Uncertain economic times caused by rapid inflation have consumers tightening their budgets. Meanwhile, increasing privacy regulations are making it harder for ecommerce brands to target and convert. The duality of these factors has retailers competing harder than ever for shoppers, resulting in record spending for customer attention — 98% of senior ecommerce decision makers in the U.S. agree that changes to privacy regulations have increased the cost per acquisition (CPA), according to a study by Vanson Bourne. These professionals are validated by a MOLOCO study which found that CPA costs increased by 63% after the release of iOS 14.5 (the beginning of Apple’s App Tracking Transparency feature) and an additional 94% after iOS 14.6.
With costs skyrocketing for ecommerce brands to attract new customers to their sites, it’s imperative that they capitalize on each engagement. This year, the average conversion rate for ecommerce is 3.65%. This means that for every 100 visitors to your website, between three and four will make a purchase. How can you improve that average to help make the record spend on customer acquisition count?
Give yourself the best chance to convert a site visitor by leveraging conversion rate optimization.
What is conversion rate optimization?
Conversion rate optimization is a tailored strategy for targeted key performance indicators (KPIs) that’s designed to increase the likelihood that a consumer will take the desired action.
While we acknowledge that there are many KPIs capable of optimization, the purpose of this article is to focus on the top priority for most ecommerce brands: the percentage of visitors who make a purchase. Getting consumers to complete the checkout process requires a user-centric approach that accounts for what motivates, deters, and persuades them and then integrating the right changes into your customer experience.
How to calculate an ecommerce conversion rate
The simplest way to calculate an ecommerce conversion rate is to divide the desired action by the number of site visitors. For example: an ecommerce site with 10,000 visitors in November and 100 sales during that same month would have a conversion rate of 1%. A month’s worth of data isn’t enough to begin the process of conversion rate optimization. Rather, collect all the data available to benchmark conversion rates and compare them to future results to determine what changes to your strategy are proving successful.
What’s a good ecommerce conversion rate?
Conversion rates vary by industry, but the horizontal average for all ecommerce sites sits between 3-4%. This means your brand should be closing three out of every 100 visitors.
Once you’ve reached this baseline, you can begin to improve on it through the following tips to achieve conversion rate optimization.
10 Tips for ecommerce conversion rate optimization
1. Optimize product description pages
Consumers who land on product description pages often arrived there from advertisements and are likely to be among your most interested visitors. Unlike in-store shopping, ecommerce isn’t a tactile experience. Ensure you’re providing online shoppers with high-resolution images, videos, and detailed descriptions to help them better envision what that item will look like and how it will be used upon delivery. Product description pages are your closer, so make them as effective as possible.
2. Incentivize influenceable shoppers
Modern ecommerce consumers have grown accustomed to certain incentives: coupons, fast shipping, and free returns. However, not every shopper needs a discount in order to convert. By focusing on real-time offers, ecommerce brands can target on-the-fence visitors with limited-time coupons, free shipping, and other single-use promotions to get them to complete a purchase — securing more sales without depleting margins.
3. Provide social proof
Ninety-five percent of consumers read reviews before making a purchase. They want to hear from others who have bought the same item and learn about their experience. The following statics from Fera highlight just how impactful social proof can be for increasing ecommerce conversion rates:
- The probability of the purchase of a product with five reviews is 270% higher than the same product without reviews.
- Reviews on higher-priced products can increase their conversion rate by 380%.
- Cheaper items with product reviews saw a 190% increase in conversion rates.
Further, 62% of consumers are more likely to purchase if they see customer photos and videos; 2 out of 3 say they’re more likely to purchase after seeing a testimonial video; and replacing landing page reviews with video testimonials can increase the conversion rate by 80%.
4. Live chat and chatbots
In-store shoppers have the opportunity to discuss products and services with sales representatives before making a purchase. Live chat support and AI-driven chatbots can provide a similar service on an ecommerce site. Leverage AI for frequently asked questions and off-hour support and save your live representatives for consumers with more personalized needs. Statistics show that adding live chat can increase conversion rates by 12%, making the feature an invaluable contributor to conversion rate optimization.
5. Streamline checkout processes
Baymard estimates that 70% of ecommerce carts are abandoned before purchase. One of the top reasons for this high percentage is a complicated checkout process — meaning it’s too long, overly complex, or not user-friendly. Streamline the purchase process by implementing industry-standard practices and allow visitors to checkout as guests to help remove the friction of creating an account.
6. Calls to action
Buttons take the guesswork out of the ecommerce process and save consumers 148 million hours each year.
Sites like Amazon have multiple calls to action on every product page (e.g., Buy Now, Add to Cart, Delivery, or Pickup) each with clean, simple copy that tells users what to expect upon clicking the button. However, calls to action can do more than get products into carts — they can provide additional revenue.
Using strategic calls to action, you can:
- Increase the average order value (AOV) by offering either a discount (25% off orders over $200) or free shipping on orders above X amount;
- Promote urgency or scarcity with dynamic messaging on items being viewed;
- And upsell or cross-sell similar products that the visitor has added to their cart.
7. Responsive user experiences
More than half of the world’s web traffic comes from mobile devices. If your ecommerce site isn’t responsive to different screen sizes, you could be delivering a suboptimal experience to visitors — 76% of shoppers stop shopping at a brand after only two negative engagements. Meanwhile, positive experiences are the deciding purchase factor for 73% of consumers, can boost order values by 1.9x, and have the power to increase revenue by upwards of 80%.
8. Cart abandonment campaigns
Cart abandonment costs ecommerce brands $4.6 trillion globally. Cart abandonment campaigns deploy targeted ads or emails to remind consumers of their cart — whether that’s:
- Alerting them that there is a price drop on an item in their cart;
- Geofencing breach notifications that the cart item is in stock at their nearby store;
- Or using Session AI’s real-time offers to create urgency and incentivize a purchase (e.g., limited-time single-use promo codes, gift with purchase, or free expedited shipping).
Most consumers (75%) notice retargeted ads, with 26% of them clicking on the ads to return to your site. Further, ecommerce brands that personalize their retargeting have seen returns of more than 1,300%. While retargeting can yield positive results, real-time offers are more effective because they happen while you still have the visitor’s attention, and before they get the chance to buy the product elsewhere.
9. Digital payment options
As many as 82% of U.S. consumers use digital payments when shopping online. This includes digital wallets like Apple Pay, BNPL (buy now, pay later), cryptocurrency, and more. These payment options not only provide secure checkout, they also streamline the checkout process by eliminating many of the steps traditionally required to complete payment. Optimizing checkout can increase ecommerce conversion rates by 35%.
10. Personalize each engagement
Personalization is perhaps the biggest factor for conversion rate optimization. The majority of consumers (80%) are likely to purchase from companies that provide tailored experiences. More than half (60%) of shoppers will become repeat customers after a personalized experience. Most (78%) of consumers chose, recommended, or pay more when a brand personalizes their visit. All this equates to marketers seeing a 20% increase in sales after implementing personalization. Unfortunately, 53% of brands lack the right technology to deliver true personalization — especially with the ever-increasing number of anonymous visitors.
See how Session AI can help personalize every experience (for both anonymous and known consumers) to drive higher conversion rates
Ecommerce brands are missing out on sales for one reason or another. Conversion rate optimization helps mitigate that lost revenue through less friction and smoother shopping experiences. Revenue from retail ecommerce in the U.S. alone is estimated at $905 billion, meaning just tenths of a percentage rise in conversion rate equates to millions in growth.
Through the tips above, and with the help of optimization technology, it’s possible to minimize cart abandonment and increase sales — both of which are now more vital in our current economic climate.
Don’t stop at conversion rate optimization. We have even more ecommerce marketing strategies.