Introduction to E-Commerce Conversion Rate Optimization

This is for the new employee on the team, the newly founded e-commerce store, or anyone who wants a basic understanding of e-commerce conversion rate optimization.

What is E-Commerce Conversion Rate Optimization?

E-commerce conversion rate optimization (CRO) encompasses all the methods and design elements used to convert shoppers into customers.

Think back to the most frustrating experience you have ever had trying to buy something online.

Did the site take forever to load? Did the checkout page bug out on a mobile screen? Did some inexplicable error force you to abandon cart? All of these scenarios are examples of bad or altogether absent CRO.

Now think of the easiest and most satisfying times you have purchased something online. One-click checkouts might come to mind, or auto populated forms, simple design, and clear instructions. Great CRO strategy eliminates unnecessary obstacles for customer purchase.

In other words, an e-commerce site that prioritizes CRO will make it easy for the customer to buy their products.

CRO in practice can be a lot of different things, but ultimately, it’s about improving your website.

How to Measure CRO

A conversion rate for an e-commerce store is calculated by dividing the number of checkouts by the number of website visitors. This will give you a straightforward number to claim as your conversion rate.

But you can dig a lot deeper.

With slight adjustments to your calculations, you get greater clarity on how your optimization efforts are working.

Try measuring checkouts against:

• All site traffic
• Unique site visitors
• Specific product page views
• Segmented customer groups (loyalty program member, traffic from newsletter or social campaigns, etc.)

With the right tools, you can even measure the conversion rate of behavior groups such as price-conscious shoppers, shipping-concerned shoppers, risk-averse shoppers, and more. These segmented conversion rate calculations are helpful to measure impact of personalization campaigns.

Why Does CRO Matter?

All benefits of CRO will fall in two simple categories: improving your bottom line and improving your customer experience.

CRO Improves Your Bottom Line

Conversion rate optimization increases e-commerce revenue. Want to make more money? Turn to CRO and make it easier for customers to buy from you.

You can pay and pay and pay for more traffic, but traffic is a vanity metric. Unfortunately, this might be something you’ve already learned from experience. What actually matters is your conversion rate. All else being equal, your competitor with twice the traffic and a third of your conversion rate will be making less money than you. It’s a good thing you optimized your site!

CRO Improves Customer Experience

The vast majority of CRO tactics are there to improve your customer experience, customer satisfaction, and brand perception.

In the following few examples, you can clearly see how these are good for customers.

• Faster page load time → Less time waiting on pages to load
• High quality product images → Greater understanding of the product
• Obvious add-to-cart buttons → No frustration adding to cart
• Clearly labeled fields → No confusion in checkout
• Multiple payment methods → Preferred payment methods

And further, a smooth and seamless customer experience improves the perception of your brand.

The highlight here is that CRO is good for both you and your customers.

What Are the Industry Benchmarks for Conversion Rates?

Conversion rates typically fall somewhere between 2% and 4%.Notice that in the chart below that there is a natural variance among quarters. Because of holiday shopping and end of year budget rules, the 4th quarter tends to have a higher conversion rate for both B2C and B2B e-commerce.

As with any data, we should consider context for our own interpretation: many factors affect the “average” conversion rate. Some products, like electronics, are researched more before bought. Potential customers will visit multiple sites, multiple times before making a choice. Products that are low cost and low commitment, like fast fashion, are bought more frequently and lend to a higher conversion rate.

Product seasonality can also make a big difference. If you’re in the business of lawn mowers, your best performing quarter will be during the spring when lawn mowers are in demand.

Benchmarks also vary by device. It’s well known that mobile conversion rates are far lower than desktop and tablet. Shoppers tend to use their phones to get information even while they are shopping in a physical store, meaning they intent to buy on mobile is really low. But because mobile traffic to e-commerce sites is often greater than desktop, the platform earns retailers serious revenue.

Conversion rate benchmarks are a good place to learn about trends, but have limited capacity. When measuring yourself against an industry benchmark, make sure it’s a measure closely related to your specific business.

CRO Best Practices

If you are getting a site off the ground, it’s good to start with best practices. A high-converting e-commerce site will have fundamental CRO characteristics such as:

• High-quality product images
• Descriptive product page copy
• Obvious add-to-cart buttons
• Clearly labeled fields in checkout
• Multiple payment methods
• And much more…

The following websites will get you started with strategies you can begin right away to optimize your e-commerce site.

Moz: Holy Grail of eCommerce Conversion Optimization - 91 Point Checklist and Infographic
Shopify Plus: 5 Easy Tips For Getting Started With Conversion Rate Optimization
CXL: The Ultimate Guide to Increasing Ecommerce Conversion Rates

However, it’s important to remember that best practices are really just average practices. Once you have a handle on what everyone else is doing, it’s time to start testing your own ideas.

CRO Testing

True CRO is about consistently and strategically making changes to your site, measuring the impact, and learning from the results.

Within each best practice, you still have a lot of options to choose from. Should the add-to-cart button be orange or red? Do customers respond better to images of the product against a white background or in context? Should the checkout process be on one page or multiple?

Modern marketers don’t depend on hunches. A good hunch isn’t good enough to win in the cut throat competition of the internet. Instead, the best CRO best practice is to test your ideas.

There’s no right answer that applies to every e-commerce site. If that were the case, we could simply copy from the highest performing e-commerce site, which would mean all e-commerce sites would be the the same, and call it a day. But there’s a few reasons we don’t do this.

First, different audiences will respond in different ways. The target market for Home Depot and Victoria’s Secret are different; so, different strategies are likely to produce different results.

Second, there’s always going to be a better way. If you thought the top dogs had cracked the conversion optimization code and don’t test anymore, you’d be wrong. Conversion optimization is ongoing. More on this later.

And third, you’re likely to miss opportunities if you aren’t creative enough to find them. If you only copy your competitors, you limit the potential to do better than them.

CRO and A/B Testing

If you haven’t heard of A/B testing, get ready: it’s kind of a big deal.

A/B testing is a method of testing the performance of a website. To conduct an A/B test, site traffic is split between two versions of the same page or website. After a statistically significant number of visitors have passed through, a winner is chosen based on performance. For our purposes, this metric is conversion rate.

There are other forms of testing, such as multivariate testing or using machine learning decision trees to test ideas. A/B testing is good to begin CRO, but when you want to increase the complexity or speed of your CRO efforts, know that there are effective methods to do so.

CRO Tools

Tools are available to help you run CRO tests, understand the results, and make the necessary changes to your site. These range from simple analytics platforms to sophisticated programs capable of real-time optimization.

There are also proactive systems like Granify which use machine learning technology to optimize your e-commerce site in real-time. The changes are made immediately, which means the feedback loop is shorter and more effective.

We could discuss a great number of online tools in this section, there are many and more. Each has its own purpose and is fit for different circumstances. 

Who is Responsible for CRO?

This answer changes depending on the company.

Some companies have a dedicated team focused on CRO. Some larger retail brands will place the responsibility within a larger e-commerce team. And other e-commerce companies assume that everyone is responsible for CRO. There are also situations where one person is responsible for coordinating CRO efforts across multiple teams.

The responsibility of CRO is concentrated or divided to fit the organization.

Conversion Rate Optimization Never Ends

CRO begins with designing an e-commerce site that is easy to navigate, provides relevant information, and serves customer needs. As mentioned before, there are a lot of best practices to get started.

But conversion rate optimization is an ongoing, never-ending, process. Once you decide on, say, a button color, you should choose an alternate color to test. And after that test, run another test on, say, the button text. Once your button tests plateau, you can shift your focus to other areas of your e-commerce site.

Every optimization is a chance to unlock potential revenue. This is the secret of e-commerce success.