Much has been written about how retailers can increase their conversion rate to drive more revenue. That’s definitely a strategy to increase revenue, and it does work, but in an increasingly competitive marketplace, increasing conversion rate dramatically is no longer possible.
In 2010 I was working with plenty of brands that had conversion rates of over five per cent, with one brand in particular boasting a 17 per cent conversion rate. That set the scene for most brands – that the best way to increase revenue was to drive conversion. But what happens now when most brands with a reasonable traffic figure are sitting around 0.8 per cent to 2.00 per cent? Should you spend your energy trying to drive conversion a fraction of a per cent higher?
Increasing conversion typically requires site development or design changes, which cost money – it’s not just going to change itself, after wall. So what else should you be looking at outside of the conversion rate? There’s a few sure-fire ways to increase online revenue, and they involve moving certain metrics in the right direction.
This is an obvious one. Drive more traffic, and you’ll probably make more money. When it comes to traffic, you do need to put some thought into how you go about this.
Where are you going to get extra traffic from? Running new marketing campaigns across different mediums is great, but it’ll only work if you’re sending the right traffic to your site. Increasing traffic considerably also tends to lower conversion rate as it’s highly unlikely you’ll convert increased traffic at the same rate.
Think about what type of people you want coming to your site, and don’t just drive traffic for the sake of getting the traffic metric up. It’ll kill all your other metrics.
Average order value
Working out a way to encourage your customers to spend just a bit more money at the checkout is another way to increase revenue, without focusing on conversion.
Unfortunately, so many brands do this wrong. Upsells on product pages are often irrelevant, and sometimes even suggest cheaper products. Cart upsells are too late in the process. Just think about a supermarket – they don’t try and sell high priced items at the checkout, just gum and chocolate bars. I see sites all the time that will try and upsell me something expensive and unrelated to what I’m buying at the cart stage.
Think about what’s actually going to persuade you to spend just a little more. If your customers are buying shoes, offer some socks at the checkout. If they’re buying a leather bag, offer a leather protector. Don’t try and sell them a more expensive bag, you’ll just confuse or annoy them and they might not buy at all.
As the way consumers are shopping continues to evolve with technology and competition, so too are the metrics you need to be looking at to measure the success of your online channel.
The way people are shopping now will likely be causing a decrease in conversion rate for most brands, as there’s no great way of measuring cross-channel conversion.
If I browse on my mobile on the way to work, researching the brand or product, then convert later that day on my desktop, the conversion rate will drop, because it took two sessions, not one, to convert me. If I research online, then head instore to purchase, the conversion rate will drop because it won’t have recorded that sale at all.
If I research your brand online, then head to a stockist of yours and purchase, your conversion rate will decrease. Your site has influenced me to shop from a stockist, which if they get good traction will continue to buy from you (which is a different type of conversion).
Conversion rate is still a good number to look at to get a high level idea of how your business is going, but really you need to start looking at other metrics and, more importantly, other ways to determine how successful your business is performing.