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Experts Speak Out on Improving Sales Conversions, Part 2

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Posted July 2, 2004 By James Maguire     Feedback

Real-world tips to help you achieve the all-important goal of turning shoppers into buyers -- and why you shouldn't sweat comparisons to other e-tailers' conversion metrics. Second in a two-part series.

In Part One, we focused on a slew of basic tips to help you convert browsers into buyers on your Web site.

Now, in the tightly competitive world of e-commerce, this begs the question: How am I doing?

If you're wondering how your sales conversion rate stacks up to your e-commerce peers, Aberdeen Group analyst Kent Allen has fresh research on the topic. Based on Allen's hot-off-the-press survey of 225 online retailers, he broke down e-tailers into three groups: Laggards, Industry Average and Best in Class.

Laggards have a conversion rate of less than two percent; Industry Average sites see a two to three percent rate, and Best in Class enjoy in excess of three percent. Allen said he has seen rates as high as 10 percent, yet the more modest numbers represent a truer industry portrait.

But while these numbers are good to know, e-tailers shouldn't get overly concerned with industry averages, analysts say. "Retailers should not benchmark themselves against other retailers," said Jupiter Research analyst Patty Freeman Evans. Instead, they should compete against their own past performance, as indicated by the statistics in their Web analytics software.

The problem with comparing your numbers with those of other e-tailers is that their businesses are very different from yours -- even if you sell the same thing. "There's very little consistency between sites as far as experience, marketing, and brand recognition," Freeman Evans noted. Truly comparing two businesses, apples-to-apples, is difficult.

Furthermore, even if your numbers look good next to your neighbor's, you still might be missing sales. "Just because you're getting two percent -- or five percent -- doesn't mean you're optimized," she said.

Besides, there are so many different methods for measuring conversion that confusion abounds. "If you ask retailers what their overall conversion rate is, not even a quarter of them measure it the same way," Freeman Evans said. Her hope -- which is far from being realized, she concedes -- is that an industry-wide standard will be adopted. Her preference: total transactions divided by total visitors, monthly.

But e-tailers currently rely on a plethora of other methods for calculating conversions that are sometimes confusing or downright unhelpful. Those include tracking total visitors instead of unique visitors, or using a daily or weekly time period. Some merchants base calculations only on shoppers who load shopping carts.

So before you feel conversion envy, remember that many reported figures are best taken with a grain of salt.

Getting Tougher
No matter what benchmarks you work against, improving conversion rate is getting tougher, experts note.

Aberdeen's Allen theorizes that today's Internet merchants face what he calls "the empowered customer." With so many consumers now having four to five years of online experience, today's buyer is "smarter, faster and more demanding than ever before."

In particular, the Net's ease of comparison shopping has caused a tectonic shift in consumer behavior, he noted.

His research indicates that to successfully romance these empowered consumers, many companies are prioritizing customer service -- a facet of a business that's always tightly linked to conversion rate -- and focusing on better managing customer data. Customer data could include anything from past purchases to shopper behavior at the site.

Allen found there continues to be a problem among multi-channel retailers: they "silo" their operations, meaning their in-store operations are still not fully integrated with their e-commerce operations.

"The Best of Class people [conversion above 3 percent] have collapsed their catalog and e-commerce operations into one -- the smartest people have a single profit and loss [statement] for those two," Allen said. But only six percent of recent survey respondents do business this way, he said.

One form of channel integration that Allen found to be highly effective at driving sales: offering the ability to order online and pick it up at a real-world store -- customers love it. Also, he noted that the online returns process can actually amount to a loyalty-building procedure for e-tailers, if handled properly.

Low-Hanging Fruit
Apart from revamping your returns process or other expensive strategies, several experts point to the "low-hanging fruit" of conversion improvement -- those strategies that e-tailers should explore right away, because they're so simple to implement.

The most obvious area for quick-and-easy improvement is the shopping cart checkout process, experts said. Though it doesn't offer the biggest conversion increase (that honor goes to improving site navigation,) improving the shopping cart process is the quickest and fastest way to increase conversion, noted Bryan Eisenberg, co-founder of e-commerce consultancy FutureNow.

Of the dozens of tactics he's developed to decrease cart abandonment, he points to a handful as particularly critical.

Continued on Page Two: Low-Hanging Fruit, Metrics, and More.

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