Sign in   |   Register

Experts Speak Out on Improving Sales Conversions

  |     |   Bookmark    
Posted July 12, 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.

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.

High on his list: the need for e-tailers to provide shoppers with a progress indicator during checkout. Page by page, you should keep customers updated about how much further they have to go. The checkout process "is an investment in time," Eisenberg noted. "If I don't know how long it's going to take me, I'm not sure I'm going to stick around."

By the same token, "the shopping cart is one of the few areas where you really don't want to make people scroll too much," he said. Someday, an e-commerce theorist will develop a mathematical formula that correlates length of check out process with conversion rates, and undoubtedly they'll conclude that a shorter checkout equals less cart abandonment.

Eisenberg also stressed that it's important to remind shoppers of your guarantee and return policies throughout checkout. "Keep building up their confidence along the way that they're going to be okay," he said.

He points to Amazon's checkout language as a good one to emulate. It reads: "We guarantee that every transaction you make at Amazon will be safe. This means you pay nothing if unauthorized transactions are made to your credit card as a result of shopping at Amazon." The statement is clear, simple and short -- and reassuring.

Also highly important: let customers know total cost -- including shipping and any sales tax -- as soon as possible.

"Remind them from screen to screen -- people forget," Eisenberg said.

While you're at it, make two other factors clear: product availability and shipping date. "That's really critical, it helps people make a decision -- people want that instantaneous thing," he added.

Eisenberg is a big believer in what he calls the "GTC" theory of e-tailing: "get the cash." This means offering as many payment methods as possible, from credit cards to e-checks to PayPal. Even offer fax order forms, if it makes sense for your business, he said.

"The more options that you give people to give you money, the more likely that they will," he said.

Reading the Tea Leaves
Like almost all techniques for improving conversion, tweaking the shopping cart process will work for some e-tailers, but not others. There's only one piece of advice that analysts give to all e-businesses: Understand and study your site's stats as if your business depends on them -- because it does.

That's because there's a clear correlation between understanding your metrics and having higher conversion rates, Freeman Evans noted.

"What we know is that people who look at them more in-depth, and use those metrics strategically, have higher conversion rates," she said.

The problem is that many e-tailers do indeed peruse their stats, but their efforts are too casual to produce real knowledge. "One of the biggest pitfalls is that retailers may have the data, but they don't invest enough in analyzing the data," she said. "If they don't have someone who's clearly focused on it they're never going to get the value they hoped for."

If not the site's president, someone on the staff has to be specifically assigned to the task. Some of the better software packages also offer professional analysis help, she noted.

As you dive into your stats, be prepared to make decisions that may go against industry trends. "One size is not going to fit everybody," Freeman Evans said.

For example, even for sites selling expensive products, not all of their customers will want extensive product detail. "There's a whole lot of people who just don't want a lot of product detail and they want to make a quicker decision," she said.

Again, your best conversion strategies are based on understanding customers on your site -- not your competitors.

"Prioritize based on your largest groups and how they like to shop on your site," Freeman Evans said.

The Future: The Personalization Debate
The ability of a site to customize itself for each individual user -- personalization -- was once seen by man as the future of sales conversion. Amazon, of course, is a leader in this. It can address you by name and offer recommendations based on past purchases.

But personalization has been taken off its pedestal. According to a study conducted by Jupiter Research in November 2003, only 14 percent of online shoppers say that a personalized site induces them to buy more. (In contrast, 54 percent pointed to faster-loading pages and 52 percent pointed to better navigation as likely purchase inducers.)

Still, many analysts continue to see personalization as a conversion increaser in the years ahead. "It's just a matter of time," said David Berkowitz, an editor with research firm eMarketer. Simply setting up a workable site is not enough to keep pace with the competition as online standards keep increasing, he said.

In other words, those sites that don't incorporate personalization could fall behind.

Eisenberg noted that one of the reasons consumers haven't embraced personalization is that some sites haven't done a good job of it.

"Amazon spent millions on their site -- it takes millions to pull it off right." He points out that some newer tools are emerging for a broader spectrum of e-tailers. "The algorithms are getting smarter, and people are beginning to see the need for it."

James Maguire is a contributor to, where this article first appeared.

Submit a Comment

Loading Comments...

Thanks for your registration, follow us on our social networks to keep up-to-date