E-commerce
Here's the scoop on conversion rates
Randall Hartman, interactive director and founder of Groundwrk, explains why retailers should not get "conversion rate jealousy" when comparing industry standards or another site's conversion rate and shares two inexpensive tools that can help in e-commerce conversion efforts.
March 16, 2021 by Randall Hartman
The average current conversion rate for a U.S.- based e-commerce website hovers between 2% to 3% — and this should mean absolutely nothing to you. You should not use this as a target nor should you pat yourself on the back for having a conversion rate "above average."
We see so many small retailers and startups obsess over conversion rates and make dangerous decisions based on a number that holds very little truth.
Let's paint two actual scenarios:
1. Company X is a mid-sized company, valued at $40 million to $60 million. Their website converts at .6% and produces a couple million in revenue. They also have a healthy marketing budget that drives targeted traffic to their website. Company X is ecstatic about their conversion rate and makes little tweaks to their website to try and gain that extra .01%.
2. Company Y is a startup with the majority of their sales coming through the website. Before online marketing they converted at 7%. Once they started marketing to a broader audience their conversion rate dropped to 2% but their sales tripled. This company was not happy about the conversion rate dropping and obsessed over it. Eventually leading to terrible marketing decisions that has slowed the company's progress.
So, the conversion rates for Company X, Company Y, and your company should never be compared, unless you are selling exactly the same product for the same price. Even then, you have to consider the traffic visiting your website. For instance, if the only folks visiting your website are your friends, family, and brand evangelists, your conversion rate will be deceivingly high for a couple reasons:
1. They already know your brand and are coming to your website to buy.
2. This audience will tolerate a poor website user experience to make a purchase.
As you start spending money to drive traffic to your website you can most certainly expect your conversion rate to decrease, sometimes significantly, and that is ok. Instead, focus on providing a great user experience for your site visitors. This you can control and small tweaks over time can pay off increasingly. To ensure your website is providing a good UX, don't trust your eye — trust the data instead.
Here are a couple of inexpensive tools you can use to gauge your website's UX:
1. HotJar: This tool has a free version that will allow you to record 300 users as they navigate your website. Match the recordings up with users that purchase to get a good idea of their path to conversion and to see what features they interact with, or don't interact with, on your website. If you see they are having a hard time navigating the site then you need to make changes to create a smoother path to conversion.
2. UserBob: There is no better way to get feedback from real people — within your target demographics — than a user testing platform such as UserBob. They are cheap, quick, and provide valuable feedback on your website's user experience.
The easier a customer's conversion path, the more conversions. This includes the number of clicks — relevant information in the correct spots — and a stunning user experience (design). All of these things add up to equal trust in your brand. Even if the customer is not in a place to purchase, the design should create that "want" in their hearts.
I am sure you have stumbled upon a product that you fell in love with before you even used it. Wine labels are probably the biggest example of the power of great design — don't try and tell me you have never label-shopped while purchasing a nice bottle of wine for date night.
The key takeaway here is that the only valuable data is your own, and building your own data takes time. Don't get conversion rate jealousy from "industry standards" or a rumor you heard about another site's conversion rate. Your true baseline will show it's ugly (or beautiful) face when your website traffic includes people outside of your extended network. Then, by using tools such as HotJar, make small tweaks to your UX overtime using your data to guide you.
Randall Hartman is interactive director and founder of Groundwrk
About Randall Hartman
He is currently an associate board member for Project Helping, a non-profit dedicated to suicide prevention, and donates 1% of all company revenue to local non-profits. In his free time Randall can be found posting an incredibly high score on the golf course or hanging out with his 120 lb pup, Charlie.
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