Your website is a tool to accomplish some sort of business goal, and in ecommerce sites, nothing is more important than the sale. As such, successful ecommerce businesses are always looking for ways to improve the average order value, conversion rates, and inbound traffic volume. To help get you started, here are three easy tips to provide a boost in each area.
CONVERSION RATES
Arguably the most important metric in your marketing benchmarking, conversion rate is the percentage of site visitors who purchase.
For example, saythere are 100,000 visits to your online store in May. From those visits,3,000 orders are placed — so your conversion rate is 3,000/100,000 = 3%.
Historically, average conversion rates for ecommerce have trended upwards over time — about 1% in 2000 and 3% in 2013. It's incredibly variable based on your market, product, and pricing — but if your conversion rate is under 3%, your store can definitely use some improvement.
The first thing to do is to make sure all elements of your site usage are tracked. Google Analytics is a great product and can track so much more than your page views — your site search, navigation clicks, image zooms, and most importantly, a customer's path through the checkout steps. Using analytics, you need to find out two things:
1. Where are people dropping off in the checkout process? Are your visitors not adding anything to the cart at all? Or are you losing them at shipping because your rates are too high?
2. What are the characteristics of customers who convert versus those that don't? Specifically, you are looking for actions or differences in behavior. Do computer users convert but mobile users don't? Do people from Facebook convert, but not those from Google ads? Do people that search versus browse products convert at a higher rate? Google Analytics segments are brilliant for these sorts of split reports. Discover the differences and you'll find many areas for improvements.
AVERAGE ORDER VALUE
No matter what you do, only a limited number of your visitors will convert. Laser-focused, high value brands like 1-800-PetMeds or OfficeDepot may have a 17% conversion rate, but that's nowhere close to the norm. So, if you are looking at a 2 to 11% conversion rate, what's another way to increase revenue? By increasing the average amount spent per order (AOV).
An easy way to do this is to encourage people to add additional products to their carts. People often mistakenly setup their product pages to cross reference similar items. A better idea is to show people complimentary items.
For example: Suppose I've clicked from a category page and selected a pair of pants I like. On the pants product page, stores often mistakenly show me other pants I may like. Wouldn't the better idea be to show items that go well with those pants, like the shoes, shirts, and accessories that would make a great outfit?
Let the category pages serve as selection racks — but let the product pages serve to highlight the product and what compliments it. Start thinking of items as complementary to each other and watch your AOV rise.
INBOUND MARKETING
No matter what you do, optimization of onsite performance will mean nothing unless you have traffic from visitors in the first place. A healthy traffic pie is represented below, the inner ring is your natural traffic distribution, while the outer right represents a year's worth of investment in growing your marketing pie. Using analytics, get a sense of where you traffic is coming from, then invest in marketing to increase the traffic where you are weak.
For example, let's say you grow your traffic by 20%.
TRAFFIC BEFORE
- 100,000 visitors a month
- 3% conversion rate
- $50 / Average Order Value
- 100,000 visitors x 3% conversion = 3,000 orders
- 3,000 orders x $50 AOV = $150,000/Revenue/month
TRAFFIC GROWTH : 20% or 20,000 visitors improvement to marketing pie
- 120,000 visitors a month
- 3% conversion rate
- $50 / Average Order Value
- 120,000 visitors x 3% conversion = 3,600 orders
- 3,600 orders x $50 AOV = $180,000/Revenue/month
A balanced revenue growth approach is to invest in your website's performance while also increasing your online marketing presence. Let's take a modest example of these three elements together and say we improve them all by 20% in the course of year.
NOT OPTIMIZED
- 100,000 visitors a month or 1,200,000/year
- 3% conversion rate
- $50 / Average Order Value
- 1,200,000 visitors x 3% conversion = 36,000 orders
- 36,000 orders x $50 AOV = $1,800,000/Revenue/Year
OPTIMIZED AT 20%
- 120,000 visitors a month or 1,440,000/year
- 3.6% conversion rate
- $60 / Average Order Value
- 1,440,000 visitors x 3.6% conversion = 51,840 orders
- 51,840 orders x $60 AOV = $3,110,400/Revenue/Year
This is a difference of $1,310,400 to revenue in a year! The improvements compound and pay for themselves — optimization is worth the investment.