For an online store, one way to increase the revenue is to increase the number of visitors, assuming a proportional amount of visitors will become buyers. This proportion is called conversion rate in a sales funnel, which is an important metric for an online store.
For example, if you have 1000 visitors to your website, and 20 of them bought something, you have a conversion ratio of 0.02 or 2%. There are lots of nuances when you measure these numbers which is an article of its own about web analytics (this is a good read), but important thing is to have some measure and keep tracking this number.
e-commerce companies in India have been spending big money on marketing, and most of it is going in attracting visitors to the site to increase the revenue. However, if the conversion ratio stays same (and low), this seems a waste of money. This point is driven home by a recent survey of digital marketing by Adobe. It points to the stark reality: “Marketers spend $92 to acquire traffic and $1 to optimize it“!
If you don’t have millions of dollars to spend on marketing to attract visitors, it might be more prudent to look at ways to increase conversion rate. It has also been shown that minor optimization in a site can lead to big conversion jumps. To increase the number of buyers this way, it is very important to understand the factors that a visitor will consider before making a purchase decision (and become a buyer). Here are some of the key factors visitors consider:
- Look and Feel – Does the site look professional enough?
- Usability – Is it easy to discover, research and buy?
- Security – Is the site safe for me to use my credit card?
- Pricing – Is this the lowest price online?
- Sale – Is there any urgency to buy it now?
- Product Details – Does it meet my need?
- Social – Will people around me think it was a good buy?
Same Adobe survey suggests these areas of optimizations:
- Search Results – “34% of site visitors use site search as the first activity on a site. 43% of site search users give up after the first try”
- Automated Recommendations and Cross-selling – “62% of site visitors find them useful in meeting their needs”
- Personalization – “Returning consumers convert at higher rates when presented with targeted content that takes into account past purchases or browsing history”
- Video content – “Professionally produced content provided a 24.7 point lift in Share of Choice for a featured product and a 16 point lift for the brand’s total line, whereas UGC videos provided a 18.7 point lift in Share of Choice for a featured product and a 10-point lift for the brand’s total line – Comscore“
- Optimize for mobile: “Tablet visitors spent over 50% more per purchase than visitors who used smartphones, and over 20% more than visitors who used desktop/laptop computers”!
- Optimize for Social engagement – “A recent comScore study demonstrated that the top 20% of users who spend the most time on Facebook spent $67 per quarter compared to $27 by nonusers”
In our next article, we will see ways to do these optimizations and how do they impact the visitors decision to be a buyer. Stay tuned!
Mrityunjay has a passion for writing, even though his corporate career has been into engineering and management. He has over 16 years of diverse experience in engineering (Development, Test, Program management), marketing (product management) and senior management roles in multiple product companies. Mrityunjay has worked for Microsoft Corporation (in Redmond and Shanghai), SumTotal Systems (Hyderbad and Redmond), and many startups in the field of high-speed networking and telecommunications, e-learning and ecommerce. Most recently, he was Technical Product Manager in Microsoft Commerce Division, for a group with over $2B in consumer transactions in a year.
In addition to his involvement in RetailBiz, Mrityunjay is a director in Palash Consulting Services, a course director and industry consultant in Sunstone Business School, and also helping setup an online retail store that is targeting a lifestyle vertical. All these diverse exposures give him a unique perspective as he manages the content team at RetailBiz to deliver quality content for the target audience.