One of the metrics used to evaluate the performance and profitability of an online business is the conversion rate. In fact, this is one of the most important indicators. In this post, we will talk specifically about it and dissect the fundamental aspects in order to optimize it to the maximum. Ready?
What is the conversion rate?
Generally, when talking about rate, one imagines a percentage value, usually related to collection, such as interest rate, freight, collection, tax, etc. In this case, it is a little different. First, you have to define the meaning of conversion.
Conversion, extrapolating the religious sense, is the successful execution by the user to a desired task or action. Maybe it's still a little confusing, so I'll explain it better.
In digital marketing, there are many actions we want the audience to do. Subscribe to a channel, enjoy or comment on photos, fill out a form, etc. When these actions are carried out, we say that there has been a conversion.
Therefore, the conversion rate is the division between the number of people who were encouraged to take action and the number of people who actually accepted this invitation.
Imagine that a site has 100 daily visits and 1 of them becomes a client. That is, in this situation, the conversion rate is 1%.
We who are involved with e-commerce have nothing to offer visitors to the online store other than the products. Thus, the conversion is only tied to the sale. Therefore, from this moment on, this will be the main focus of the article in relation to increasing the conversion rate.
Why and how to calculate the conversion rate?
Although the concept has already been defined from the above topic, it is worth highlighting and describing the formula for calculating the conversion rate, specific to e-commerce
The conversion rate can be measured on several time scales: daily, weekly, monthly, yearly or in any specific period. However, for best use, the most recommended is to evaluate on a daily scale.
You may be wondering why you know this metric. Well, know that it's key to assessing the financial health of your business. There are many advantages to be scored, but in this article I've cited only three.
Grow revenue without increasing expenditure
Any business on the Internet is based on two main pillars: traffic and CONVERSION. Imagine that your virtual store receives 1000 daily visits and makes 10 sales. This clearly shows that the conversion rate is 1%.
Now, if you aim to make 20 sales a day, two ways are possible. Either you increase the traffic to 2000 visitors or you optimize the conversion rate so that it reaches 2%.
However, to get traffic, you have to invest time or money. To improve the conversion, only small changes in your site, especially in the titles, descriptions and photos of the product are necessary. This process is much faster and much less costly.
Identifies bottlenecks and improvement points
You certainly know the term Customer Journey, don't you? Every new person exposed to your e-commerce for the first time travels a certain path. The finish line is the purchase. However, it's not so simple to walk this path, since it is unknown.
Previously, the global conversion rate was defined, i.e. of a site as a whole. However, the Customer Journey is composed of several steps. Attract attention to ads, click on the link, view product, fill the shopping cart, start payment checkout. These are the main steps.
Therefore, the conversion rate for each specific action can be calculated and improved. By knowing this metric, you will identify the obstacles that are preventing you from making sales.
For example, your ads may be performing well, but many purchases are abandoned at checkout. So you know where to improve to increase your business profitability.
Rethinking marketing and traffic campaigns
With the conversion rate at hand, you can reduce the cost of sponsored ads, as you will clearly see that certain products are not giving the proper financial return. In this way, you can reorganize your campaigns and direct traffic to the offers and products that convert the most, scaling your digital business to another level.
How do I know if my conversion rate is good?
There is no specific rule delimiting a range of acceptable values for the conversion rate. It should not be the only metric to be analyzed in an e-commerce and can never receive an isolated evaluation from the others. The satisfaction rate must incur along with other factors.
Check the conversion rates of your niche
In general, e-commerce has varying conversion rates between 1 and 3.6%, the average being 1.33%. In other words, it can be said that 1% is the minimum value that every virtual store should at least have.
The market niches also differ in terms of the conversion rate. For example, those who sell laptops will have a much lower rate than the clothing e-commerce. This is for very obvious reasons.
Also analyze other metrics, especially the ROI
Tell me what is the best scenario: conversion rate of 0.25% in a R$ 2000 product or 1% in a R$ 200 product? Assessing this way, the first option is more advantageous.
However, if I say that for the product of R$ 2000, R$ 1900 was spent on traffic, while that of 200 required only R$ 50. Which product will generate a higher revenue?
This is why the conversion rate cannot be seen in isolation. It can also be deceptive. The main point is that you should also be aware of another metric, the Return on Investment (ROI). His formula is as follows:
ROI is a metric that does not consider the niche market. It only shows whether a business is being profitable or not. For example, 50% ROI means that every $1 that is invested in your business generates $1.50 of net profit for you.
In other words, if the ROI of your venture is positive, the conversion rate is probably optimal as well.
Explore other traffic sources
One way to improve the conversion rate is to check the traffic sources of your business. For example, someone who comes to your site via Google search converts better than a Facebook ad because there is already a prior interest from the customer.
I ask you to answer the following question truthfully: "Have you used all the existing traffic sources in your business? Have you invested in Instagram, Youtube, Pinterest and digital influencers?" If your answer is no, I advise you to think about it because you may find sources that better convert to the current ones you are using.
Reflect on your online business satisfaction
The previous topics covered many metrics, data and numbers. However, now I want to make you think about a more subjective factor: your satisfaction with the online store.
Only you know how much the monthly income in your business is. If you are satisfied with the revenue and the money you receive, then there is no need to worry avidly about the conversion rate. If the business is profitable, sustainable, walking on its own two legs and the economic level of your life is pleasant for you, then it is all right.
How to improve the conversion rate at each funnel stage?
Regardless of where strategies to improve the conversion rate will be applied, an important concept is to understand: the A/B tests.
The A/B tests are an advanced concept of digital marketing. It would require a specific whole article on the subject. But briefly, I will explain how this works.
Any test to be done on your e-commerce needs to take into account the current settings and only a change on the landing page to be tested. Think of a product that you want to improve the conversion rate. There are many variables that need to be analyzed. However, it is recommended to evaluate one at a time.
For example, you just change the title of the product. With A/B testing (various automation tools allow you to do this, including Google Analytics), you shift half of the site traffic to a page with a different product title. Let it run for a certain period of time (14 days, 30 days or even 60 days). Then analyze which title had the most conversion. That's it! If the second option (modified) resulted in more sales, you should change the product title.
After this first test, you can check the images, the descriptions and the color of the purchase button as well.
A/B tests are applicable at various stages of an e-commerce sales funnel. In the topics below you will see where you can apply them with the intent to optimize the conversion rate.
Top of Funnel - Announcements
The ads are the audience's first contact with your brand. In this circumstance, the conversion rate can be improved by performing A/B tests on different variables:
- Audience Segmentation: Are the people receiving the ads the most qualified to buy? Do they have persona characteristics?
- Hours and days of the week: people have different habits of consumption. Most of them work during business hours. So maybe announcing 10 am is less profitable than 7 pm. How do I know that? Actually, I don't know. You have to test it.
- Title and description: the title and descriptions of the ads are also important and should be tested to find those with higher click rates (CTR)
- Images/videos: images and videos are the factors that most contribute to attract the public's attention. Constantly do tests to find the ideal pattern.
Funnel medium - Products page
The middle of the funnel of an online store are the products. After all, the customer has already entered your site and now the job is to convert into sales. The most important elements are:
- Title of the product;
- Buy button.
The process of performing A/B tests at this stage has already been demonstrated in the topic above.
Funnel Fund - Checkout
Checkout is one of the main stages of an online store. First of all, you need to know that many visitors abandon their purchase in the middle of checkout. This is very common to occur. Its function is to reduce this number of abandonments with a better conversion rate.
The main factors contributing to the checkout conversion rate are the lack of clarity in the freight specifications, the amount of information that needs to be filled in and the opening of new tabs to finalize the payment.
Stay until the end of the article that I'll show you how CartX helps you in this regard.
Hopper bottom conversion also involves the application of strategies such as cart recovery and remarketing ads.
Global factors contributing to the conversion rate
Above have been highlighted specific places where tests can be done to improve the conversion rate. Now, I will explore some global requirements that involve the entire site. Being suitable for them is very important as well.
- Fast loading: if an online store takes a long time to get the pages loaded, it is harder for the user to stay there. Make sure the loading time is within acceptable levels, between 2 and 3 seconds.
- Mobile Friendly: Mobile phones are increasingly used to surf the Internet. Therefore, your online store needs to be suitable for the screen resolution of various devices, both vertically and horizontally.
- Usability: this word relates to ease of navigation. A simple and clean layout, with proper font size and easy-to-find menus are essential for the user to understand and access the site with ease.
How CartX can help you with your conversion rate
If you don't know us yet, we at CartX offer differentiated solutions for e-commerce. In addition to the hosting platform for e-commerce, we develop useful tools at no additional cost to our customers, which can also be installed on Shopify and WooCommerce.
Here are some of the benefits we offer.
The transparent checkout is a fully customizable checkout model to optimize your online store sales. With it, it is much simpler for customers to make purchases, because only essential information is requested.
With CartX Payments, payment processing is much easier and safer. The conversion rate for those using this tool increases considerably. CartX has several plans for balance release. It's worth checking out!
Recovery of abandoned carts
We are proud to say that we developed Speak, the automatic messaging application to recover abandoned carts. With it, you schedule checkout reminders and send them directly to users' WhatsApp.
Conclusion on conversion rate:
I hope you enjoyed this content. It was very complete about the conversion rate.
If you are interested in how to use the Facebook pixel to assist with conversions in your online store, read the article How to use the Facebook pixel to measure your conversions
Any questions, I'm at your disposal. Just get in touch with me and I'll help you.
A hug and a lot of success,