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How to Improve eCommerce Conversion Rates – Don’t Settle For 2%
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No-one likes to be seen as average. No artist or performer would settle for reviews describing them as “mediocre.” Nothing kills a romance faster than words like “average” or “ordinary.” However, there is one area where run-of-the-mill and middle-of-the-road is especially fatal: eCommerce.

In the competitive world of online sales, average is nowhere near good enough. So, when it comes to your eCommerce conversion rate, settling for “ordinary” is not an option.

ecommerce conversion rate

Considering how important it is to stay ahead of the game, and the amount of money businesses spend on customer acquisition, most online stores are surprisingly complacent about their conversion rate. Surveys documenting average eCommerce conversion rates usually put the figure around 2%. This might seem reasonable, but consider this…

The Royal Albert Hall seats 5500 people. Imagine that 2% of the audience buys something during a show. If the Royal Albert Hall had the same conversion rate as most eCommerce websites, all the bars, merchandise stalls and snack shops would be fighting over only 110 customers. That’s a lot of empty barstools!

These rates can be increased without spending much time or money. In this article, we discuss the benchmark for eCommerce conversion rates, explain why conversion rates matter and consider how to improve them. Taking note of some of the hints, tips and techniques from our Conversion Rate Guide will help you to outperform the industry average. 

Average eCommerce conversion rates vary depending on who you ask:

Average eCommerce Conversion Rate (%)Research BodyDate of Survey
1.85Wolfgang Digital2019
1.55IRP Commerce1st January 2019
2.86Invesp EQ3 2018
2.42Monetate2018
2.58Compass2018

wolfgang digital ecommerce conversion rate report

The Wolfgang DigitalKey Performance Indicator Report” for 2019 put the average eCommerce conversion rate at 1.85%. The average conversion rate by user was 3.2%.Perhaps more significantly, the agency found a strong relationship between Sessions Per User and Website Revenue (which highlights the importance of return visits).

Invesp ecommerce conversion rate report

IRP Intelligent Commerce put the average conversion rate during 2018 at 1.55%, a marginal increase from 2017. However, the numbers also suggest that Average Order Value (AOV) decreased significantly during this period.

monetate ecommerce conversion rate report

Monetate’s most recent quarterly KPI and benchmark report suggested that the average conversion rate for eCommerce in the UK was 4.04%. Intriguingly, this was significantly higher than the US (an average eCommerce conversion rate of 2.23%). 

These rates might seem perfectly adequate. You might be happy to aim for these “mediocre,” “ordinary,” or “so-so” numbers. But, as I mentioned at the start of this article, there are good reasons for aiming a lot higher.

Why Conversion Rates Matter for eCommerce

There are a number of reasons to focus on conversions. Alongside other more obvious metrics (traffic volume, traffic source, unique visitors… etc), conversion rate has a big part to play in your store’s performance. There are also more complicated factors to consider, such as how conversion rates fit into your overall marketing strategy. The importance of conversion rates can be split into three main areas:

  1. Revenue: Increasing your conversion rates is the most cost-effective way to build your revenue. Instead of spending your marketing budget on advertising (which often reduces the quality of your traffic), focusing on conversions is the most reliable way to get more sales. 
  2. Value: Improving your conversion rate is impossible without in some way enhancing the value of your products. Your conversion rate provides a crucial insight into the health of your business and the service you are offering. Paying attention to User Experience (UX), reducing Ambiguity, reassuring your customers or adding persuasive content to you website, all adds value to your products. 
  3. Marketing: as any marketer will tell you, the best audience for future sales is former customers. Re-marketing is a huge part of an effective marketing mix, but it can’t take place unless you make the first sale. Think about it: would you rather tell someone how great your product is, or show them? Finding a way to turn a few more uncertain browsers into customers (and then re-marketing to them) is more efficient than spending big on marketing to strangers.

Once you have decided to work on your conversion rate, you have to find a way to make your website more persuasive. To see a few of our favourite tactics, skip straight to the section on Increasing eCommerce Conversion Rates. Before that, though, I want to introduce you to a modern phenomenon and its applications to eCommerce. Welcome to the world of game mechanics and the Winner-Takes-All effect…

eCommerce Conversion Rates and the Winner-Takes-All Society

Most good games have what’s known as a “Catch-Up Mechanism.” Supposing you are ten-roles-in to a board-game and there is already a clear winner: most games have a way of slowing the leader down. For example, in snakes-and-ladders there are always longer snakes towards the end of the board.

However, there are also situations in life where Catch-Up Mechanics are balanced against another phenomenon Competitive Divergence. A good example of this is the board game Monopoly. As a player accumulates property they earn more money, so early leaders almost always win the game. 

Everybody has some experience of these effects. However, there is a third type of competition that most people rarely consider: the Winner-Takes-All scenario. This model is also the key to understanding why eCommerce conversion rates matter.

How to Improve Ecommerce Conversion Rates

A screenshot taken from the book “The Winner-Take-All Society” by Robert H. Frank and Philip J. Cook

The “Winner-Takes-All” effect, also known as the “Slight Edge” phenomenon occurs in scenarios where only the winner receives a reward. When that reward allows the leader to become more even more competitive, a single person or organisation can dominate a field. The phenomenon is best described in the book “The Winner-Take-All Society” by Robert H. Frank and Philip J. Cook.

The effect is particularly apparent in online industries. Slight differences between competitors (in price, convenience or strategy) are multiplied many times by the number of unique customers. This then reinforces the resources of the market leader. The success of Google and Amazon illustrates how a slight competitive advantage, when multiplied by the volume of customers online, can translate into market dominance.

So, what is the best strategy for competing in a Winner-Takes-All market?

The best way to compete in a Winner-Takes-All scenario is to take an early lead. For eCommerce, this means doing everything you can to increase your conversion rate!

Learning how to convert more of your visitors into customers is worth more to your business than the value of the sales: 

  • Your customers become better prospects for marketing
  • Your competitors lose the resources you gain
  • The value of your products increases (due to Social Proof, scarcity, and brand exposure)

Your conversion rate is a measure of the value you are offering; it keeps score of how many “matches”, “rounds” or “races” you are winning. Because eCommerce operates in a Winner-Takes-All environment, improving this number is the best way to becoming a market leader.

There is an endless list of strategies designed to improve eCommerce conversion rates. The important thing is to identify the best approach for your business and to test them thoroughly. However, there are one or two tactics that have been proven to work for a variety of eCommerce businesses:

  1. Social Proof
  2. Cognitive Ease
  3. Loss Aversion

A great example of a simple adjustment producing an immediate improvement in conversion rate was demonstrated by Vanity Planet, an online distributor beauty products. They decided to add photos of happy customers to the product page of a particular skin brush, and A/B tested the variation against the original page.

The experiment was a remarkable success. Over 10 days, Vanity Planet tested 6000 unique visitors. The micro-conversion rate (visitors who continued to the checkout from the product page) for the original page was 6.56%. For the new page it was 8.11%. Optimizing their website in this way gave Vanity Planet a Conversion Rate uplift of 24%

The use of customers’ photos to illustrate product pages is a good example of a psychological phenomenon known as social proof. 

Social Proof occurs when an individual’s behaviour is shaped by the apparent consensus. It is one of the most powerful psychological effects that can be directly applied to eCommerce websites. To find more techniques for applying social proof to your site, explore our list of 14 ways to apply Social Proof to eCommerce websites.

For eCommerce businesses operating from a platform such as Shopify, WooCommerce or Big Commerce, there are a number of apps that instantly apply Social Proof notifications to your store. To see a short list of the best plug-ins available, read our article on the top three Social Proof Apps for Shopify stores.

Add pictures to increase ecommerce conversion rates

Social Proof is just one of a number of psychological effects you can use to increase your conversion rate. In the rest of this article we will show you how to augment Cognitive Ease and apply the principle of Loss Aversion to your eCommerce website. Doing so will make your website more persuasive and improve your conversion rate.

Site structure is important. Marketing Experiments, an online library of Conversion Rate and A/B testing case studies, undertook research on whether one or two-column-websites drive more conversions. The results showed an unbelievable 681% increase in conversions.

While this experiment was conducted on a lead-generation site, rather than an eCommerce store, the result is enough to prompt some important insights. There is one takeaway message that stands out: Do not overcomplicate things. Cognitive ease is the foundation for a good User Experience, and User Experience (UX) is important for two reasons: Firstly, it encourages positive emotional associations with your products. Secondly, it makes it more likely that a customer will return to your site for a second visit.

The Wolfgang Digital report that we spoke about at the start of this article ran a series of correlation hypotheses on their data (which combined Facebook Analytics with Google Analytics). Their research demonstrated relationships between different types of website data, and one of the strongest correlations they found was between conversions and return visitors. Sessions Per User was strongly connected to website Revenue.

Considering how important return visits are to website revenue, it makes sense to keep your website as user-friendly as possible. The easiest way to do this is to structure your pages to reduce Cognitive Load.

cognitive ease conversion rate tactic

The pain of losing something is a powerful motivator. In fact, according to research conducted by Amos Tversky and Daniel Kahneman in 1984, the emotional impact of loss is around twice as large as the pleasure of gaining. Whilst this conclusion is subject to debate, the broader effect explains why people will often avoid risks, even when their circumstances suggest this is the best strategy. People are resistant to behaviours or strategies that expose them to feelings of loss, even when the strategies are significantly more likely to be successful. A good example of this is the Monty Hall problem, where participants adopt (often irrational) behaviours to minimise the potential for experiencing loss.

To apply loss aversion to your site, consider adding an element of jeopardy to your offers. Urgency and Scarcity both appeal to loss aversion. The urgency effect occurs when a time limit is placed on an offer, whilst the scarcity effect involves limited stock. Both techniques are used by the most successful eCommerce websites and have been shown to significantly increase conversion rates. 

Tactic_Appeal to people's fear of loss (Loss Aversion) rather than emphasising potential gains

One last thing about eCommerce conversion rates…

…they’re not everything.

Seriously, having spent an entire blog post explaining how important they are and how to improve them, I am now going to tell you why you need to look beyond conversion rates.

The problem is that conversion rates only measure sales. They don’t take into account Average Order Value (AOV), Customer Retention Rate (CRR), or Customer Lifetime Value (CLV). They don’t even provide a measure of how many unique visitors make a purchase (so a customer who browses one day and buys something later would give you a conversion rate of 50%). 

If your AOV decreases or your CRR (and, therefore, traffic) disappears, you could increase your conversion rate and still end up losing revenue. That’s why it is important to make sure you optimize in all three areas. We call this Revenue Optimization. 

increase ecommerce conversion rate

Conclusion

Mediocrity is not the way to success. Sometimes, it takes just one extra step to stand out from the crowd. In many ways, eCommerce has come to reflect the idea of the Winner-Takes-All society. In this scenario, a marginal advantage over your competition, especially in terms of Conversion Rate, will produce disproportionate gains for your business.

There are a few proven techniques for improving eCommerce Conversion Rates: 

  • Using reviews and popularity to apply Social Proof
  • Restructuring your site to simplify things and improve User Experience
  • Harnessing urgency and scarcity to add value to your products

Whether you find the impact of techniques like this hard to believe, or have already started applying neuromarketing principles to your business, we would love to hear from you.

Benjamin Ligier

by Benjamin Ligier

Benjamin is a CRO Expert at Convertize. He is passionate about design, web marketing and consumer psychology.

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Benjamin is an expert in A/B testing and conversion rate optimisation. He works on testing and design.

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