One of the most common buzzwords heard in the world of eCommerce is “conversion rate”.
What is “conversion rate”?
Its premise is very simple; the percentage of unique visitors to your site that actually go on to make a purchase. So if 100 people visit your website in a day and 10 people actually make a purchase, the conversion rate for that day is 10%. Given how the figure is obtained, the higher the conversion rate, the better, and this is why it’s becoming more and more common to see the term used as a barometer for a website’s performance.
Over the last three years, an industry has sprung up around the act of improving conversion rates. CRO (Conversion Rate Optimisation), much like its older brother SEO (Search Engine Optimisation), is at its very core a series of practices and guidelines that look at how people use a website (in CRO’s case, your website, in SEO’s case, the search engines) and aims to engineer your website to make it as easy as possible for visitors to get from their start point to their desired goal.
CRO & SEO
One main difference between the two disciplines, however, is measurement. When it comes to SEO, it’s very easy to measure any improvement or detriment that has been caused by changes made in the name of SEO, as your position in the search engine results will go up or down. Since other competing companies are also in the same list, you can also get an idea of how well you’re performing against other companies. CRO, however, is different in this sense. Unless your competitors publish their conversion rates on a regular basis, it’s not possible to compare your conversion rates against those of competing companies.
There are very few external factors that can impact your search engine results, beyond Google algorithm changes and the SEO work done by other companies to their own websites. However with CRO, there are many external factors that can affect whether a potential customer completes an order or not. Everything from a phone ringing whilst they’re placing their order, to hesitation in spending the amount of money they’re about to spend could prevent an individual from completing an order. On top of this, there’s seasonal cycles and school holidays to take into consideration. Some industries will always do better around Christmas because of the type of goods they sell, whereas others find Christmas to be their worst point of the year when it comes to sales.
CRO and EKM
“This is all very interesting,” you might be thinking, “but why are you bringing it up?” Well, in the last 6 months we’ve made changes to a vital part of EKM that was directly influenced by CRO and best practices for the checkout process of an online shop. In this article, I’m going to look at the statistical and financial impact those changes have had with regards the improved conversion rate of a sample of eCommerce websites.
The following sample was chosen to minimise the impact of external factors. For instance, websites which were less likely to have a natural, seasonal dip after Christmas and had not run post-Christmas sales to combat this.
7 Day Window
28 Day Window
The above graphs show the original conversion rate in the 7 and 28-day windows. Conversion rates before the launch of the new checkout are represented by the blue bar, and the improvement to that original conversion rate is the green bar. The combination of the blue and green bars shows the full new conversion rate. Whilst some of the sample may only seem to show a small improvement (the lowest in the sample over 7 days was 0.21% and over 28 days was 0.23%), this is still potentially important on a financial level. This is because tiny improvements in the conversion rate percentage often translate into a much bigger percentage gain in order volumes.
So what’s it worth?
The best improvement to conversion rates from the sample was 2.86%. Using the average number of sessions per week (which from our sample was 2989) and an example average order value of £50, the Cooking Equipment Shop’s weekly revenue increased by £4,274.27. Over a month, this would represent an extra £17,097.08 being generated by the new checkout.
Similar calculations based on the lowest improvement in conversion rate (which was 0.21%) from the sample before and after the new checkout implementation still means an extra £1,255.54 over four weeks.
Table showing extra weekly revenue from the lowest, average and highest 7-day improvements to the conversion rates.
A closer look
As I’ve outlined earlier in this article, comparisons of conversion rates between companies can be a little misleading, especially when looking at companies in different industries. To clearly outline the individual improvements for three of the sample websites, the following graphs will show their original conversion rate in both the 7 and the 28 days before the new checkout launch, and their new conversion rate after the launch of the new checkout.
Pet Food Website
This store had the highest original conversion rate in the sample but still saw an increase after the implementation of the new checkout. This was sustained over both the initial 7 days after new checkout implementation, and the first 28 days after new checkout implementation.
Cooking Equipment Website
In this case, the impact of the new checkout was seen more strongly over the 7 day period, which could point to an external factor impacting the original conversion rate in the 7 days prior to the new checkout implementation, but the 28 day period still shows a considerable improvement to the conversion rate for the website.
Vaping Supplies Website
This website again had a lower original conversion rate in the 7-day period but experienced an increase to both the original and new conversion rates when comparing the 7-day values against the 28-day values.
What does it all mean?
CRO on thousands of ecommerce websites using the new checkout have seen improvements across the board, and we’ll be publishing more case studies on specific websites over the coming weeks to further illustrate this. Some websites have seen greater gains than others, as a wide range of factors can impact conversion rate both positively and negatively. Factors such as promotions, new product lines, seasonality, price changes and numerous others can impact conversion rate, regardless of how easy (or difficult) you make the checkout process. One thing we can be sure of however, is that optimising your customer’s journey through the eCommerce checkout is a valuable and essential exercise in increasing your conversion rate, and therefore the amount of money you make.