The ecommerce business is partly a numbers game. And the object of the game is to increase your sales and profitability. You need to understand how your site’s visitors are converted to buying customers. Not that you need to immerse yourself in the minutiae of data that many web statistics programs produce, but to reach your site’s sales potential, you need to have an understanding of its key numbers and have a simple method for tracking them over time.
Understanding the Numbers
Here are the most important numbers involved in measuring your site’s conversion rate.
- Unique Visitors – This is the number of individual users who visit your site.
- Number of Transactions – The number of transactions that get placed through your website. (For this exercise, we are going to exclude customers that visit the site but order by phone).
- Average Order Value – The average dollar amount of all the orders you receive.
- Total Sales Volume – The total dollar amount of sales.
- Conversion Rate – The percentage of visitors who come to your site and actually place an order.
Reaching Your Sales Goals
To understand how conversion rates are determined, let’s plug in some numbers and look a little more closely.
Say you had 10,000 unique visitors to your site last month, and out of those 10,000 visitors you received 100 orders. This would be a 1 percent conversion rate.
Now, let’s say you have set a gross sales goal of $8,000 a month and your average order size is $75. That means the 100 sales you made last month equal a total sales volume of $7,500, representing a $500 shortfall.
So we now have a goal: To increase your sales volume by $500.
Get in the Game
So what do you need to play the conversion game?
- You first need a numbers-tracking tool. If you don’t already have one, a good option is to use Google Analytics. It is full-featured analytics application, and it’s free. Ask your ecommerce provider if your website can be integrated with Google Analytics. If not, perhaps your provider has a package that will produce the numbers you need.
- You need to analyze the data. This is where a minimal commitment comes in. We are not talking high-level statistics, but a commitment to evaluate the key numbers on a regular basis. And, as you get a little more experienced, you might want to start digging even more deeply into your data.
- You need to take action. All the numbers in the world are useless unless you take action and actually affect your results. This could include, for example:
- Add/modify pages and adjust the presentation of your website.
- Commit to a pay-per-click campaign in which you can experiment with different ad copy and target phrases.
- Execute some level of search optimization to drive more qualified traffic to your website.
Playing the Game
We started out by setting our baseline goal to increase our monthly sales volume by $500 for a given amount of traffic. There are two main methods for hitting your goal. Let’s look at each one and how they work.
- Increase the conversion rate so the same number of visitors will result in more orders. This involves assessing your site and shopping experience for usability. Without spending any more money you can likely increase conversions by honing your message, making sure your site follows best practices for web usability, and determining how your site stacks up against your competition.
- Encourage customers to purchase more on each visit, so the average order size grows, even if the other numbers are static. There are many tactics you can use to build your average order size. Do you offer quantity discounts? Free shipping over a certain order size? Do you suggest products on your site to encourage customers to purchase multiple items, such as by deploying a cross-selling feature?
And the Winner Is. . .
Upping your conversion rate takes patience. You will implement changes, watch your statistics, analyze the results, and take new actions, and these processes take time. Give yourself three to six months to evaluate the changes you’ve made. You can shorten this evaluation time by using pay-per-click advertising campaigns if you have the additional budget.
As you gain experience, you can drill down more deeply into your statistics to start to understand the behavior of your customers and take a more sophisticated approach to analyzing your data. But, if you haven’t yet started to play the conversion game, the best time to start is right now.