conversion rate

6 Ecommerce Metrics Critical to Long Term Success

If you’ve ever explored Google Analytics, you’ve probably felt overwhelmed by the countless metrics that can be measured.

 

However, if you’re not tracking key performance indicators, you’re flying blind. You might be able to wing it for a little while. But with the immense competition online, it’s a near certainty that sooner or later, a data-driven competitor in your industry will come along and overtake you by focusing on the fundamental metrics that help an ecommerce business scale.

 

Below, find the 6 fundamental metrics you need to know to build a successful, scalable online store.

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How to Get Inside Your Customer’s Head

Companies looking to improve their website conversion rates often ask me something that I find rather farcical. “Can you tell me why aren’t my customers converting?” Sure, we can dive into the analytics. We can record user sessions. We can look at heat maps. Eye tracking. Run split tests. There are lots and lots of articles written about best practices for web/landing page design with a focus on conversion, and many of these are quite good. But my first question is, “Have you actually asked them?” They typically give me a look resembling something between perplexed and contrite and say “Um, no.”

On-Site Customer Surveys

We can analyze the website data and draw conclusions from it, but often the fastest and easiest option is to simply ask customers. On site survey software such as Qualaroo or Webengage allow you to create unique (even rules-based) on-site surveys so you can ask a simple, open-ended question like “Is there anything still preventing you from purchasing?” You might be amazed by what they are willing to tell you.

Abandoned Cart Email Follow Up

There are 3rd party abandoned cart follow up email tools that can automate this process. Additionally, a number of common email platforms that you might already be using for your email newsletters even allow rules-based triggers that you can create based on customers visiting certain pages of your site and not converting.  For example, something as simple as “Hi [Name], Thanks for visiting [Website Name.] We noticed that you did not complete your order for [product name] Is there anything currently preventing you from completing your purchase that we can assist you with? [Your Contact Info, Call to Action, Assurances, etc.]”

Mine Your Customer Data

On a related note, I also find it irrational when I hear from a company that “We get the same questions from customers over and over again.” I would simply ask, “Have you reviewed your website to make sure the answers to these questions are obvious?” It may be a fix as simple as adding another FAQ, adding additional product specs, or making a button bigger and more noticeable. Look at your customer inquiries. Talk to your customer service staff. They are a great resource to help you get inside the heads of your customers, because they are the ones actually interacting with them. Even reach out to your existing customers and ask them what made them become customers in the first place.

Build a Real Customer Profile

Now that you’ve asked the questions, can you use the answers to build a customer profile to get inside their head and understand their concerns? Their uncertainties? Their needs? Imagine if you proactively addressed all of these in your website copy and what that might do for your conversion rates! Rather than marketing “at” your potential customers on your site by rattling off features, you could instead actually be speaking their language and showing that you truly understand them. Your product or service is the solution to whatever problem they are facing or addresses their needs and you can provide it in such a way that they feel comfortable doing business with you. Wouldn’t you be more likely to buy from a company that you thought really understood you and presented a clear value proposition?

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What is Conversion Rate?

conversion rate

Conversion rate is simply the percentage of visitors to your website that achieve a certain goal that you set as your objective.

Your objective might be making a purchase of a product, filling out a contact form, signing up for a mailing list, registering for your site, or whatever else you are trying to achieve.

If you are spending time and money to draw visitors to your website, increasing your conversion rate may be the single most important metric to focus on to grow your business and improve ROI.

Yet many businesses don’t focus on this and instead just spend more time and money trying to attract new customers, when they aren’t maximizing the customers they already have at their site!

Imagine you own a retail clothing store…

Customers are walking in on their own and browsing the racks. But instead of your sales staff tending to them, making suggestions, trying to convince them that they would look great in that new dress they are eyeing, and helping them check out, they are all standing outside holding up posters asking random strangers on the street to come inside the store. How many of those customers who were just a small step away from becoming a paying customer might instead walk out empty-handed?

It’s easy to see a similar impact in nurturing the customers on your website.

As a website operator, you might spend 5 hours writing a newsletter for your company or you spend $500 on a banner advertisement on a relevant website with the objective of acquiring new customers.  If you double your conversion rate, that very same 5 hours you spent or the same $500 would actually generate twice as many new customers.  And it’s not a one time thing, either. When you improve your overall site conversion rate, every piece of marketing that you do will provide a better ROI, forever! Because every newsletter you send, every advertisement you run, every visitor is now being driven to a better performing website that achieves more of your goals with the exact same amount of effort.

Ok, what else can conversion rate optimization do for me?

Conversion rate optimization doesn’t just help increase the ROI of your existing traffic, it creates great new opportunities for increased marketing to really accelerate your growth.

All businesses should have a target cost per acquisition (CPA) which is the amount it costs you to get a visitor to achieve your goal.

If you get 100 new registrations for your website from an advertisement that costs $1000, your cost per acquisition is $10. If you spend $12 on pay per click search ads to get one new customer, your cost is – you guessed right – $12. Your target cost per acquisition is influenced by your margin, overhead and lifetime customer value.

A simple example would be if you’re selling dresses for $100 and your cost is $50, perhaps you’re willing to pay up to $25 to obtain a new customer, leaving $25 in gross profit to cover your other business expenses and have some profit left over. As your conversion rate increases, your cost per acquisition decreases. Doubling your conversion rate means the $1000 that used to get you 100 new registrations now gets you 200. The PPC ads that used to require $12 to get a new customer now only cost you $6. With PPC bidding getting more and more competitive, conversion rate optimization can be absolutely critical in maintaining profitability.

But wait, there’s more!

Think about how many new keywords you wanted to bid on or other ad campaigns you wanted to run to acquire more customers, but they were just too darn expensive. You’re thinking, “I’d love to be there, but there’s just no way I can justify the cost of that ad if I’m only getting 1% of my site visitors to convert.”  When you increase your conversion rate, all of a sudden ad campaigns that were once unable to produce a sufficient ROI now are affordable, helping you to grow your revenue and scale your business faster.

How do I improve my conversion rate?

Renown Venture Capitalist Bill Gurley, who writes at Abovethecrowd.com, makes an important point: “Unfortunately, conversion improvements typically are the aggregate gain of 100 tiny improvements, not one silver bullet. Rarely will you find one single change that is going to have a 5% lift in conversion (you might if you have never tried, but this type of win will go away quickly). Rather you will find 30 things on a page that all have a tiny impact, and the overall impact, after months of work might be 5%. You have to be willing to toil in the minutia knowing that the impact on the overall system will be the combined result of many tiny little changes.”

Don’t get discouraged. These small incremental changes really start to build over time and have an exponential impact. Stay tuned for new posts on some great ways to test and find ways to perform conversion rate optimization or contact ME to help you with your conversion rate optimization.
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