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E-commerce Marketing

What is Conversion Rate Optimization and Why Should You Care?

Most ecommerce entrepreneurs are focused on driving traffic toward their websites in hopes that this traffic then converts into qualified leads that can make purchases and make the business grow. 

However, it often makes more sense to get more out of existing traffic and leads compared to trying to make sales from entirely new traffic. That’s where conversion rate optimization (CRO) comes in.

Conversion rate optimization (CRO) is the process of systematically increasing the percentage of website visitors who fulfill the website’s goal – be that signing up to an email list, buying something, etc.

At its core, CRO is about taking a fact-based, data-driven scientific approach to understanding how users navigate your website, how they engage with certain marketing elements, what they do, and what’s in the way of them doing what you want them to.

But what is a conversion in the first place?

A conversion is an action taken by your website visitor that positively responds to your call-to-action (CTA). Conversions come in two types:

Macro-conversions refer to when the visitor responds to a CTA that fulfills your website’s primary goal. For an ecommerce website that sells products, this is when a purchase is made.

Micro-conversions refer to when the visitor responds to a CTA that fulfills any of your website’s secondary goals. There smaller conversions usually lead up to the visitor completing a macro-conversion. They include adding a product to the cart, creating an account, signing up for your mailing list, clicking through to another page, answering a survey, giving feedback, downloading an eBook, etc.

Conversions can happen on just about any page on your website – from the homepage to the landing pages to the pricing page to the blog. Therefore, you should endeavor to make sure that each and every one of these locations is thoroughly optimized to maximally turn website visitors into paying customers.

By creating a benchmark conversion rate and keeping track of how it changes over specific periods of time, you can understand how well your website design, copy and content are performing as well as whether or not your optimization efforts are bearing any fruit in attracting leads ready to spend.

So how do you calculate your conversion rate?

Calculating Conversion Rate

To work out your conversion rate, you need to know two things:

  1. How many people see your call-to-action (CTA)
  2. How many people positively respond to it

Your site’s conversion rate is the number of times a visitor positively responds to your call-to-action divided by your site traffic and then multiplied by 100 to get the percentage.

For example, if you run an ecommerce site and 1000 people visited it over the past month with 100 of them making a purchase, your conversion rate is 10% (100 divided by 1000, multiplied by 100).

However, it’s also worth keeping in mind that at the same time, each page on your website has at least two conversion rates (and sometimes, more).

For example, the product pages on your ecommerce website have two conversion goals:

  1. To make visitors click on the “Add to cart” button (the micro-conversion)
  2.  To make these visitors place complete the purchase (the macro-conversion)

This subsequently means that your product pages have two conversion rates:

The micro-conversion rate is the total number of times the “Add to Cart” button gets clicked divided by the number of visitors who make it to the product pages, multiplied by 100 to get the percentage.

The macro-conversion rate is the total number of times the purchase gets completed divided by the number of visitors who make it to the product pages, multiplied by 100 to get the percentage.

For example, if your online store receives 100,000 visitors in one month and only 25,000 make it all the way to the product pages, and of these 25,000 only 10,000 click on the “Add to Cart” button, and only 5,000 of these 10,000 complete the purchase:

  • Your website conversion rate is 5% (5,000 sales divided by 100,000 visitors, multiplied by 100)
  •  Your product pages’ micro-conversion rate is 40% (10,000 clicks divided by 25,000 product page visitors, multiplied by 100)
  •  Your product pages’ macro-conversion rate is 20% (5,000 completed purchases divided by 25,000 product page visitors, multiplied by 100)

Why should you care about conversion rate optimization?

Conversion Rate Optimization

Measuring conversion rates gives you an accurate understanding of whether or not your web pages’ design and copy are persuading visitors to respond to your website’s call-to-action.

CRO allows you to increase how many highly-qualified leads you reel in, how much revenue you generate from each lead while simultaneously reducing your lead acquisition costs.

Remember, you are spending to get traffic to your site – be it in form of buying ads or putting in your own marketing efforts. Either way, it is more cost-effective to make sure that more of the visitors you already have are positively responding to your CTA than trying to attract more new ones.

Even if your website is not getting a lot of traffic, with the right CRO strategy you can extract a high ROI from the few visitors you receive. A good conversion optimization strategy will help you:

  • Create better, data-driven buyer personas to learn more about your store’s customers
  • Map the customer journey to better understand your visitors’ behaviors and patterns
  • Track user flow and usability to deliver a better user experience that builds more trust
  • Get more qualified leads that are ready to make purchases instead of random browsers
  • Spend less on driving traffic to your website by getting the most out of your PPC spend

The best about all this is that these improvements are based on hard data, not guesswork.

What conversion rate optimization (CRO) is NOT

We have covered what conversion optimization is about, but it’s also good to clarify what it’s not.

First of all, CRO is not the main purpose of your ecommerce marketing. The main goal will always be securing leads and sales – so remember that CRO is just one of the tools you can use to reach that goal.

CRO is not SEO (search engine optimization), which is aimed at optimizing content to attract more organic traffic from search engines to your site. CRO starts when the visitors come to your site.

CRO is not A/B testing. Although many ecommerce marketers tend to conflate the two terms and even use them interchangeably, A/B testing is just one element of conversion rate optimization as a whole.

What is a good conversion rate?

The average e-commerce conversion rate is about 3% (meaning that 97% of visitors leave sites without completing a purchase) but ultimately, a good conversion rate is one that is steadily rising with time. The starting point you set as a benchmark doesn’t really matter as long as you never stop improving.

At the end of the day, as long as you have an ecommerce website that is attracting visitors, you should be thinking about CRO on a regular basis. No matter how established or large your store is, you always want more of your visitors turning into customers in the most effective, impactful, and reliable way.

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