Online Marketing Specialist
Conversion Rate Optimization (CRO) is based on increasing the conversion rate of an e-commerce website in order to increase its sales.
It is a very data-driven process based on testing, and tends to be one of the most profitable investments for an e-commerce website in any industry. In this article we will unpack everything you need to know to increase the conversion rate of your e-commerce website.
Table of Contents
E-commerce is a business model that has its complexities, but luckily there are a few things that are simple and direct, such as calculating sales or breaking down sales based on the principal indicators of e-commerce.
Sales = Traffic x Conversion x Average Order Value
E-commerce sales from a specific time period are calculated by multiplying the visits to the website by the conversion rate and by the average order value.
If you want to double e-commerce sales, you can double the traffic, the conversion rate or the average order value.
Or you can take a more realistic approach based on increasing traffic by 25%, conversion by 25% and the average order value by 25%. By increasing each variable by 25%, you can double your e-commerce sales. And I can assure you that it will be much easier for you to increase each of these indicators by 25% than to double just one of them.
Historically, many e-commerce businesses have grown thanks to incrementally increasing traffic and visitors to the website. This was feasible when the CACs (customer acquisition costs) were not skyrocketing as they are now. With rising acquisition costs, increasing bids on paid traffic channels is no longer profitable, so it is even more important to work on conversion.
From a certain point of view, conversion is a way to leverage traffic and the traffic growth that you can achieve. At the level of ‘unit economics,’ an increase of x% in conversion allows you to also invest another x% in your CAC while maintaining profitability.
Conversion is a big part of the magic of e-commerce.
The conversion rate of an e-commerce website is calculated by dividing the sales generated during a certain time period by the total number of visits to the website during the same time period.
Conversion rate = sales / visits
There are no more mysteries at this level, although in practice different questions may arise.
For example, if you have a blog that generates a lot of organic traffic, your conversion rate could be seen as diminished because a large part of the blog traffic is converting at a much lower rate than the traffic that visits category lists or product pages. This is completely normal and in some cases you can compensate by removing the blog traffic from the general calculation, at least when you compare yourself with other players that may have very different approaches to traffic acquisition.
Different sources of traffic generate different conversions. Traffic from social media tends to convert less and branded traffic tends to convert more. Your dependence on paid or organic channels, or specific strategies can cause your conversion rates to vary significantly.
Dates also change the conversion rate. In general, during big campaigns, like those for Black Friday, Christmas, or any other similar promotional event, conversion rates tend to go up substantially because people are in “shopping mode.”
That said, and bearing in mind that the conversion rate of each e-commerce website is different because it depends on its verticals, strategic factors, traffic channels, etc., you can use any reliable reference to evaluate your website’s conversion level.
According to the E-Commerce Conversion Rates Study by Flat 101 from 2022, the average conversion rate of Spanish e-commerce websites is 1.291%.
This conversion rate varies quite a lot depending on the device, going from 0.88% for smartphones to 2.32% for desktop; this is also true for traffic acquisition channels where it ranges from 0.44% conversion through display campaigns to 5.41% conversion in referral traffic.
At the sectoral level there are many differences between sectors, and the average conversion rates of the most relevant ones are as follows:
Almost everyone looks for “hacks” or good practices to reliably and precisely improve their e-commerce website’s conversion rate. But that is like asking everyone on Earth if magic is real.
Some tricks seem to work in the short term, but in order to increase your conversion rate sustainably over the long term, you need a robust approach that allows you to work continuously at the CRO level.
The way that I approach CRO projects is to use Product Hackers Canvas, a tool that organizes all stages of customer contact and allows you to analyze current KPIs, opportunities for improvement and possible things to try to increase conversion rates.
At the conversion level, we will focus on the following stages:
This perspective enables us to break conversion down into 3 phases, which gives us 3 major leverage points to increase the conversion rate of any e-commerce store.
Conversion = interest stage x desire stage x action stage
Translated to the e-commerce conversion funnel:
Conversion = the % of users who view a product x the % of users who add it to their cart x % of users who complete the checkout.
For a large number of users who do not end up buying from us, it is because:
At this stage, we are going to focus on two causes of reduced conversion rates. Let’s look at the following elements:
When you look at a website through the eyes of the buyer, you can find many elements that you can improve upon in terms of building trust. So a good practice is to try to view your e-commerce store not as if you were working on it but as if you were going to buy a product.
In general, try to focus on aspects like:
There are websites that scare you as soon as you see them…
In order for a user to make a purchase, they need to be able to find a product that interests them. This is obvious, but it is not always easy to find the products that the user needs or likes.
Here a good internal search engine like Doofinder is one of your best allies. On average, conversion rates are 3 times higher among users who use this search engine than those who do not.
The more you improve the search engine, the better search results you will get and the more people will discover and use the search engine, which can significantly improve conversion rates.
Within the search engine you can highlight products for specific queries, what to do when the user searches for a product that you do not have, how to reorder the products from highly performed searches, and many other aspects.
More than just using a good search engine, there are other options that support improved product findability:
Second step of CRO: the User adds the product to their cart
Once the user has seen a product that might interest them, you have to get them to want to buy this product, hence this is called the ‘Desire stage.’
There are 3 main drivers that support this stage:
In an e-commerce website, you can create emotional connections in many different ways. But the one that takes the cake is the use of visual material. High-quality product photographs, product videos, 360° views…
Eliciting that emotional response can sometimes be achieved by telling a story, for example, while using the product. A good example is this picture of cured ham, which is trying to induce a craving in the visitor thanks to seeing the product in a very attractive way and almost inciting them to eat.
Image from Maximiliano Jabugo e-commerce website.
In addition to eliciting positive emotions towards the purchase, you must tangibilize the benefits of the product and of your brand/e-commerce store to the user.
For example, in this test we increased the sales of a complex product like a mirror-wardrobe from Due Home by including a 360° interactive photograph which succeeded in connecting with the user while tangiblizing its different elements.
Another tactic you can use is to tangiblize things that might seem obvious to you but many users are not aware of. By doing something as simple as adding a “Free Shipping” label to the product pages of products whose price is higher than the threshold for free shipping, we managed to increase the sales of those items by 64% in a brand like Havaianas.
Humans rely heavily on our social relationships. We are tribal beings, we need constant social approval.
That’s why all techniques that rely on some form of social proof tend to work well to sell more. You can use elements such as:
Experimenting with these elements tends to help increase the ratio of products added to the cart considerably.
Once the user has a product in their cart and wants to buy it, you need to make their life as easy as possible so that they can complete the purchase with lightening speed.
At a methodological level, for this phase I usually rely on Fogg’s behavioral model, which tells us that to get a user to do something we want him to do (e.g. buy from us), we must:
If you have done the desire phase well, your users should arrive with a good amount of motivation to make a purchase. But you can always provide a little extra motivation.
To do this, you can turn to tactics such as:
In any e-commerce business there are always things to do or improve. Checking out is a loathed process for the user. The user wants to buy a product and, suddenly, they have to fill out a heap of information that nobody wants to fill in.
To simplify this phase, you can experiment with:
Perfume’s Club has a well-crafted checkout, integrating card tokenization, device-adapted payment methods, and an address lookup service. A good example of where to get ideas to experiment with.
Sometimes all a user needs is a little nudge to make a decision and check out. Here you can use tactics like offering a discount for the first purchase, as brands like Blue Banana do. It drives conversions and is a good way to capture emails to add to your database.
Working on the conversion rate of your e-commerce website is the best tool to increase your sales in a sustainable and continuous way over time, while optimizing the investment in acquisition.
There is no magic formula to increase your conversion rates, but the CRO methodology and the Product Hackers Canvas that we have explained in this article offer path that will allow us to find the levers that can improve conversion rates.
Our job is to always be testing those levers, doing A/B tests to determine which improvements really work and engaging with an iterative process in our e-commerce store but not overloading it with things that do not work.
“Always be testing” is the best way to bring your e-commerce sales to the next level.