What an e-commerce conversion rate is and how to optimize it step by step to increase sales

Are you the type of person who is obsessed with getting more and more visitors?

Of course, nobody is going to deny that visibility is important, especially when you are starting out, but it is not, by any means, the only metric that you should focus on.

You should never forget that you have a business, which means that you should always value, above everything else, sales—or, in other words, the conversion rate.

We will not only explain what this indicator is in this article, but we will also give some ideas about how to improve it.

Ready to sell more?

Let’s get to it!

What is the conversion rate?

The conversion rate can be defined as follows:

The percentage of unique visitors that have made a purchase in an online shop within a set period of time (daily, monthly, quarterly, annually, etc.).

After reading this definition, and before moving on, it’s important for you to have a clear understanding of the overall concept of conversion beyond a website or business.

We typically associate conversions with final sales, as you’ll see in this article. It’s obvious that the end goal of an online shop is to close a sale, but the concept of conversion is much larger.

  • If the goal is to increase the number of newsletter subscribers, a conversion is somebody who subscribes.
  • If the objective is for the user to read a full article, a conversion is when they stay on the page for more than x minutes.
  • If the objective is to increase the time spend viewing your videos, a user that converts is the one that watches them for the number of minutes you define.

Therefore, the conversion rate, in terms of the full range of marketing, works in accordance to the time-related goals you define.

Later we’ll talk about how to implement them into Google Analytics.

How is it calculated?

The formula to calculate it is simple and doesn’t depend on what you consider to be “conversion”.

Conversion rate= (No. of conversions / visits) x100

If you receive 10,000 visits and make 200 sales, your conversion rate would be: 200/10,000 x 100 = 2%.

It’s always expressed as a percentage so that it’s easier to understand.

Our example gave us 2%, but that’s not very typical in terms of e-commerce sales. Unless you are Amazon or today happens to by Black Friday, don’t be scared if you see 1% or less—you are in the average range.

Dissecting the conversion rate to get more information

If you have an online shop and you are taking on the challenge of improving your visitor conversion, you should be clear about one thing:

The average rate is useful, but even more so if you have it separated out, which is to say, if you know the conversion rate of each source of traffic, or if it’s broken down by date or some other important factor.

Let’s take a look at why.

1. Conversion rates separated by source

You should know the ratio of each source of traffic:

  • Organic
  • Paid
  • Social Traffic
  • Referrals
  • Other

This helps you better understand how your users behave in terms of where they come from. Furthermore, it will save you valuable money by investing in the sources of traffic that convert the most.

Imagine that you launch two marketing campaigns: one through Facebook Ads and the second with an influencer.

The first one generates 20,000 visits to your site; however, the majority of them bounce and there are only a few conversions. The influencer, on the other hand, only brought you 1,000 new visitors—but nearly 10% of those users were converted into clients.

In which of the two campaigns would you prefer to invest your money? Don’t forget that number of visits is a vanity metric—what’s important is how they convert.

Recommended reading: Web analytics for e-commerce: which metrics do you need to monitor to know if your business is doing well?

2. AdWords and conversion rate

Knowing how many people end up making a purchase is always important, but that importance increases when we are paying for visitors. Google AdWords (now Google Ads) can be a bottomless pit that we throw money into if we don’t understand and optimize the response of the website for which we are paying for visitors.

Important: To see your AdWords conversion rate, you use Analytics in the tab Acquisition > Campaigns > Paid Keywords. There you can find a breakdown of each campaign and you can decide to keep investing or to opt for a different marketing strategy.

Aside from where they come from, it’s also useful to filter conversions by time periods.

3. Conversion rates by date

Seasonality is a typical ingredient when it comes to retail. However, if you just assume that you sell more in December and less in

February, you’ll be wasting optimization opportunities.

Analyze and compare the conversion rates month to month, even week to week, and check for yourself if your business suffers from seasonality. Remember that the key metric isn’t the number of users, but rather the percentage of them that translate into euros.

Perhaps one month’s supposedly low conversion rate surprises you in a positive way—it would be worth increasing your marketing investment—or the opposite. ;)

How to measure the conversion rate with Analytics

As we already mentioned in this guide, Google Analytics has an option called “Enhanced Ecommerce” that makes a lot of the work much easier.

After activating it and configuring your e-commerce to send the correct data to your Analytics control panel, you’ll see:

  • Average and separated conversion rate
  • Number of transactions
  • Average checkout price
  • Value of returns
  • Coupons used

With just a few clicks you can see how conversion responds to many different factors:

  • Age and gender: to see if your buyer persona really buys more.
  • Device: if you sell iPhone accessories, it’s normal for Android devices to have low conversion rates—you can verify here.
  • Location: filtering the rate by country or even by city.

You may even be a bit overwhelmed by the quantity of information.

Remember that the key to web analytics isn’t gathering a lot of data, but rather knowing how to interpret it to make good business decisions.

And if we want to measure other goals?

Imagine that in addition to sales, you want to track newsletter subscribers. Analytics doesn’t offer you any direct way of doing it, so you’ll have to do it via goals conversion.

You just have to define the goal, which in this case is visiting the “thanks for subscribing” page, and then look at the results in your control panel.

We go more into depth on this topic in our Google Analytics Mega Tutorial—take a look!

How to improve the conversion rate

What can you do to achieve the increase you’re aiming for?

1. Improve the design

Start by taking another look at the design and content of your online shop with a critical eye. The image you transmit plays an important role in gaining the trust of your visitors.

A bad design gives off a feeling of being unprofessional. Or, just the same, it might cause a client to leave your shop and go to that of a competitor. 

Take a look at these posts:

2. Work on your product cards

If a company doesn’t want to have a decent website, or doesn’t want to spend money on it, how can a user trust that there order will be treated with the importance it deserves?

If the content of a product card is incorrect or poorly written, where is the added value? In the price of the products? It’s quite a fragile advantage to play with.

TIP: If you want to improve your descriptions and other key parts of your product cards, read this.

3. Be clear about your return policy

In a physical shop, the client knows where the shop is and that returning the product consists of going back and explaining the problem. That’s why users are more prone to buying from websites with good return policies (it builds trust).

Ideas to improve it:

  1. Have a phone number for returns, where the client can explain the problem to a real person.
  2. If it is viable in terms of your business, offer free shipping on returns. People don’t like paying to return things, especially when it’s not because of their own error.
  3. Give the user plenty of time to return things: 28/30 days is a good timeframe, but based on the time of delivery rather than the time of purchase.
  4. Studying the returns in detail will give you a lot of information about your users. For example, it can tell you where to improve the product content or if the company that handles your shipping is working well.

However, don’t forget about what we said earlier: never stop measuring. The decisions about your business must always be based on numbers, never on hypotheses.

4. Explain your shipping fees from the start

Shipping costs are almost always an additional obstacle during the buying process. If you add shipping costs on the payment page, you force people to reconsider their purchase at the worst possible time for you—right when they were about to pay.

If you can’t offer free shipping, tell them from the beginning of the purchasing process. The sooner they know what the total cost is, the better for everyone.

5. Install an efficient search engine

You always have to have your users’ needs in mind and should understand the basic patterns to the way they navigate your online shop.

And for that, having a professional web search engine is essential. The power of the magnifying glass means that:

  • Any search the user carries out yields a result (wouldn’t you offer them an alternative if the product they were searching for didn’t exist?).
  • Even if the user writes poorly or uses a synonym, the shop will understand (for example, if they wrote “naike flip floop”, the search engine would show results for “Nike footwear”).
  • It gives you options from the start. Thanks to autocomplete, the search engine shows you articles even if you have only written the brand.
  • The products that interest you the most appear first (the articles that have the best profit margin or the stock that is most difficult for you to sell).

The search engine acts plays the role of that store clerk that is in every physical shop and that takes care of attending (and selling) to all of the clients that come in. ;)

6. Keep the user informed

When somebody buys something on the Internet, they want to be sure that it’s going to arrive. People are impatient—there’s nothing we can do about that.

Giving them an estimated date of arrival during the buying process is a good start. Sending them an email when their product has made it to the logistics operator is great. Giving them a tracking number when a courier service is being used that allows for online tracking is perfect.

In short, keep the user as updated as possible each step of the way, before and after the sale.

7. Monitor your competition

Nobody is the smartest or the most unique—we all learn from each other. That’s why you should keep an eye on the…

…from your competition.

The advantage and drawback of the Internet is that it ends up being quite difficult to stand out for a long time. But, if you don’t pay attention, it’s easy to get left behind because everything moves so fast.

8. Do A/B tests

It’s impossible to optimize without carrying out tests. Testing two alternatives is the natural way of checking which is better.

The way that A/B tests work is as follows:

  • Show A measure A.
  • Show B and measure B.
  • Choose the best result.
  • Do a new variation.
  • Show the two new options.
  • Measure again.
  • New variation.
  • And on, and on, and…

In this manner, you refine your shop until you find the formula that works best for you.

You can do it with more alternatives. There are experts who recommend working with up to 10 different landing pages and starting to test from there.

9. Use wish lists

Give your users a chance to save the products they are interested in—it usually helps improve the conversion rate.

Perhaps they aren’t 100% convinced in this very moment, but if you just let them go, they will probably forget about the product. On the other hand, if you let them save it in a wish list, it will be there waiting when they return.

10. Load speed and other optimizations

We’ve left this for last, but that doesn’t make it any less important.

The speed of your website is one of those factors that only matters when it fails.

Nobody will make a purchase just because your site loads quickly, but they will stop doing it if they have to wait 4 seconds every time it reloads.

  • Optimize your images.
  • Use clean code.
  • Don’t overload your page with plugins and extensions.
  • Cache it and speed won’t be a problem.

Think about yourself—how long would you wait for a site that was taking a while to load? Exactly. ;)

Want to know how to really optimize your e-commerce conversion rate to the max?

By leaving your client satisfied when they make a purchase

In the end, a satisfied customer is a customer who comes back to buy again and who recommends you to their friends. You don’t have to do magic—you just have to worry about caring for them the way you’d like to be cared for.