Everything You Need to Know About Conversion Rate Optimization

Dec 12, 2023 10:00:00 AM
16 min read

Happy customer interacting with sales associate at checkout. Any e-commerce business knows that success isn't determined by attracting visitors to your online store; it's about turning those visitors into paying customers. This is where Conversion Rate Optimization (CRO) comes in. According to data collected by Google Trends, “conversion rate optimization” was searched for more this fall than ever before. And it’s no surprise – understanding the magic of CRO can be crucial to any business's bottom line. 

The thing is, CRO is so comprehensive in the way it works, what metrics to focus on, and determining which strategies might work best, that it can leave retailers feeling a bit overwhelmed. Fortunately, you don’t have to figure it out on your own! This detailed overview will walk you through the essentials of conversion rate optimization, covering everything from what it is, to how to measure it, to which approaches work best for improving it (and more!)

What is conversion rate optimization?

Shopper smiling with two shopping bags in hand. A speech bubble shows a 'thumbs-up' emoticon, conveying the shoppers satisfaction. Conversion Rate Optimization is the systematic process of increasing the percentage of website visitors who take a desired action, such as making a purchase, filling out a form, or subscribing to a newsletter. A high conversion rate implies that a greater proportion of online shoppers followed through with the sought-after activity.

On the other hand, a low conversion rate usually indicates that they were met with challenges on their path to purchase. The higher you can increase your conversion rate, the more you’ll be able to boost your website revenue without needing to drive more traffic.

How does conversion rate optimization work? 

Curious shopper looking through magnifying glass.The CRO process involves a combination of important variables that work together to minimize friction in the customer journey. To effectively optimize your conversions, it’s imperative that you understand your users, including what drives them to buy and what steers them away from the finish line empty handed. Once you have this information, you can fine-tune different components of your website to address any issues.

Calculating Your Conversion Rate

8 out of 10 marketers find it “somewhat” or “extremely” challenging  to understand how to track and test conversion rates. Fortunately, calculating your conversion rate (CR) is easier than you might think. Conversion Rate Optimization (CRO) is commonly measured using the conversion rate formula, which is presented as a percentage. To calculate your CR, simply divide the number of conversions by the total number of visitors and multiply by 100. 

Conversion Rate (%) =
(Number of Conversions / Total Number of Visitors) x 100

Calculating Conversion Rate graphic, showing the formula: Conversion Rate = (Conversions/Total Visitors) x 100

Let’s say, for example, your website received 15,000 visitors last month and 450 of them made a purchase. Your conversion rate would be 3%.

As for what’s considered a good conversion rate? Well, that depends on a wide range of factors, such as your industry, target audience, traffic source, and the type of action being measured. In general, the average website conversion rate across all industries is 2.35% (Source: Wordstream). While this may seem low, to put it into perspective this would mean that, for every 30,000 visitors your site gets, 705 make a purchase. Considering the majority of shoppers enter a site with no intention of making a purchase, that’s pretty good.

Why does conversion rate optimization matter?

Person using binoculars surrounded by projected e-commerce insights behind them. There are a lot of reasons why CRO is vital for both e-commerce businesses and customers, including these major benefits:

  • Higher Revenue: Higher conversion rates translate to increased sales, which is the primary goal for most CRO strategies.
  • Better User Experience: If shoppers are enjoying your website, they’re more likely to stay longer, make a purchase, and even return again in the future.
  • Improved Customer Insights: Analyzing what drives conversions can help you understand your customers’ preferences, concerns, and expectations, leading to more effective decision-making.
  • Enhanced Loyalty: Visitors who can navigate through your online store easily are more likely to become loyal repeat customers. Even a 7% increase in brand loyalty can increase the customer lifetime value of each customer by 85% (Source: Microsoft).
  • Reduced Cart Abandonment: Many CRO strategies address issues that contribute to deserted shopping carts, leading to an increase in completed transactions and a much lower cart abandonment rate. 
  • Better Return on Investment (ROI): The costs of acquiring new customers can be up to 25 times higher than retaining existing ones. CRO can help e-tailers improve their ROI by converting a higher percentage of the existing audience into customers, enabling long-term loyalty and profitability.
  • Lower Bounce Rate: By addressing issues that may cause visitors to leave a site without taking any action, CRO helps keep them on the site longer, increasing the opportunities for engagement and conversion.
  • Increased Search Engine Visibility: The more user-friendly your website is, the greater the exposure from search engines like Google, who reward you by ranking your site higher in search results.
  • Heightened Competitive Advantage: A website that is optimized for conversion is more likely to attract and retain customers, setting the business apart from competitors.

What are some CRO strategies? 

Increasing your e-commerce conversion rate is all about improving the many facets of the online shopping experience, so visitors are compelled to make a purchase. The following are our top strategies to give your CR a boost:

Personalized Content 

Present with lid off and to the side. Inside the box, is a rocket ship.When it comes to elevating user engagement and revenue, the value of personalization cannot be overstated. A study from McKinsey found that 76% of consumers say they’re more likely to purchase from brands that personalize, and 78% say it makes them more likely to repurchase. To deliver a truly tailored experience, leverage AI (like Granify) and data analytics to provide contextualized product recommendations, targeted offers and relevant content based on each individual’s in-session behavior, preferences, and user history. 

Seamless User Experience (UX)

Shopper sitting in armchair with a laptop. The shopper is about to make a purchase from home.Improving the overall user experience is the ultimate CRO game changer. In fact, good UX can raise your website’s conversion rate by a whopping 200% (Source: Forrester)! To achieve this, you’ll need to do a 360° assessment of your entire website, focusing on key aspects including:

  • User-Centric Design:  A seamless, user-friendly website not only attracts online shoppers, but encourages them to stick around and explore. 
  • Streamlined Landing Pages: Thoughtfully crafted landing pages are integral to get products into shoppers baskets, especially when they have only one focus (e.g. highlighting the advantages of a single product) with one distinct call-to-action or link that brings visitors closer to making a purchase. 
  • Intuitive Navigation: Your site’s layout and structure should take shoppers to what they're looking for quickly, and include distinct menus, robust search functionality, and responsive design capabilities. You can even take this one step further with AI-enabled navigation that tailors the categories to the shopper.
  • Fast Loading Times: E-commerce conversion rates drop by 0.3% for every extra second it takes a page to load. Optimize your speed by compressing images, minimizing HTTP requests, and enabling browser caching. 
  • Detailed Product Pages: A high-converting product page provides clear and compelling information, including detailed product descriptions, high-quality images, transparent pricing, customer reviews, and a visible “Add to Cart” button. 
  • Simplified Checkout Process: 17% of US online shoppers have ditched their carts because checking out was too long or complicated. To get your inimize the number of steps required, provide plenty of payment options, and always offer guest checkout. 

Related: 5 Reasons Simplicity Matters in the Customer Experience

Floating illustration of a smartphone. A banner on the screen reads: 'App' and in smaller text 'Notification.'Mobile Optimization 

Everyone and their dog has a mobile device these days, which is why they account for 63% of organic traffic. If your digital store isn’t mobile-friendly, you’re losing out on quite a few conversions. To ensure shoppers have instant access to your site’s many features (which will also help you increase your sales), implement a responsive design that:

  • Provides a simplified navigation for smaller screens
  • Has large, visible buttons that are easy to tap
  • Condenses content and displays essential information first
  • Works well both on mobile devices and in different browsers
  • Reduces the size of image and video files for faster load times
  • Employs one-page or quick checkout with secure mobile payment options

Persuasive CTAs

Calls-to-action are not the time to be fancy with your words. These buttons serve a specific purpose: to guide shoppers towards a desired outcome. The best CTAs are clear, cincice, and use language that prompts users to take action (e.g. “Buy Now,” "Sign Up,” or “Add to Cart”). They’re also easy to spot thanks to their size, contrasting color, and position on product pages, in emails, or throughout the site. Want to increase your conversion rate even more? Keep your CTAs clear from clutter and surrounded by empty space, and your conversion could jump to over 230%!

Exit-Intent Popups

Shopper walking through a doorway, seeing an exit-intent pop-up as they do.Popups have had a questionable reputation for many years, but when done right, these e-commerce tools can do wonders for your CR. In particular, exit-intent popups provide your online store with another chance to compel visitors to reconsider before they leave your site. They’re so good, they actually have the highest conversion rate–17.12% to be exact–of any type of website pop-up (Source: OptiMonk).

Of course any popup should offer real value to the visitor, which is why we recommend highlighting a special incentive, such as a discount or free shipping, to encourage them to stay and complete their purchase. 

cart - emptyAbandoned Cart Recovery

You already know that you’re never going to be able to persuade every shopper who visits your site to buy, but there are a couple of ways to get them to revisit your site (and their ditched cart) after they’ve moved on.

  • Abandoned Cart Emails: A follow-up, “Hey, did you forget something in your cart” email can go a long way to recovering a lost sale, especially if it comes with a tailored offer the user can’t resist. Don’t believe us? According to Moosend, 50% of users who engage with email content, completed their purchase. 
  • Retargeting Ads: These strategic reminders encourage shoppers to return and complete their journey through the conversion funnel, while being tailored to their individual interests and preferences. Personalize ads by featuring products viewed by users, and you could successfully send 26% of shoppers back to your site. 

Trust Signals

Badge with an illustration of a lock on it. Displaying customer reviews, ratings, and testimonials on your website provides valuable social proof that can positively influence a shopper’s purchasing decisions. Research shows that user-generated content, such as photos or videos of customers using your products, increase the likelihood of conversions by over 102%.

Security badges and communication of protective measures, such as SSL certificates, also establish trust with potential customers, which increases the likelihood of conversions. Lastly, transparent refund and return policies displayed in simple language that is easy to locate on your website or mobile app can directly address potential questions or concerns.

Urgency Messaging

Mobile shopper being served a pop-up. Give someone unlimited time to do something, and they’re likely to keep delaying it, and it’s the same with purchasing decisions. Urgency messaging lights a fire under window shoppers by prompting them to act quickly. This is especially useful when these messages highlight popular products, low stock alerts, or even flash sales.

And if you really want incredible results, inject urgency into your CTAs, which can generate up to 332% more conversions for your online store. 

Up-Selling and Cross-Selling

ourstory_6@2xWhichever way you look at it, upselling and cross-selling are no-brainers in bringing you one step closer to your CRO goals. Not only do these strategies contribute to 43% more revenue, but they also enhance the customer experience by tailoring product pages, search pages, and even home pages with relevant recommendations that improve customer retention and foster brand loyalty. 

Tip: Featuring a “Frequently Bought Together” section at checkout is an easy way to delight customers and increase your average order value (AOV) at the same time!

Proactive Customer Support

Shopper standing in front of a mirror while a sales associate helps them. Some shoppers need a bit of assurance or clarification before making a purchase. Without direct contact options, they could leave your site feeling frustrated, and without buying. To prevent this, offer a variety of channels, including telephone, email, and live chat support. You’ll also want to include an FAQ section that covers commonly asked questions around topics like shipping, returns, payment options, and privacy policies.

Finally, you can utilize chatbots for immediate assistance to common inquiries, and to aid shoppers browsing your site in off-hours. These helpful virtual assistants have a reputation for responding swiftly, which 68% of shoppers appreciate immensely (Source: Userlike).

What role does AI play in CRO?

Person with computer chip brain. An exclamation mark is seen next to them, as though they've had an idea. Artificial intelligence and machine learning (ML) are essential tools when it comes to optimizing conversions, driving tremendous website performance improvements. We’ve already mentioned a few strategies that AI plays a major role in, such as personalization, popups, virtual customer support, but that’s only the beginning. 

Let’s break it down a bit more:

  • Predictive analytics, driven by ML algorithms, can predict user behavior and likelihood of conversion based on historical data, allowing targeted interventions for optimized conversion rates. (It can also reduce cart abandonment by 18%). 
  • In e-commerce, AI analyzes market conditions, competitor pricing, and user behavior to dynamically optimize pricing, in turn maximizing revenue in real-time. 
  • Fraud detection algorithms enhance security, instilling trust while also positively impacting conversions. 
  • Recommendation engines, powered by ML, suggest relevant products, encouraging additional purchases or increasing average order value (AOV). 

It’s pretty safe to say that the integration of AI and ML has transformed CRO by going beyond surface-level metrics and providing deeper, real-time insights into user behavior that can optimize conversion funnels, websites, and the overall user experience. This eliminates any guesswork and enables data-driven decisions that are both precise and reliable. 

What are some CRO best practices? 

Implementing conversion rate optimization best practices can maximize the performance of the strategies you implement. We recommend the following:

Define Your Goals

Before implementing any CRO strategies, it’s important to establish clear and specific goals for the initiatives you’re looking to undertake. Do you want to boost sales? Increase the number of newsletter subscribers? Acquire more UCG? Whatever it is, your e-commerce objectives will serve as benchmarks for your brand’s success. If you’re unsure how to approach this, think SMART:

  • Specific
  • Measurable
  • Achievable
  • Relevant
  • Time-bound

Understand the Behavior of Your Users

PredictingFuture_impossible@2x-CroppedWhen you understand the actions of your audience, it allows you to better meet their needs. This involves mapping out and analyzing user journeys, identifying pain points, and recognizing barriers preventing shoppers from converting. If possible, utilize heatmapping tools like HotJar, or even better, interview end users directly to understand how they move through your site.

Analyze the Data

In order to be successful with CRO, you need to have the right data – and once you have that data, you need to know what to do with it. A data-driven approach (which could include AI-enabled insights) allows you to make informed decisions that align with the evolving preferences of your audience. By basing your optimization efforts on solid data, you’ll be able to remove any guesswork and adapt your strategies accordingly, resulting in a better user experience and higher conversion rates.

Evaluate Your Conversion Funnel

Assessing your current conversion funnel allows you to identify and address any hurdles that may be hindering the transition of visitors into paying customers. Every stage of the conversion funnel matters–from the initial site visit all the way down to the final purchase. By analyzing each stage, you can zero in on problematic areas and adjust them accordingly  to enhance the buyer journey and ultimately, improve profitability for your online business.

Elevate Your Omnichannel Experience

Person with Shopping Bag and PhoneMost shoppers start their buying journey on one channel, continue it on a second channel, and finish on another. An omnichannel user experience eliminates any fractures by providing a cohesive, uninterrupted customer journey across every touchpoint you have with your users. On the customer side, this creates a positive, cohesive brand experience, while on the e-commerce side, you’ll be gaining loyalty and trust. The more shoppers trust you, the greater the chances of converting them into loyal customers–studies show that e-commerce brands with three or more channels can boost their order rate by a lofty 494%! 

Tracking Key Metrics

Measuring how successful your CRO efforts are involves tracking some key metrics beyond the overall conversion rate. These include:

  • Bounce Rate: The percentage of visitors who leave a website after viewing only one page
  • Click-Through Rate (CTR): The ratio of users who click on a specific link to the number of total users
  • Average Order Value (AOV): The average amount spent by customers in a single transaction
  • Customer Lifetime Value (CLV): The predicted total revenue a business can expect from a customer throughout their entire relationship.

Analyzing these metrics regularly can help you identify areas for improvement, validate the success of implemented strategies, and make data-driven decisions to enhance overall conversion performance.

Continuous Monitoring 

Person looking through a telescope. You can gather all the user insights in the world, but if you don’t review them regularly, you’ll be doing your business and your customers a disservice. Make sure to frequently monitor data and analyze conversion funnels to identify bottlenecks and assess what your customers are interacting with most.

By taking an iterative approach, you’ll be able to ensure your website is always performing its best and that it remains aligned with customer expectations.

Regular Testing 

CRO is an ongoing process that will continue to be influenced by changing industry trends and customer expectations. In order to stay ahead of the competition, it’s important to test the elements of your website to identify what works best. Most online retailers opt for A/B testing, which compares two versions of a web page to determine which performs better. This can include headlines, images, page layouts, and CTA buttons. Once you’ve compared performance, you’ll be able to fine-tune your experience to meet the evolving expectations of your target audience.

AB Testing - Cars Updated

If A/B testing isn’t your thing, don’t worry. There are plenty of other ways to measure and improve your CRO, including:

  • Multivariate testing, which tests different combinations of webpage elements concurrently to identify which one produces the highest conversion rate.
  • Split URL testing, which compares varied versions of a webpage with distinct URLs to see which performs better.
  • UX testing, which evaluates the overall user experience to recognize areas for improvement.

Whatever type of testing you perform, remember, this ain’t no “one and done” process. To get the results you want, you’ll need to continue to test and tweak until you achieve your desired outcome. 

Cheers to clicks and conversions!

Cheers-1For e-commerce businesses, mastering Conversion Rate Optimization is paramount for success. By focusing on refining key elements of the online shopping experience, you can build trust, maximize your ROI, and drive sustainable revenue growth. Remember, CRO is not just about immediate sales; it's a strategic approach that creates a foundation for long-term success by fostering positive customer experiences and adapting to market dynamics.

Through continuous testing, refinement, and the implementation of effective CRO strategies,you’ll be able to unlock your online store's full potential and cultivate enduring customer relationships. Embrace this dynamic process with vigilance, and take advantage of the strategies and available tools (like Granify) to stay ahead in this competitive digital landscape.

Granify: Your Conversion Optimization Ally

Two hands reaching out, about to shake, in front of a green circle. Granify's advanced AI-technology turbocharges conversion rates by providing seamless and optimized shopping experiences. Our innovative machine learning capabilities can analyze millions of data points in real-time to understand the unique behaviors and preferences of every visitor – including when they’re most likely to make a purchase. Reach out today to discover how you can supercharge your conversions!

Get In Touch