It’s imperative for online businesses to make every visit both convenient and exceptional.
The cold traffic coming to your website is the people who have come to learn and engage with your brand, and I’m a strong advocate of selling worthwhile products to the people who need it the most.
Did you know that over 69% of visitors who add items into a shopping cart end up not finishing the transaction? They leave their cart behind and never complete the transaction.
With that in mind, consider the amount of money you’ve invested in promotions, social media advertising, content marketing, etc, but that 69% of potential customers decide to abandon the cart regardless.
Running an ecommerce business requires persistence. You always need to be putting new ideas and tactics to the test to try and increase conversions. But testing winning ideas take time, and it can sometimes become a lengthy process of trial and error. You have to be patient in getting the results you want, otherwise, you’ll just end up quitting.
Luckily for you, I’ve provided some practical and powerful optimization tips, based on your key metrics, to help you fix this very problem
1. Sales conversion rate.
This metric measures how well you convert leads into new customers.
Your inbound marketing is responsible for bringing in cold traffic and other lead-generating activities. Here’s how it works.
Say you have 30k leads, a mixture of organic and paid, and after working with those leads you were able to win over 15k customers. That’s a 50% conversion rate, meaning 50% of your leads were “converted” from cold leads to new, paying customers.
How do you calculate the conversion rate?
Conversion Rate = Total Number of Sales / Number of Leads * 100
If you’re monitoring conversions from website leads, then your formula will look like:
Conversion Rate = Total Number of Sales / Number of Unique Visitors * 100
Now let’s say you’re making 1k sales in a month and you have 5,000 unique visitors to your website; your conversion rate is 20%.
But it doesn’t end there.
There are several reasons why conversion sales rates are low, and it could be any one or more of the following:
- Your website isn’t mobile-friendly
- Users cannot find the products, poor navigation
- Poor quality of images
- No free shipping
- Discount coupons are not available
- Products are not unique
- Cluttered checkout form or their inability to check out as guests
- Your website is not trustworthy
And these are only some of the many reasons why your conversion rate is low. Address these issues and see how visitors respond to the improvements.
2. Opt-in emails.
This is a valuable part of ecommerce marketing, and here’s why:
Growing an email list is simple and can give you a better return on investment than any other marketing efforts you have available to you.
77% of customers favor receiving permission-based marketing messages through email. This means that email is the top channel for sending marketing campaigns.
If your current opt-in forms are not converting well enough, that could mean it’s intrusive and annoying to your visitors.
Here are some ways to increase opt-in email rates:
Improve your design.
Make it look pleasing and trustworthy. Offer “value” in exchange for their email address. It can be a discount code or a VIP product offer. Anything that will make a visitor exchange their information.
Test your copy.
Does it address a problem they have? Does it provide benefits? Does it grab their attention? Test different headlines to see what the winning copy is.
Set your pop-up to appear two minutes after they go to your website. People find it obtrusive if pop-ups appear seconds after they visited the website, so give them a break and let them explore your website before your opt-ins activate.
Correct dimensions of overlays.
How big is your opt-in box going to be? Make sure it’s big enough to grab their attention but not so big that it becomes annoying. Also make sure it will appear on both desktop and mobile versions.
Don’t forget to carry out your own tests to see what works best for your website.
3. Customer Lifetime Value (LTV)
Are you focused on retaining existing customers or acquiring new ones?
Customer acquisition costs six to seven times more than keeping the ones you already have. So instead of ignoring an already loyal clientele, it’s time to give them more attention.
A 5% increase in customer retention can create a 25% profit. Repeating purchases add more sales.
Studies prove that marketing to a first-time customer generates a 5-20% conversion. For an existing customer, the conversion rate is roughly 60-70%. Additionally, promotions sent to new customers are around 1% conversion.
Is it worth spending your time and money pursuing new customers? Or is it more worthwhile to satisfy your existing customers, who can give you a better ROI?
To improve your customer’s lifetime value, you can take the following steps:
- Send “limited-time exclusive offers”, such as new products. Make them feel special by giving them special access to your new product lineup.
- Offer incentives such as discount codes or referral bonuses for bringing customers to your website.
- Give “free gifts” when they purchase another product. It can be anything from an ebook or an iTunes gift card to emphasize how well you treat your loyal customers.
4. Customer acquisition cost (CAC)
We briefly discussed how retaining customers is much cheaper than acquiring new ones.
Well, to calculate customer acquisition cost, we use this formula:
CAC = total marketing spend/number of new customers
Is there a good and bad customer acquisition cost?
You can’t pinpoint whether your CAC is good or bad right away, so let’s look at an example.
Say you spent $100 to get 10 new customers; your CAC is now $10. You are spending $10 for every 10 new customers.
Now suppose your average customer spends $250 for each transaction. The general rule here is that the total purchase value of each customer should be bigger than what you spend to get them.
Here are some ways to make the most out of your marketing budget:
- Reduce your marketing costs. Track which marketing effort is bringing in results and stop pouring money into a channel that doesn’t produce any.
- Focus on the right metrics. Check your metrics by monitoring your marketing efforts. Simply know which ones are relevant so you know what to focus on.
5. Revenue by Traffic Source.
Do you receive more cold traffic from organic or paid channels?
Do you like getting more traffic but don’t know what to do with it?
Revenue by Traffic Source is a list of the total revenue per channel. It can be both organic and paid searches, social media, or referrals.
If you can learn where people are coming from, you can better identify how much you are making from each traffic source. You’ll also learn what the most valuable traffic sources to your business are.
Use Google Analytics to see your traffic sources. Tracking each transaction lets you see your revenue by the sources that drive traffic to your website.
To get a better ROI, try implementing the following steps to increase revenue per traffic source:
- Improve your SEO to get better organic traffic. If people can easily find your website on search engines, they can buy your product without going through paid channels. By having the relevant keywords, your customers are actively looking for you and they need your product, so they’re ready to buy.
- Use AdWords or social media ads to target customers. These advertising platforms can target specific people. By serving them advertisements you are bringing the product to them. You convince these people that they need your product and lead them to your conversion funnel.
6. Average Order Value (AOV)
This is the average dollar amount spent when a customer places an order on your website.
What is the benefit of knowing your AOV?
This metric can help make your marketing and pricing strategies more efficient. By increasing your average order value, you can directly impact your revenue growth target.
Here’s an example of how you can calculate this number:
AOV = total revenue/number of orders
To put this in context, let’s say your total revenue for the month of April is $50,000 and the total number of orders on your website is 2,400. Based on this example, your (AOV) for April is $20.83.
If you want to increase your average order value, here’s how you do it:
- Offer free shipping. 57% of online shoppers say they cancel orders if shipping costs are too expensive. The fastest way to increase AOV is to offer a free shipping threshold. You can say something along the lines of “Free shipping on all orders over $100.”
- Offer product bundles. You can push the “buy one take one” psychology on your high-traffic pages. There are several benefits to product bundling: it increases customer experience in a positive way, it makes decision making simpler, and it validates the customer’s choice.
- Time-sensitive product deals. “This 50% discount ends in 24 hours!” “Only 10 pieces left!” “Get 2, Get 1 Free, Only Today.” When you include scarcity, more people will take action.
7. Cart Abandonment Rate
Why do people abandon their cart?
Here are some reasons why people decide to not complete their transaction:
- They don’t trust your website; it’s not HTTPs
- High shipping costs
- Complicated checkout process
- Slow website
- Lack of payment options
- Your website is riddled with bugs
And these are only the common reasons why people abandon their carts.
Check out some of the other tips we have outlined in our previous blog post.
8. Net Promoter Score (NPS)
This is a customer loyalty indicator associated with the likelihood of an existing customer promoting your brand to their friends and acquaintances.
Implementing a Net Promoter Score on your website can help you to better understand whether or not your customers are happy with your brand.
How to implement NPS to your business:
- Survey every customer, not just the top spenders.
- Cut the feedback loop.
- Don’t focus on the score, focus on the customer.
- Use marketplace apps to calculate your score.
When used efficiently, NPS helps you engage with your customers and keep them. It can also produce more brand ambassadors and improve customer experience.
Metric-based optimization can help your ecommerce website perform better. Rather than implementing generic strategies, you can fix the specific issues facing your business.
Don’t aim to beat the benchmarks. Use your current performance indicators to identify your areas for improvement. By understanding your situation, you’ll have a better direction.