Ecommerce conversion rate: The ultimate optimisation guide
Ecommerce is still growing rapidly. The UK ecommerce market is predicted to hit £91,412 million by the end of 2021. Looking beyond 2021, that market is projected to show a compound annual growth (CAGR) of 3.46% over the next four years, leading to an estimated £104,747m by 2025.
These figures illustrate just how important the ecommerce market is to brands across the UK, and that importance will continue to grow. Also growing is competition, however.
Ensuring you have a good ecommerce website conversion rate across your channels is something that should be at the centre of your planning.
Read on to learn about:
What ecommerce conversion rate is & how do you calculate it?
Your ecommerce conversion rate (CVR) is the percentage of visitors to your ecommerce stores who make a decision to buy something.
For example, if you have 50,000 website visitors to your site over a month, and 1,000 of them progress to making a purchase, then your conversion rate for that particular month would be 4%.
It’s worth noting that different organisations may count their visitor numbers in different ways. One business may only count unique visitors, while another may count total visits to the site, regardless if some of those people visit on multiple occasions.
That difference can also extend to your conversions. If a website visitor comes to your site twice in that month and buys on both occasions, do you count them as one or two conversions?
Both ways are acceptable but the rule is to choose one and to then use it consistently. Don’t swap between them to “massage” figures.
What is a good ecommerce conversion rate?
There can be quite a range of figures that may count as good conversion rates for your organisation. Rates vary according to sector and number of competitors. Average ecommerce conversion rates are around 2-2.5%.
If you look at the graph above, you’ll see that the sectors with lower benchmarks are the ones where buyers prefer to be “hands on'' when making a purchase. Meanwhile, those with figures above 2% are ones where it is easier for consumers to get information online and then make a decision to buy.
Although around 2% may be an average ecommerce conversion rate across the entire market, ideally you want to be aiming higher. The top 25% of ecommerce websites have a conversion rate of 5.31% or more. If you narrow that field further, the top 10% show higher conversion rates of 11% or more.
Comparisons of ecommerce conversion rates
Conversion rates can have wide ranges according to a number of factors. Knowing what represents average to good figures according to those factors can help set initial conversion rate benchmarks.
Different sectors can expect different conversion rates, and this is something you should consider when setting targets. Why do different industries have different conversion rates?
The primary reason is that the buying decision process a customer goes through can vary according to the product or service they are looking for. For example, if Bob was looking to buy a television, then it’s simple to compare products online and then make a decision to buy his preferred model from a website.
But let’s say Bob wants to buy a car. While he may do some comparisons online (on prices and reviews), he will almost certainly go to a dealer he has identified from that research. He will ask more questions, have a test drive, then make the final purchase there.
These factors should play a big role in deciding what you’re selling via your online channels and how you choose to market. An electronics store may focus a lot of resources on their online channels and may not have a physical store at all. A car dealership may use their online channels to inform customers and attract them to a physical location.
Fashion is one industry that has seen a shift towards online being more convenient and important to consumers. This has mainly been down to a change in tactics, with returns and exchanges being easier than they previously were.
Many fashion retailers are shifting towards online as being their primary channel. This is shown by the recent decision by Gap to close all their physical shops and concentrate on ecommerce sales. This is possibly a pattern that will continue in the coming years.
If you are going down this route, it’s important to make the online experience as “real” as possible for your customers. They need to feel just as welcome on your website as they would in-store. Personalisation is key here, and Ve's Digital Assistant basically simulates a “personal shopper” for online visitors.
Of course, one of the beauties of ecommerce over physical stores is that the entire world becomes your marketplace. This is helpful when you’re offering niche or high quality goods. Or where your pricing (with shipping) is competitive enough to win customers from their local online stores.
In terms of size, China is by far the world’s largest digital marketplace, with total 2020 sales just under $2.8 trillion and actual buyers numbering 792.5 million. What stands out in regards to China is that it is set to be the first country that has more sales occurring online rather than through physical stores (52.1% of retail sales happening via ecommerce).
If you’re planning on selling your products internationally, then it will help to look closer at conversion rate benchmarks in the main countries you’re targeting. There’s no one size fits all solution when it comes to how you present and market your products to different nationalities, after all.
It may well be the case that not only do you have to tweak your marketing strategies for different countries but also any KPI you use to measure success. What counts as success in Italy may be less impressive in Germany.
It’s very unlikely that you sell via only one channel. Most ecommerce organisations have either a multi-channel or omnichannel approach.
Just as with different sectors and countries, different channels are likely to produce differing conversion rates. You need to take this into consideration when formulating your overall strategy.
While the actual purchase may be made on your website or on a specific landing page, identifying where that traffic originated can be crucial. Not only can that knowledge shape your strategies, it can also help you highlight the sources that perform the best.
Different channels may work better for different industries. For example, email remarketing and marketing works well for businesses in the food and beverage sector. Connected media or social media can help drive traffic for sectors such as fashion or beauty and wellness.
Your marketing strategy will differ from channel to channel. You may use social media for the visual impact of showing off a new clothing range. Emails can inform customers and potential customers of special offers, discounts, or new products. Knowing where any referral to your website originates informs you of how to make future decisions on all your channels.
Importance of ecommerce conversion rate
Why should you focus on your CVR? As with many aspects of your business, it comes down to money. If you increase conversions it means more sales, more revenue, and more profit. And a big smile on the faces of the business owners! But it’s also about reducing your costs.
One metric you should always have an eye on is your customer acquisition cost (CAC). This, in turn, is linked to that customer’s lifetime value (LTV). CAC represents what you spend to acquire a customer. LTV represents what that customer is worth to you over the entire span of their relationship with your business.
Optimising your conversion rate as much as you can means that your CAC is lowered, as you are spending less per customer. It can also boost your AOV (average order value).
There are several other reasons to improve your CVR:
"Free” customers. If you can improve your CVR without having to increase any spending, then you can view those extra customers as being free.
Growth loop. By increasing CVR and reducing CAC, you create a cycle of growth for your business where traffic increases. You can run targeted ads aimed at certain demographics and improve your CTR (click-through rate). Then you’ll outperform and outgrow your closest competitors.
Know your customers. Better CVR means you can collect more data on your customer base. You’ll get more knowledge of what they like and want, and better shape future strategy.
Ways to increase your ecommerce conversion rate
Knowing what CVR is and why it’s important is only the first step in the journey. The next, and perhaps most important, step, is identifying how you can improve your current CVR.
Regularly perform a conversion rate audit
Ecommerce is ever-changing. You have to deal with seasonal trends, new products, new competitors, and more. You can’t make decisions based on a single snapshot of your CVR taken occasionally. Audit your conversion rates on a regular basis so any decisions are accurate and data-driven.
You likely make changes to your ecommerce website on a regular basis, possibly even daily. You may perform A/B testing on an ongoing basis to increase customer engagement. You may even add new landing pages and product categories regularly. If you make all these changes often, then you should also be looking at some of the resulting effects.
Performing regular CVR audits gives you a full 360° view of what is driving your conversion rates and can help you hone in on what’s working and what’s not. You can use a variety of tools such as Google Analytics, results from your A/B tests, and heat maps to help.
Personalise your customer experience
“The customer is king” may be a well-worn cliche, but it was never truer than it is today. Just ask global goliath Amazon, which has a famously customer-centric business model.
Customers now expect a high degree of personalisation and convenience in all their interactions with you at every touchpoint. This means data collection is more important than ever, as good data drives how personalised CX is.
Your customers want to receive marketing and offers that are targeted at them and not at your customer base as a whole. So how can you improve that overall customer experience?
Implement the use of a Digital Assistant. Ve's Digital Assistant takes personalisation to the next level. It can identify and apply context to your interactions with customers. What’s more, it can focus on those crucial moments where highly-personalised messaging better suits your customers’ needs and can help drive them to a sale.
Understand your customers. Leverage the data you collect to create accurate customer profiles. Know what they like, what they want, and how they prefer to interact with you. Even down to if they browse your site on Android or iOS devices.
Improved customer service. In an online environment, your customer service reps are the “face” of your company. If you provide great service, then not only can you drive up conversion rates, but also those crucial customer retention numbers.
Choice. Customers don’t always see multiple channels and touchpoints. They see what’s most convenient to them. Give them the choice of how they connect with you.
Social media. Leverage your social media platforms as much as you can. Not only do they offer a great platform for digital marketing and discussing your products, they also provide a convenient communications channel.
Technology. Using tools such as CRM (customer relationship management) can improve your service.
Leverage live chat software and digital assistants
If a customer has any query, they often want to find the answers themselves. In fact, 70% of customers expect there to be such options. Using digital assistants or live chat, and offering access to a comprehensive knowledge base, is the ideal way to let your customers help themselves.
This case study shows how Ve's Digital Assistant helped an IT company raise their CVR by an incredible 88% in only six months. It enabled the business to engage better with its customer base by learning their behaviours and needs. They turned that knowledge into focused personalised experiences at every touchpoint.
The digital assistant could thus let the customer navigate the site smoothly and find what they wanted faster. Meaning a better customer experience tailored to them without being obtrusive.
If you want to implement Ve's Digital Assistant, it can be up and running within weeks. It fits easily into your existing website structure and ensures customers are presented with information and content based on their behavioural patterns. It can provide you with real time messaging options, appropriate offers, and messaging about cart recovery to reduce your abandonment rates.
Offer promos and free shipping
Of course, everyone loves promos, discounts, or offers such as free shipping. But this is a solution that comes with a caveat.
While such offers may give your figures a short term boost, you need to be aware that if you do this long-term, customers will expect similar offers constantly. While that may not be a bad thing from the customer’s perspective, it is a bad thing from yours.
It reduces your revenue and profit margins, which means that any higher CVR has less of a positive impact on your bottom line. Using Ve's Digital Assistant is a great way of putting the “special” back in “special offer”. It can identify those times when giving some sort of offer really can make a difference.
It does this by offering those small incentives such as promotional codes that can transform your customer from a thinker to a buyer. Giving away crazy discounts will affect your final margins, so go smart and keep you and your customers happy.
Increase your customer trust threshold
Look at things from the customer’s perspective: if they’re a first-time visitor to your site, they may not know much about you. That means they don't really trust you—yet. Establishing a trusting relationship is a major step towards that person making a desired action (buying from you). So how do you establish trust?
Social proof. This is where those much-loved (when positive) customer reviews come into play. Use any good reviews posted on your own website, on your social media channels, or from independent websites. 79% of customers state that they trust online reviews, so use any reviews to build trust and boost CVR.
Guarantees. If your website contains clear information on what a customer can do if unhappy with a product, they’ll be more likely to trust your brand. That means information on refunds, returns, etc.
Communication. Offering multiple options to contact you also instils trust. That means contact numbers for customer service, email address, live chat options, etc. When a consumer sees easy ways to talk to you in case of an issue—or a question—they’ll feel more confident in buying.
Verification. If you plan on using a third-party platform such as Shopify, look at what verification options they have. When a major ecommerce platform signals that they trust you, then customers will too.
Cohesive experience. If a customer encounters a great website and has a cohesive experience across it, they are more likely to give their trust to that brand. This can be enabled with the Ve Digital Assistant.
Provide detailed product information
Imagine for a moment that you’re a customer looking for a TV. You click on a product description and it simply says, “Great for watching Coronation Street on”. You would immediately go and look elsewhere, wouldn’t you?
Your customers want and need a lot of information before they make an informed decision to make a purchase. Ve's Digital Assistant can help your site provide better levels of product discovery and wider coverage of your catalogue. This can help increase your conversions and lead to higher AOV (average order values).
One of the biggest challenges ecommerce businesses face is ensuring customers buy online rather than in a physical store. They can’t inspect the product up close and look at it, so you need to do it for them. What should you include?
Lots of details. That means technical information for electronic products and similar items. Lists of ingredients for health and wellness products or F&B products. Any detail that you feel may affect the customer’s decision.
Warnings. No, this is not a negative thing. For example, if a product is not vegan or vegetarian-friendly because of one ingredient, highlight that. To avoid losing the sale, suggest alternatives that do suit.
Demonstrate. In a shop, a salesperson might show off the features of that TV you want. You can still do this in a virtual environment. Include a short video that demonstrates the main features of the product.
Reviews. Include any reviews on a product page so customers can see what other people thought of it.
Optimise your website performance
You may have the best products in the world and offer the best prices on those products. But if your website functionality is about as speedy as dial-up access (remember that?), then customers will just go elsewhere.
You must realise that website optimisation is not a one-off exercise. It’s an ongoing task that needs to ensure your website is always operating at peak levels.
Ideally, your website should be loading in under three seconds (from a desktop). You also have to remember that more than 55% of today’s internet traffic comes from mobile devices. So when it comes to optimising your site, look at access from all devices.
When it comes to optimising your site, A/B testing is the way to go. It allows you to test out different variations of images, content, and more to find which one customers prefer and makes them more likely to buy.
Something as simple, yet as crucial, as your CTA could be the barrier that’s stopping people from making that final decision and affecting your bounce rate adversely.
Other things to include in any optimisation plan include:
SEO can be a tricky animal to master. But if you get it right, you’ll have better ranking on search engines and thus more visitors. What’s more, you can ensure a better quality of visitor—those more likely to convert.
Ensuring customers have a smooth UX (user experience) is crucial to improving your CVR. Make sure all touchpoints are easy to access and use, and that you identify and eliminate (where possible) any pain points.
Improve your checkout process
Your checkout page is perhaps your most important. This is where thinking turns to decision and your actual revenue becomes real. It’s also where you’ll see a lot of people abandoning a purchase at the last moment.
In March of 2020, an incredible 88.05% of ecommerce carts were abandoned, so this is an area you must focus on.
There are several reasons why a customer might abandon their cart at that final stage:
- Shipping costs made the total cost too much for them.
- Customers just wanted to see the total cost to compare with other sites.
- Customers didn’t want to create an account and enter details.
- Their order didn’t qualify for free or discounted shipping.
- Shipping times were too long.
- Preferred payment option not offered.
- Customers wanted to save their shopping carts for later.
Optimising the checkout process can help reduce cart abandonment and boost your conversion rate. You could try:
- Implementing Ve's Digital Assistant, which has been proven to help overcome checkout abandonment. It targets the customer with suggestions and incentives that encourage them to complete the checkout process.
- Single page vs multi-page checkouts. There’s no set rule for which is better, but if you have high abandonment rates with one, try the other option.
- Voluntary sign-up. While you love to have customers sign up with you (and thus be on your list for email marketing, SMS messaging, etc.), some customers want to buy without doing so. Try avoiding mandatory sign-ups if possible.
- Emphasise the security you use for your payment gateway to give customers confidence to use their credit cards.
- If you offer free shipping (use sparingly), look at the threshold you use in order for people to qualify. Make sure it doesn’t adversely affect your margins.
- Free returns. While free shipping should be used cautiously, offering free returns may not only reduce abandonment, but also build trust and confidence.
- Forms. No-one likes forms, so make any forms you use on your site easy and quick to complete. Use Google Autofill where possible.
- People may want a single item or they may want more. Ensure that they have the choice between “buy now” and “continue shopping”.
Track your customer behaviour
Knowing your customers’ behaviour means you get real insights into anything you need to adjust or tweak to improve their experience. You will have the data to encourage them, not only to buy on a single visit but to return and make further purchases in the future.
To track their behaviour, you need to pay close attention to your analytics. There are two types you should monitor; quantitative and qualitative.
Quantitative analytics will tell you the “what” of customer behaviour. It will show you the metrics (using tools like Google Analytics) you need to think about. That can include things like bounce rates, churn rates, shopping cart abandonment rates, CVR, sign ups, etc. These numbers can highlight areas that need further investigation and work.
While quantitative analytics may show you areas where your site is performing poorly, it doesn’t tell you why. That’s where qualitative tools such as customer tracking apps and session recording come into play. By analysing replays of a user’s session, you can better understand why they do what they do. And you can see where on your site may be presenting hurdles.
Combining these two analytics is called UBA (user behaviour analytics). It can help you make the changes that lead to a better customer journey and better conversion rates for you. Using a tool such as the Digital Assistant can be of huge help. It uses specially targeted surveys that provide you with quality information but also give a positive experience to your customers.
Always measure & improve
In order to constantly look at ways of improving sales and conversion rates, you need to constantly measure and analyse. Identify your most important KPIs and metrics and review them on a regular basis to ensure they meet your goals consistently. Remember that your conversion rate benchmarks can change over time.
While that 2-3% may be a global average for CVR, the reality is that any ecommerce business wants to be achieving far higher rates. Think of yourself as an athlete, constantly seeking to better your last performance. Every business wants to grow, to expand, and to outperform their closest competitors. To achieve that, always measure and improve.
Important ecommerce conversion rate statistics in 2021
It’s worth having a brief look at some of the statistics related to CVR for 2021:
- 2.35% - The average conversion rate across all industries.
- 11% or more - The CVR achieved by the best performing ecommerce sites.
- 1.53% - Average CVR when sites are accessed from mobile devices.
- 4.14% - CVR from desktops/laptops.
- 10% - Highest B2B CVR (financial services).
- $1 - The amount spent on CRO (conversion rate optimisation) compared to $92 spent on customer acquisition.
- 5% - How much of their budget the best converting ecommerce marketers spend on CRO (a lesson!).
- From 10 to 15. The number of increased landing pages that can increase leads by 55%.
- 40+ - The number of landing pages on sites that see 12 times more leads than sites with under 40 landing pages.
With the competitiveness in ecommerce, monitoring your metrics and your website’s performance is crucial if you want to succeed.
Utilising every tool, process or trick you can find to help you keep ahead of the competition is integral to that success. That can include things like CRM and digital assistants to ensure good customer experiences and high conversion rates.
Sadly, there is no easy fix. If you want success and growth, be prepared to put in some hard work (or delegate it). From optimising your website to building trust with your customer base, that effort will pay off in the long term. Improving one aspect of your performance may lead to small changes, but taking a more holistic approach can lead to dramatic ones.
Frequently asked questions (FAQs)
What is a good ecommerce conversion rate?
While the average CVR is around 2.35%, you should really be aiming for a minimum of 5% to be considered ‘“good” and 10% or more as “excellent”. Across industries, the top 25% are converting at 5.31% or higher, while the top 10% have conversion rates of 11.45% or more.
Ecommerce has relatively low conversion rates compared to, say, finance. And figures vary between different areas of the industry. But if yours is on the low side, don’t panic—there are plenty of tricks you can try!
What are the benefits of a good ecommerce conversion rate?
The obvious benefit is that you will see increased sales and revenue. But it can also help you improve customer experiences, which will lower your CAC and increase LTV.
A good conversion rate enables you to boost your website search engine ranking with an improved SEO strategy. That way, you can maximise every penny of your PPC spend.
What are the tools to use to improve conversion rates?
There are many tools you can use for CRO. One major tool you should always consider is a Digital Assistant such as that provided by Ve.
Ve can also offer you a connected media service to improve the performance of your digital ads. Other tools you could consider include:
- Market research apps or tools.
- Competitor research apps to see what is working for them.
- Survey apps to glean info from customers and potential customers.
- A/B testing tools to ensure your website is optimised.