you in the driver’s seat. You can influence user behavior because you’ve studied and understood what type of content they like, where they spend the most amount of time on your website, what type of content generates shares and reviews. By understanding how many interactions your visitors have with your online store, you’re able to tailor your strategy to meet their needs. This, in turn, leads to more conversions and higher ROI. 

How to track and improve?

The more you increase interactions that lead to purchases, the better. Take note of the elements on your website that make users interact and keep improving those elements. Tools like Crazy Egg and Mouseflow help you visualize those interactions and improve on them. Being able to visualize and understand the behavior patterns of your consumers, you’ll be able to identify the best tactics to nurture them through their buying journey. 

2. Total Leads Generated

What is it? 

There's a lot of debate out there about whether B2C companies should focus on leads or not. We say yes! Just like in B2B, leads are a key metric for success in eCommerce.

A lead is defined as a visitor who is interested in your products and shows interest by taking an action on your site - for example, signing up for your newsletter to receive 15% off their first purchase.

Focusing on leads helps you to:

  • Convert more visitors into paying customers
  • Build a database of interested prospects that you can marketing to in the future and increase lifetime value
  • Understand what's working (and not working) on your site so that you can optimize your conversion funnel

If you're not already focusing on leads, we recommend starting today. Leads are a key metric that will help you to grow your business!

Why is it important? 

Leads are potential customers who have shown interest in your business but have not yet made a purchase. By tracking leads, you can better understand where they come from and how likely they are to become paying customers.

Lead tracking is an important part of any sales or marketing strategy. By understanding where your leads come from, you can better target your marketing efforts and improve your chances of converting leads into customers.

There are a number of ways to track leads. Many businesses use lead tracking software, which can help you keep track of leads from multiple sources and track their progress through the sales pipeline.

Lead tracking can be used to track leads from online sources, such as website visitors who fill out a form or click on an ad. Lead tracking can also be used to track offline sources, such as referrals from existing customers or sales leads generated through trade shows or other events.

Lead tracking is an important tool for any business that wants to improve its sales and marketing efforts. By understanding where your leads come from and how likely they are to convert into customers, you can better target your marketing efforts and improve your chances of success.

How to track and improve? 

If you want to improve your conversion rates, it's important to create segmented lists and track the performance of your website and conversion points. By doing this, you can see how many leads turn into conversions and adjust your approach accordingly.

The right tools will make it easier to track your progress and identify areas for improvement. By leaning into the performance of your website and segmented lists, you can see the percentage of how many leads turn into conversions. The higher that percentage is, the better your conversion rates will be, thus the more revenue you will gain.

Tracking back to channels that generate leads is essential to understanding what's working and what isn't. This data will help you fine-tune your marketing strategies and ensure that you're making the most of your efforts. By taking the time to track your progress and analyze your data, you can improve your conversion rates and generate more revenue for your business.

3. Sales conversion rates

Shopify's comprehensive sales funnel shows you the entire scope of your sales operation, from the number of people who add products to their cart to those who actually click Checkout. This can help you identify any potential issues in your checkout process – for example, if you have 25% of people adding products to their cart, but only 1-2% are converting. By optimizing your sales funnel, you can make sure you're maximizing your revenue.

Your conversion rate should remain steady, or at least increase over time. If you’re seeing major drops, it could be a good time to investigate to make sure your website is still working properly

4. Average Order Value

This metric is key to building the right KPIs for your business. It goes hand in hand with your conversion rate and can help you with revenue and profit projections. 

Your AOV = Total revenue / total number of orders within a given period. We like to look at this over 12 months, to account for seasonality. 

Understanding this metric and how to track it against your revenue goals will open your marketing team up to new strategies to identify ways in which you can increase your AOV. 

What we’ve found by working with our partner, Recharge, is that a subscription-based model can not only increase your AOV, but also your conversion rate. And the key thing to note is subscription merchants are  2 to 4 times more valuable than their counterparts, and also have higher average order values (AOV), lower churn rates, and higher lifetime value (LTV). 

There’s a downside to subscription-based models as well, which is the FUD factor (fear, uncertainty, and doubt). “What if I won’t be able to cancel easily and I’m locked into a long-term commitment?” “What if I don’t like the product?” But when we work with our clients, we make sure that the messaging on the subscription landing page is clear on answering these questions right out of the gate to immediately build trust with potential buyers by being extremely transparent on how they can opt out. 

5. Customer Lifetime Value (CLV)

Shopify defines the CLV as the total revenue your business could expect from a single customer throughout their lifetime (or at least the lifetime of their relationship with your business).

This number will vary based on industry and product as well. The customer lifetime value of a SaaS product that costs $25/month could be just $900 if the average customer sticks around for three years.

Whereas the customer lifetime value of a well-loved candle shop could be way more than that if customers keep coming back month after month and year after year to replenish their candle collection.

To calculate CLV, use the formula:

CLV = Average Value of a Purchase x # of Times the Customer Will Buy Each Year x Average Length of the Customer Relationship (in Years)

So back to our candle shop example. If the average number of $20 candles your customers tend to buy in a year is 15 and they tend to shop at your business for 10 years, you’ll multiply 20 x 15 x 10 to get a CLV of $3,000.

This isn’t a metric shown in your Shopify dashboard because it takes some analysis as the shop owner to figure out. However, it gives you insight on valuable information needed to more informed business decisions.  it lets you know some pretty important information.

For instance, knowing how much a customer is worth to your business helps you determine how much you can comfortably spend on customer acquisition and still make a profit. It can also help you pinpoint which products are most valuable to your bottom line—i.e., which products with a premium price point are popular, and how you can readjust your strategy to get more people to buy them. 

6. Customer Acquisition Costs

Your customer acquisition costs (CAC) tell you how much it costs, on average, to get a new customer. This is another metric that you’re going to have to calculate yourself based on the marketing budget you allocate toward customer generation.

The formula for customer acquisition costs is:

CAC = Amount Spent on Marketing / # of New Customers

For example, if you spent $1,000 on a monthly ad campaign and brought in 100 new customers, your CAC would be $10 per customer.

Make sure you check in on this metric regularly to ensure it doesn’t exceed your CLV—or even get closer to it than you’re comfortable with.

If your CLV is $1,000 and you’re spending hundreds of dollars to bring even one new customer in the door, your CAC is really eating into your profits. When this is the case, you’ll need to reevaluate your customer acquisition strategy to see how you can maximize results while minimizing cost.

7. Shopping Cart Abandonment Rate

No matter how high your conversion rate or how sought after your products are, there will be some consumers who simply don’t complete their purchase. This is called shopping cart abandonment—it’s when a customer adds a product to their online shopping cart but they don’t complete the entire checkout process, essentially abandoning those items.

While sad, it’s still an expected part of eCommerce. But you still want to keep an eye on your overall shopping cart abandonment rate because it can let you know of potential problems with checkout.

To calculate your shopping cart abandonment rate, use this formula:

Shopping Cart Abandonment Rate = (# of Completed Purchases / # of Shopping Carts 

Created) x 100

The average rate depends on the type of device someone was using to access your online store, but it actually falls between 69.75% and 85.65%.

So don’t be worried if you have a high shopping cart abandonment rate. It’s time to start investigating for potential issues, though, if your rate falls between 95% and 100%, as this means there could be errors in the checkout process that are keeping people from completing their purchases.

8. Returning Customer Rate

Your returning customer rate, also sometimes called repeat customer rate, is the number of customers who have made more than one purchase from your shop. 

The average eCommerce store likely sees a returning customer rate of between 20% and 30%. Anything above that means you should invest resources into expanding your customer base, and anything below means you might want to try some retargeting ads to get those past customers to come back.

Because it can cost as much as five times more to get new customers vs. returning ones, you want to make sure you’re working to get customers back in the (figurative) door just as much as finding first-time customers.

While you can find this in your Shopify analytics dashboard, you can also use the following formula:

Returning Customer Rate = (# of Return Customers / Total # of Customers) x 100

And this is what the metric looks like in your Shopify dashboard:

Getting repeat purchases is a clear sign you’re doing a great job. So if you’re struggling to improve your returning customer rate, you might want to take a look at your overall customer experience to see if there’s anything you can revamp. 

9. Bounce Rate

Bounce rate is a metric that anyone with any kind of website needs to pay attention to, not just eCommerce sites. Your bounce rate tells you the number of people who landed on your website and then left it again without taking any action, whether that was clicking to another page, filling out a form, checking out a product, etc.

Your bounce rate can be found under Audience > Overview in your website’s Google Analytics. 

An average bounce rate for an eCommerce website is between 20% and 45%, so try to keep it around that benchmark (or even lower if you can). To reduce bounce rate, make sure you have an easy-to-navigate website and an attractive design, and that people can tell what you sell immediately upon landing on your site.

10. Net Promoter Score
Your net promoter score (NPS) measures overall customer loyalty and customer satisfaction. This metric is calculated by surveying your customers at checkout by asking one simple question: “On a scale of 1–10, how likely are you to recommend us to a friend or family member?”
Those responses are then broken down into three categories:
  • Promoters: Customers who gave a rating of 9–10
  • Passives: Customers who gave a rating of 7–8
  • Detractors: Customers who gave a rating of 6 or less

Obviously, the higher the score, the better. Then, to find your net promoter score, use the following formula:

NPS = % of Promoters - % of Detractors

So if you have 80% promoters, 15% passives, and 5% detractors, you would calculate 80 - 5 to get a net promoter score of 75.

A net promoter score can range anywhere from -100 to 100, with a negative number occurring when there are more detractors than promoters. However, it’s not likely that any companies have ever had a score of 100. And, in fact, our sample score of 75 is still extremely high.

According to Inc., any score over 0 is considered “good,” scores of over 50 are considered “excellent,” and a score of more than 75 would be considered “world class.”

So if you’re seeing an NPS of around 20 or so—don’t fret. You’re still doing great.

11. Click-Through Rate (CTR)

Your click-through rate (CTR) is the rate at which someone clicks on an email campaign, ad, social media post, etc., and lands on your website.

To calculate click-through rate, use the following formula:

CTR = (# of Clicks / # of Views/Impressions) x 100

Your email marketing platform or ad platform should offer this up in your analytics or reporting dashboard, making it easy to gauge the overall success of your digital marketing campaigns.

For Google ads, the eCommerce industry tends to see a CTR of 1.66% for search ads and 0.45% for display ads. However, for email campaigns, the CTR is more like 2.01%. (Also, eCommerce email open rates are around 15.68%.)

All in all, click-through rates are likely to be pretty low numbers. If you’re seeing a CTR of 2% or higher, you’re doing pretty well.

In email marketing, your CTR gives you insight on the content your customer is engaging with. When you have a low CTR, it’s important to make sure you are generating relevant content your audience actually wants to read, such as; adding social proof, generating FOMO and segmenting your audience appropriately to ensure you’re creating a personalized experience for every reader. Write your content as though you are writing for one person. 

12. Store Sessions by Traffic Source

​​Your online store sessions by traffic source report shows you the number of visitors you have coming to your website and how they accessed it.

The most common traffic sources are:

  • Search: Website visitors who landed on your website after clicking from search results
  • Direct: Website visitors who landed on your website after typing it directly into their URL bar
  • Social: Website visitors who landed on your website after clicking from a social media platform
  • Email: Website visitors who landed on your website after clicking from an email newsletter

Looking at these stats can help you gauge which marketing channels are the most popular for your business and which might need a bit of TLC. For example, you might want to ramp up your SEO strategy or build up your email list to increase email visits.

You can access this right inside your Shopify analytics dashboard.

13. Store Sessions by Device Type

Similar to the above stat, this section of your Shopify analytics shows your store visitors based on the device they’re using to access your website. The devices will typically show up as mobile, desktop, or tablet.

If you have a lot of people accessing your website via mobile, you’ll want to pay attention to how well your mobile responsiveness works. Having an easily accessible mobile site can exponentially increase your mobile sales.

14. Store sessions by location

Again, this metric is also shown right on your Shopify analytics dashboard. This shows you the top locations of your customers, helping you to adjust your marketing and product offerings based on where your top customers are located.

15. Top Products by Units Sold

Top products by units sold is also available on your Shopify analytics dashboard. This metric lets you know which of your products are the most popular so you can plan ahead and prepare for inventory or creating more products.

16. Month End Inventory Sold Per Day

Another unique eCommerce metric in your Shopify dashboard, the average inventory sold per day shows the number of items sold each day by product variant. 

Tracking your online store’s performance is key to understanding if something in your marketing or sales strategy simply isn’t working, allowing you to adjust and adapt for the future.

GOOGLES SEARCH ALGORITHM HAS CHANGED

Find out what you need to consider building a search engine optimized website
CHAPTER 3

Understanding Website Engagement

Ecommerce customer engagement is defined as the emotional connection between a customer and a brand. Highly engaged customers buy, promote, and show more loyalty. Providing outstanding experience is an important component of your eCommerce consumer engagement strategy.

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Shopify’s ecommerce analytics can help you further understand how people tend to interact with your online store. How often are customers converting? Which product pages are the most popular (and is that in line with products actually purchased)? How much overall website traffic are you seeing?

Paying attention to your Shopify and Google Analytics can also help you figure out how people tend to navigate your site. This can help you pinpoint if your navigation and website flow makes sense, or if you need to make some changes to ensure the process is a bit more seamless.

How to Improve eComm Customer Engagement

What are some ways to improve eComm customer engagement on your online store, thus increasing eCom conversion rates

  • Coupons + Discounts
  • Lead Magnets
  • Loyalty Program
  • Giveaways + Contests
  • Create a Challenge
  • Cross-sell + Upsell
  • Top Sellers
  • Interactive Assistants
  • Video Demos
  • Risk Reducers
  • Product Plugs
  • Wishlists
  • Create Trust
  • UGC Content
  • Exit-Intent Pop-ups
  • Tab Title
  • Influencer Marketing
  • Instagram
  • Product Landing Pages
  • Mobile Ads
  • Shipping

Offer Coupons and Discounts

When looking to increase conversions and engagement on your eCommerce website, never underestimate the power of coupons and discounts. This has always been a great way to incentivize customers to buy from your store, and leads to more sales and repeat business.
 
However, in the digital shopping realm, coupons play a role beyond simply providing a purchase incentive. They act as bait to hook new email subscribers. Of course, you’ll follow-up with subscribers, so consider expanding your portfolio of coupons to create specific subscriber segments that will receive relevant offers.
 
You can offer coupons explicitly for product purchases, but may also find coupons marry well with offers to receive newsletters and useful downloadable content.

Offer ebooks and other lead magnets

What a lot of ecomm brands don’t realize, or simply, don’t think they need is actual content, and not content about products. If you’re in the ecomm industry and you want to succeed, you need to be creating content that answers the most common questions your potential buyers have about the problems your product solves for. And yes, this is very common of B2B industry, but it’s equally as important to B2C, DTC! 
 
The average online conversion rate for ecommerce shoppers hovers between 2% and 3%. At least 97% bail on you. However, a failed attempt to capture a sale doesn’t mean you can’t capture email addresses.
 
In a post that explains how SaaS marketing differs from other types of marketing, Neil Patel writes, “If you are a B2B SaaS marketer, think of yourself in different terms from mere ‘marketer.’ Think of yourself as an industry savant — the one who possesses and dispenses information.”
 
While blog content helps attract traffic, one of your content marketing goals should be to convert the traffic into subscribers. Offer eBooks and other lead magnets such as checklists, mini-courses, templates, tools, and more to motivate visitors to give you their email addresses.
 
Think value. Think relevance. What can you offer to help a prospective customer solve a problem? Think of your lead magnet offer as something so valuable it’s worth paying for—then deliver it free.

Offer a Loyalty Program

Your goal with increasing customer engagement is to not only want customers to buy your products; you want them to keep buying.
 
Ecommerce brands accomplish this by making their best customers feel valued. Do so by giving them valuable rewards through a customer loyalty program.
 
Create a loyalty program that offers customers an incentive to buy more often or spend more on their purchases. Loyalty programs can take any number of forms, but generally feature a system whereby points are accumulated that build increased buying power. You might also consider loyalty programs that reward buyers for doing things beyond buying such as writing reviews, sharing your pages and posts, and submitting photos. If able, create a VIP segment of high value customers and offer exclusive discounts and early offers/promotions.

Giveaway

People love free stuff. Create buzz about your brand with giveaways.
Promoting giveaways on your website and via social media puts your brand in front of new eyes and grows your email list. 

Instagram and Facebook contests—or contests you promote on any social network or channel—are one of the best ways for ecommerce brands to generate awareness, build community, drive traffic and boost sales.
Best practices for conducting social media contests include:
  • Create a unique hashtag for the promotion.
  • Create an image or video to announce your contest.
  • Create example posts to inspire users.
  • Use a moderation tool.
  • Secure legal rights to re-use user-generated content.
  • Display the curated posts in a gallery on your website and social channels.
  • Adhere to the rules of the network and publish the policies of the contest. 
  • Use Instagram polls to get data from your followers on likes/dislikes

Create a Challenge

This tactic allows your marketing team to have a little fun, while also promoting your products. Whether the challenge is supporting your favorite charity, promoting a healthier lifestyle, or showing your audience how they are using your product (submitting a story on how your product solved a challenge), you’re creating a community that includes people who share in a common cause. 
 
For example, if you’re in the health and fitness space and sell a product that monitors that, create a challenge for people to join and share their fitness journey and how they are using your product to set fitness goals. Perhaps the person who meets their goals the fastest wins a $500 Amazon gift card.

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A post on the SEMRush blog wisely recommends focusing on cross-selling your products to increase sales. They offer as an example, a customer that has purchased a mobile phone being offered a screen guard or case.
It shouldn’t be difficult for you to think of practical cross-selling opportunities to offer your buyers that will add value to their purchase and dollars to your cash register.
 
Upselling works too. In fact, Econsultancy says it works 20X better than cross-selling.
See, buyers often don’t know a superior product is available. Chances are some of the products you offer are closely related to premium versions. Set-up your store to upsell and keep in mind:
  • The suggested product must fit the original needs of the customer.
  • Price sensitivity is bound to be an issue, so be clear about the benefits of upgrading.

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How often do you ask a server in a restaurant what their favorite dish is or ask what the specials are? 
Their suggestions quite often follow questions around what might be something they’re known for, can prepare most easily, or profit the most from. Many restaurants spare you from having to ask by highlighting their most popular menu items on the menu.
Ecommerce companies can do the same.
It’s human nature to go with the crowd. Also, buyers value direction. Show them your best sellers, or best sellers in specific categories. You’ll reduce overwhelm, and accelerate sales. Buyers generally prefer direction when it comes to making a purchase. Too many options can be overwhelming and lead to anxiety or indecisions, which results in browse abandonment. Have a limited number of choices presented in a clear and concise way. It will result in more satisfied, converting customers.

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Cart Abandonment + Automated Emails

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CHAPTER 4

The Future of Forecasting

When you pay attention to your metrics and which products people are buying, you can easily improve your overall sales forecasting at the same time.
 
Look at popular products, find out what you need to create/order more of, and get a good idea of buying trends. You’ll be able to figure out which months or seasons are slower than others, giving you more time to prepare sales promotions and campaigns for your slower seasons.
 
You can also get a better gauge of your business’s overall revenue and what to expect in upcoming months, so you’re more secure in ordering inventory or even making new hires in your business.
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