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Small, marginal improvements are more important than you may realize in business. When most small business owners and entrepreneurs are focused on capturing new market share and building a better product than their competition, 98% of their online shoppers may just walk away, and the scary thing is, they don’t even realize how much it costs their business costs.
Before we can understand how marginal improvements can drive seismic financial results for your business, let’s get to the basics. Whether you’re running a small brick-and-mortar business or scaling up a newly funded startup, I can guarantee that one of the top short-term priorities is top-line growth and (eventually) growing profitability. Did you know that, according to this one Shopify article, on average only 2%-2.5% of your store’s visitors eventually make the purchase and complete the checkout? That means 98% of most online shoppers who visit an e-commerce store decide not to buy — an astonishing figure.
In addition, as quoted in this study conducted by LittleData, “Anything over 3.3% would put you in the top 20% of Shopify stores that we benchmark for conversion rate, and over 4.6% would put you in the top 10%.”
Related: 6 Tips to Skyrocket Ecommerce Conversions on Your Site
How do we calculate our store’s ecommerce conversion rate? It’s simple: take the total number of completed checkouts and divide it by the total number of site visitors, expressed as a percentage. If you have 100 visitors per day and two complete the checkout, you have an ecommerce conversion rate of 2%. An easy way to track ecommerce conversion rates is to use a free analytics tool like Google Analytics or an ecommerce platform that does this for you like Shopify or WooCommerce.
Let’s say you run a small gift basket business, and your average order value (AOV) is a $100 gift basket of goodies and freshly baked candies, which you ship nationally. In our example above, a conversion rate of 2% per day would bring your daily revenue to $200, or $6,000 per month ($72,000 per year).
Working the math backwards, even a 1% increase in conversion per day (another $100 sale) would add up to an additional $3,000 annually in new revenue ($36,000 a year). Imagine if we could increase your ecomm conversion rate from 2% to 4%. Your business would double, a marked improvement from new revenue growth of $72,000 per year ($144,000 revenue per year in total). With a 40% gross profit margin, you’re looking at $4,800 per month to pay overhead and cover operating expenses, such as rent and salaries.
Running a larger $500,000-a-year online business with a 2% conversion rate? The math is the same: Another 2% increase in ecomm conversion rates could put you in the seven-figure club, a $1 million-a-year business.
So, with so much to gain in both revenue growth and revenue growth, how come most SMBs and startups struggle to achieve higher ecommerce conversion rates? Based on my consulting sessions over several years with founders, it’s because they don’t see the register from the customer’s point of view.
Here are three key areas that hinder ecommerce conversion rates:
1. Checkout friction
Checkout issues represents the redundant information your store may need to complete the transaction, such as forcing customers to register for an account instead of allowing customers who shop for the first time to simply check out as “guests”. Another easy way to avoid this block is to install an API (app or plugin) that allows your customers to verify their account with their Amazon, Facebook or Google credentials with one click without having to sign in. register and create a password for your site.
Another popular point of friction is asking shoppers to verify their email address before completing checkout while creating an account with your store, forcing them to log into their email account first and then (hopefully) get to it. thinking about visiting the shopping cart again and checking out. It’s just too much friction and it takes way too long for busy shoppers, leading to abandonment.
Related: Four Top Tips to Optimize Your Online Checkout
2. Trust
All transactions must convey confidence to the shopper – confidence that when you take their money you will deliver the product or service in a timely manner, confidence that the checkout process must protect their information with an encrypted cash register (using a secure socket layer or a other encrypted method), trust that if something goes wrong with the order, there is someone to talk to to fix it.
A few ways to demonstrate your shopper’s confidence is to use the security seal that ensures your checkout is encrypted, to emphasize your company’s worry-free guarantee on the cart and checkout pages, and to include your customer service phone number. on the above pages as well as in the e-mailed receipt and packing list sent to the customer with the order.
First-time shoppers don’t trust your brand. It is your responsibility to inspire confidence, to watched risk of working with your company. After a great experience, a returning customer will have a basic level of trust from which to build their next buying behavior. Initially, however, you start from the beginning.
3. Unexpected costs
The last thing a shopper expects is a hidden fee or higher-than-expected shipping cost. To avoid this problem, you can try raising your prices to offer free shipping, or set a minimum order threshold, such as $99 per order, that ensures that all orders meet or exceed that level. The customer journey took many steps to find your business, evaluate your offer, and make an informed purchase decision – why throw all their last-minute efforts away by shocking them with high shipping costs? Be transparent with all upfront costs on the product listing or detail pages, and remove last-minute buyer hesitation by self-walking the customer’s shopping journey to see where the urge to buy fades when a sudden, unexpected roadblock is forced.
Now you realize how crucial ecommerce conversion rates are, how to measure them, and how just a 1%-2% increase can significantly change your business’ economy and set your business ready for faster, organic growth.
One last important point, as ecommerce conversion rates can and do fluctuate over time depending on various factors such as seasonality, the quality of site traffic you receive, the amount of discounts or coupons you offer, and others. factors, make sure you track ecommerce conversion rates in a spreadsheet or other document on a weekly and monthly basis, and highlight any changes you make along the way to improve the customer’s shopping experience.
Not only is a higher conversion rate beneficial to your business, but it also greatly means your customers will find what they want and checkout seamlessly, which in itself can be one of the main reasons they’ll love coming back to buy from you. online shop.
Related: 5 Ways to Deliver a Positive Customer Experience in Ecommerce
