In this article, you will learn how to calculate conversion rate and use it to boost your e-commerce sales.
If you’re running an e-commerce business, then you know how important it is to have a high conversion rate.
Conversion rate is a measure of how many visitors to your website actually make a purchase. It’s a key metric that can help you understand the effectiveness of your marketing efforts and identify areas for improvement.
We’ll also provide some tips and strategies for increasing your conversion rate and driving more revenue for your business.
So if you’re looking to improve your e-commerce performance and drive more sales, then this article is for you. Let’s get started!
What Is Conversion Rate?
Conversion rate is the percentage of visitors to your website who take a desired action, such as making a purchase or filling out a form.
It is a useful metric for measuring the effectiveness of your website and can help you identify opportunities for improvement.
How To Calculate Conversion Rate
In order to maximize sales for your Shopify store, it’s important to understand how to calculate conversion rate. Let’s take a look at how to do this.
To calculate your conversion rate, you will need to determine the number of visitors to your website and the number of conversions.
You can then use the following formula to calculate your conversion rate:
For example, if your website received 1000 visitors in a given period and 20 of those visitors made a purchase, your conversion rate would be 2% i.e. [(20 / 1000) x 100].
If you are struggling with understanding how to calculate conversion rate for your e-commerce store, you can use a tool like Trinity, a conversion rate calculator, to help you.
Average Conversion Rate For E-commerce
To calculate the average conversion rate your of e-commerce store, you will need to learn how to calculate conversion rate of your store over a period of time and then calculate the average.
How to calculate conversion rate averages:
You can do this by collecting data on the number of visitors and conversions for each period (e.g., day, week, month) and then dividing the total number of conversions by the total number of visitors and multiplying by 100.
By tracking your e-commerce conversion rate over time and analyzing the data specific to your business, you can identify opportunities to improve your conversion rate and drive more sales for your business.
Let’s talk about Average Order Value (AOV) and its inverse relationship with Conversion Rate.
The average order value (AOV) is a metric that measures the average amount of money that a customer spends on a single order. It is calculated by dividing the total revenue by the number of orders.
Average order value = Total revenue / Number of orders placed
A high AOV is generally seen as a good sign, as it indicates that customers are spending more money on each purchase.
A high conversion rate is generally also seen as a good sign, as it indicates that a large percentage of visitors are taking the desired action.
There is an inverse relationship between the average order value and the conversion rate, meaning that as one increases, the other decreases. This is because the higher the average order value, the fewer orders are needed to reach a certain revenue goal. As a result, a business with a high AOV may have a lower conversion rate, since fewer orders are needed to meet its revenue goals. On the other hand, a business with a low AOV may have a higher conversion rate, since it needs to make more orders to meet its revenue goals.
It’s important to note that both the average order value and the conversion rate are important metrics for a business to track and optimize. A business should strive to find the right balance between these two metrics, as maximizing one at the expense of the other may not be the best strategy in the long run. For example, while it may be tempting to focus on increasing the average order value to boost revenue, this could come at the expense of the conversion rate, as customers may be less likely to make a purchase if the prices are too high.
It’s important to note that there are many factors that can influence your conversion rate, such as the design and usability of your website, the perceived value of your products, the pricing of your products, and the payment options you offer.
By tracking your conversion rate over time and experimenting with different variables, you can identify opportunities to improve your conversion rate and drive more sales for your business.
Improving your conversion rate is one of the most underrated and highly effective ways to improve the return on investment (ROI) of your e-commerce business. By improving your e-commerce conversion rate, you can significantly increase your sales and revenue.
For example, if your current conversion rate is 1%, and you are able to increase it to 2%, you would be doubling your sales.
This would also result in an increase in your return on ad spend (ROAS) and your overall ROI. In other words, improving your conversion rate can have a cascading effect on your business’s profitability.
There are many ways to improve your conversion rate, such as optimizing your website for conversions, offering relevant and compelling products, providing excellent customer service, and implementing effective marketing strategies.
By focusing on improving your e-commerce conversion rate, you can take your e-commerce business to the next level.
Top 10 tips to double your conversion rate
Improve Your Website Speed
Improving the speed of your website can have a number of benefits for your business. A faster website can lead to a better user experience, which can increase your conversion rate. A faster website can also improve your search engine rankings since search engines tend to favour faster websites in their search results.
There are a number of ways you can improve the speed of your website:
- Optimize images: Large images can take a long time to load, so it’s a good idea to optimize them by reducing their file size without compromising on quality. You can use tools like TinyPNG or Kraken to optimize your images.
- Enable caching: Caching allows your website to store certain elements, such as images and stylesheets, in the user’s browser so that they don’t have to be downloaded each time the user visits your website. This can significantly improve the speed of your website.
- Minimize HTTP requests: Every time a user visits your website, their browser has to send an HTTP request to your server to retrieve the necessary files. The more HTTP requests your website requires, the slower it will be. You can reduce the number of HTTP requests by combining multiple files into one, or by using CSS sprites to combine images into a single file.
- Use a content delivery network (CDN): A CDN is a network of servers located around the world that serve content to users based on their geographic location. Using a CDN can improve the speed of your website by serving content from the server that is closest to the user.
- Enable compression: Compressing your website’s files can significantly reduce their size, which can improve the speed of your website. You can use tools like Gzip to compress your files.
To test the speed of your website, you can use the Google speed test tool. Google’s PageSpeed Insights tool will analyze your website and provide recommendations on how to improve its speed.
You can then implement these recommendations to optimize your website for speed.
Play With Your Price Points
Testing different price points for your products can be a useful way to determine the optimal price for your products and maximise your profits.
By showing different prices to different groups of your audience, you can see which price point generates the most sales or leads. This can help you determine the price point that is most appealing to your target market.
To test different price points, you can use a tool like Google Optimize. This tool allows you to create different versions of your website, each with a different price for your products.
You can then use Google Optimize to split your traffic between these different versions of your website and see which price point performs best.
It’s important to note that when testing different price points, you should consider other factors that could affect the results, such as the perceived value of your product, your target market, and the prices of similar products in the market.
It’s generally a good idea to test different price points in small increments, rather than making drastic changes all at once. This can help you get a better understanding of the relationship between price and demand for your products.
Add A ‘Was’ Price Or ‘Before’ Price
Displaying a “was” price or “before” price next to your current price can be an effective way to make your products appear more attractive to potential customers.
By showing a higher price than your product used to be sold at, you can create the impression that the customer is getting a discount on the current price. This can make your product seem more appealing and encourage more people to make a purchase.
To add a “was” price or “before” price to your products, you can simply display the current price next to a strikethrough line or a label indicating the previous price. This can help make your products appear more attractive to potential customers and encourage more sales.
Showcase Product Reviews
Displaying product reviews on your website can be an effective way to build trust and credibility with potential customers.
By showing that other people have purchased and used your products, you can provide social proof that your products are high-quality and worth purchasing. This can help increase your conversion rate and ultimately drive more sales for your business.
There are a few different ways you can showcase product reviews on your website:
- Text-based reviews: You can display written reviews from customers on your website, either on the product page or on a separate reviews page. These reviews should be genuine and should include specific details about the product and the customer’s experience.
- Visual reviews: You can also display visual reviews, such as photos or videos of customers using your products. These can be particularly effective if you sell physical products, as they can give potential customers a better idea of what the product looks like in real life.
- Social media reviews: You can also showcase product reviews from social media platforms, such as Instagram or Facebook. This can be a good way to show that your products are being used and appreciated by real people.
Give Free Shipping
Offering free shipping can be an effective way to encourage more sales and improve the overall customer experience on your website.
By providing free shipping, you can make it easier and more convenient for customers to purchase your products, which can improve your conversion rate.
One way to implement free shipping is to set a threshold, or minimum order amount, beyond which customers will qualify for free shipping.
For example, you might offer free shipping on all orders over $50. This can encourage customers to add more items to their cart in order to qualify for free shipping, which can increase the average order value and ultimately drive more sales for your business.
In addition to setting a threshold for free shipping, you may also want to consider offering free shipping as a promotional offer.
For example, you could offer free shipping for a limited time or for a certain group of customers, such as first-time buyers or VIP members. This can be a good way to drive more sales and attract new customers to your website.
Use Buy Now, Pay Later Apps
Using buy now, pay later apps can be an effective way to make it easier and more convenient for customers to purchase your products. These apps allow customers to make a purchase and pay for it in installments, rather than paying the full amount upfront.
This can be particularly appealing to customers who may not have the funds available to make a large purchase all at once.
To use a buy now, pay later app, you will need to integrate it into your store.
This typically involves signing up for an account with the app and installing a plugin or code snippet provided by the app on your website. Once the app is integrated, customers will be able to select the buy now, pay later option at checkout and make their purchase in installments.
Each app has its own fees and terms, so it’s important to do your research and choose the app that best meets the needs of your business and your customers.
Have Multiple Options For Payment
Having multiple payment options on your checkout page can be beneficial for a number of reasons:
- Convenience: By offering multiple payment options, you can make it easier and more convenient for customers to make a purchase. Customers may prefer to use a certain payment method, such as a credit card or a digital wallet, and by offering multiple options, you can accommodate their preferences and increase the likelihood that they will complete a purchase.
- Trust: Offering multiple payment options can also help to build trust with your customers. Customers may be more likely to make a purchase if they see that you offer their preferred payment method, as it can give them confidence that their payment will be secure and processed smoothly.
- Accessibility: Having multiple payment options can also make your products more accessible to a wider audience. For example, if you offer a variety of payment options, including options for customers who may not have a credit card or a bank account, you can make it easier for these customers to make a purchase.
To offer multiple payment options on your checkout page, you will need to sign up with payment processors or gateways that support the payment methods you want to offer.
You will then need to integrate these payment options into your checkout page, either by installing a plugin or by adding a code snippet provided by the payment processor.
It’s important to consider the fees and terms associated with different payment options and choose the ones that are most suitable for your business. You should also make sure that your checkout page is secure and that you follow best practices for handling sensitive payment information.
This can help build trust with your customers and increase the likelihood that they will make a purchase.
Have A Cart Expiry Time
Displaying a shopping cart expiry timer can be an effective way to create a sense of urgency and encourage more sales on your website. By showing customers a countdown timer that indicates when their shopping cart will expire, you can create a sense of urgency that motivates them to complete their purchase.
This can be particularly useful if you are running a promotion or have limited quantities of a certain product.
To implement a shopping cart expiry timer, you will need to add a timer to your checkout page that counts down from a certain amount of time. You can set the amount of time-based on your business needs and goals.
For example, you might set the timer to expire after 30 minutes, 1 hour, or 24 hours, depending on the nature of your products and the desired level of urgency. By using a cart expiry timer judiciously, you can create a sense of urgency that motivates customers to complete their purchase and drive more sales for your business.
Do Not Require Sign-up For Checkout
Requiring customers to sign up for an account before they can make a purchase can be a barrier to conversion, or the process of turning a website visitor into a paying customer.
Customers may be hesitant to sign up for an account if they are only making a one-time purchase, or if they are concerned about privacy or spam. As a result, requiring a sign-up for checkout can reduce the conversion rate on your website.
To avoid this issue, it’s a good idea to make sure that you have the option of letting customers check out as a guest enabled on your website. This will allow customers to make a purchase without having to create an account.
By offering the option of checking out as a guest and making it easy for customers to make a purchase without creating an account, you can reduce barriers to conversion and improve the overall user experience on your website.
Have A Clear, Extended Return Policy
Having a clear, extended return policy can be an important factor in helping customers make the decision to purchase from your store. A return policy sets out the terms and conditions under which customers can return a product and receive a refund or exchange.
By offering a generous return policy, you can help to build trust and credibility with your customers and make it easier for them to make a purchase.
There are a few things to consider when creating a return policy:
- Set a clear timeframe: Make sure to set a clear timeframe within which customers can return a product. A return policy of 60 or 90 days is generally considered generous and can help to give customers confidence that they can return a product if they are not satisfied.
- Specify the conditions under which a return is accepted: Make sure to specify the conditions under which a return is accepted, such as if the product is defective or if it was received in error. This can help to clarify the terms of your return policy and reduce confusion.
- Clearly outline the process for returning a product: Make sure to clearly outline the process for returning a product, including any forms that need to be completed and the address to which the product should be returned.
- Consider offering free returns: You may also want to consider offering free returns, either for all products or for certain categories of products. This can make it easier and more convenient for customers to return a product and can help to reduce barriers to conversion.
By having a clear, extended return policy, you can help to build trust and credibility with your customers and make it easier for them to make a purchase from your store.
As you learnt in this article, there are many ways to improve the conversion rate of your ecommerce store. You also learnt how to calculate conversion rate – absolute and averages. If you want to explore more growth hacks for conversion rate optimization (CRO), make sure to read this blog.