Basket Cases – Conversion

Over the forthcoming weeks I will be discussing issues on ecommerce and selling online, by covering the basics that every site owner, larger or small should be interested in.  To start off, I will explore conversion and with the Christmas season just gone, this is a hot topic for all retailers.

 

Conversion

• What is it?
• What is the typical conversion rate?
• How do I find out what my conversion rate is?
• How do I measure this?

Conversions on a website, what does it really mean?  There is a lot of fuss made over this term but unless you know what you want out of your website this term “conversions” is meaningless.  In a nutshell, a website conversion is a percentage or number of website visitors that have performed a desired action on your website.  For example on a website selling books, it will be the number of people that have brought books whilst visiting the store.  If it is an information site, it will be the number of people that have signed up or downloaded information from the site.  There are a number of actions that can be performed on a site and all can be tailored to your end goal for the website and business.

So I know what it means, how can I measure the conversion rate on my site?  This is the difficult part, different industries and retail sectors have different conversion rates.  In the retail industry, conversion rates can vary from 0.5% to 8% of visitors.  They also vary dramatically when specific industries are compared side by side.  On average catalogue e-commerce sites have 6% Conversion rate compared to electronics e-commerce site which has a 1% conversion rate.  The average in the retail sector is 2% conversion rate. 

 There is some debate into how conversion rates are measured, but for simplicity the normal calculation is:

Completed Actions / Total Number of Visitors = Conversion Rate x 100

 For example:
Selling specialist Champagne in wine merchant

Number of bottles of wine sold / total number of Visitors to wine merchant site
3/250 = 0.012 x 100 = 1.12%

1.12% is the conversion rate. This is how many visitors will purchase Champagne per 100 visitors to the site.   Once you have this conversion rate you can then focus on increasing relevant visitors to the site wanting to buy Champagne.  As long as the conversion rate stays the same, the more visitors to the site, the more Champagne this site will sell.

So how do I measure the number of visitors to my site? Unfortunately, this is the most complicated part of measuring conversion rates.  Visitor traffic can be tracked through a number of analytical packages of which there are hundreds on the market to choose from.  The most widely used and easy to install on you average HTML website is Google Analytics.  However there are increasing more e-commerce sites which offer analytical packages built into the site to monitor, trace and track visitors on the site.  It is worth whilst looking if your e-commerce site or web developers can install this functionality for you. 

One point to bear in mind is that different analytics packages will measure and report on traffic very differently from each other.  So if you are comparing conversion rates between two site, ensure the raw data is reported by the same analytics packages. 

I will take time to understand conversion rates specific to your site, and this rate will fluctuate dramatically throughout a 12 month period. Specifically during key seasonal periods such as Christmas, Easter and Summer.  Understanding what your typical conversion rate is can help increase your sales and maximise the potential of your site throughout peak seasons.