What is the conversion rate? What can we really expect from it in e- commerce? we would like to tell you, in a language that you can understand, with reliable figures and references.
The conversion rate in context: three definitions
Recall the three essential indicators in the analytics of a business model based on electronic commerce, and its meaning:
Traffic: how many people visit your website.
Conversion rate: what percentage of those visits “convert” (in eCommerce, conversion is usually associated with “sale”, although a more correct definition would be “achieved objectives”).
Average ticket: the average amount of orders.
These three values make up the basic “picture” of an online business: how many people visit it, how many of those people they buy and how much their orders are average. If you have an online store and talk to an investor, this is the first thing you want to know.
However, it is not uncommon to find entrepreneurs who embark on an adventure without having predictions about these indicators, and what is more important, without a strategy to achieve the objectives set:
- Traffic: how do I bring all those visits to my website?
- Conversion rate: what do I do to ensure that visitors do not leave without buying?
- Average ticket: In what way do I make sure that the orders are, on average, the expected amount or higher?
Obviously, these three things do not happen by themselves. We have to do something to make them happen, and often they will not happen even if we let our skin try. You already know:
The answers will never be correct if we do not even know what the question is.
Understanding the context with these brief definitions, let’s focus on the Conversion Rate, the main purpose of this article. Remember that at MLK Marketing you will find skilful professionals ready to create a suitable marketing strategy for your business.
The importance of the conversion rate
The mere technical definition of “conversion rate” (sometimes referred to as “conversion ratio”) does not reflect the real importance of the concept, nor its profound implications.
This great quote from the expert Bryan Eisenberg gives us a vision of greater wealth:
Conversion rate is a measure of your ability to persuade visitors to carry out the action you want them to do. It is a reflection of your effectiveness and customer satisfaction. In order to achieve your goals, the visitors must first get theirs.
Sometimes we are too busy thinking about our own goals and forget about the client’s goals. We will never get the one without the other! But let’s go to what’s certain: what kind of values can we expect for this rate and what variables influence them? Let’s see it below.
Numbers you’ve seen out there
As this many popular indicators reflect, the average “global” conversion rate seems to be around 4%.
Conversion Rate: Average website conversion rates, by industry a 3% is established for retail activities, but other very different percentages are broken down according to the type of activity.
For sale of professional services, available studies and reports seem to indicate that it is reasonable to expect a conversion rate 3 times higher than in a retail activity … But beware, it is not the same triple the 1% that triple the 3 %.
Why are there so many differences in the conversion rate by type of activity?
We have already seen that studies show very different means according to the type of activity. The factors to consider to qualify the expectations of conversion rate are very diverse, and many of them do not depend on you:
- Competition: are there other stores that sell the same? many? Is there a “price war”?
- Urgency and contingency: can my clients “leave the purchase for another day” because what I sell does not satisfy urgent needs? Does it make sense to visit my website to browse or just enter someone who has previously decided to buy?
- Potential comparator: does the nature of my product allow it to be easily compared with others?
Look at this assumption:
Maria absentmindedly browses through a fashion website, because she has been thinking about buying some pants for days; You already have many, but if you find something that you like, you would not mind giving yourself a treat, on this website or on another website that has better prices. Her friend Lucy, meanwhile, is desperately looking for a repair service that fixes a leak in the bedroom, and lands on a website that offers that kind of urgent service. Which web do you think will be most likely to make the sale, the fashion, or the repair?
Common sense will probably tell you what experience tells me (and what you have already seen in the studies cited above). The average conversion rate in professional services is much higher than that of retail. Surely this example has helped you to see it more clearly.
But obviously there are also important factors that do depend on you:
- User experience: is my website intuitive, pleasant, easy to use, fast, without errors? Is the payment process clear and simple? What is the customer’s perception of the “security” of my website?
- Call to action: are the product pages designed and optimized for conversion? Have we tested different solutions? (see this other article if you want to get into this topic in depth: The 7 gold guidelines to increase sales in e-Commerce)
- Traffic qualification: Am I attracting the right traffic to my website or do people who are not buying me visit? How many people are attracted by a specific offer? How many visits are from people who are already customers?
As you can see, there are consubstantial aspects to your product and to your market that you cannot change… So, you will have to employ yourself thoroughly with those that you can control.
It is hard to say, but it is clear that many business plans of our eCommerce entrepreneurs come to light with one of these two serious flaws:
- Plans that lack an estimate of traffic, conversion rate and average ticket (incredible as it may seem).
- Plans that assume volumes of traffic and conversion rates away from reality (and often based on data seen on the Internet that are not applicable to the market in question).
Does it make sense to have a business plan based on the assumption of a 4% starting conversion rate in retail when it is common to find rates of 1% and when a veteran of eCommerce would come up with a song in the teeth by 3%?
Of course, there are online retail businesses that have amazing conversion rates, but that depends on the sector, the type of traffic that the website has and many other factors.
Here at MLK Marketing we will define the most suitable strategy to ensure your goals are achieved and conversion rates skyrocket. Contact us today!