Optimizing Your E-Commerce Conversion Rate: The Two Conversion Criteria
Optimizing Your E-Commerce Conversion Rate: The Two Conversion Criteria

Optimizing Your E-Commerce Conversion Rate: The Two Conversion Criteria

Published February 23, 2010 in Business Strategy
The Better Way to Modify Magento Layouts
February 23, 2010
Editing Magento’s Top Links (The Better Way)
February 24, 2010

E-commerce traffic is worthless if you are not converting any of your traffic into sales.  The percentage of visits that result in a purchase is called the conversion rate.  So much emphasis is put on generating traffic, but it’s only the first step in building e-commerce revenue and profitability.  It is typically very expensive from a holistic resource perspective (money, time, focus, etc.) to generate traffic, so to pay no attention to conversion rate is committing a cardinal e-commerce sin.  There are a few critical components that determine how high your conversion rate will be.

Step back for a moment.  What would it take to produce a 100% conversion rate?  Every single time someone visited your site, they would purchase something.  Anytime a visitor meets two criteria, they make a purchase.  There are many factors that affect each of these criteria, and I will analyze each of them in this article and following articles.

THE TWO CONVERSION CRITERIA

(Here it is.  The secret recipe for converting visits to sales.)

To convert a visit into a purchase, the visitor must:

1.  Perceive the value of what you offer is higher than the value of the cost to acquire it.

2.  Have the resources to absorb the cost at the point of purchase.

Related: Find out more about our Marketing Services.

 

I will analyze these Conversion Criteria from the perspective of a different set of variables.  While it isn’t a quantitative measurement, you can determine the likelihood that an individual will make a purchase via a cubic equation:  Traffic Quality x Value Presentation x Ease of Purchase.  If you have a very high value for any of these variables, it doesn’t necessarily mean you will have a high conversion rate.  Just as with the broader e-commerce revenue equation I covered in the first post of this series (Traffic x Conversion Rate x Average Order Size = Revenue), attention must be given to each of the variables to optimize the outcome.  If any one of them is shirked, it can ruin all of the efforts made to improve the other two.  While you cannot attach a numeric value to these variables as easily as you can to the Revenue variables, it’s still important to understand conceptually because the conversion variables relate in the same way as the revenue variables.

In the next article, I will dig into the first variable that affects conversion rate:  Traffic Quality.

2 Comments

  1. Well put and well said. Too many ecommerce marketing experts spend a disproportionate amount of time on style, and much less on analysis and optimization.

  2. Sid says:

    Really well written.
    However, I have one question. How will one be able to calculate the conversion, keeping in mind that numeric values cannot be attached to all variables?

Leave a Reply

Your email address will not be published. Required fields are marked *

Related postsView all
February 22, 2018

Does Social Media Affect My SEO?

How do we know if our social posts affect our SEO? We’ve been told it does, we’ve been told it doesn’t. And with Google’s ever-changing algorithm, […]
December 20, 2017

What does ROAS Really Mean?

ROAS (Return on Ad Spend) is a popular metric that can help businesses evaluate if their campaigns are successful. It’s a simple calculation of ad spend […]
December 18, 2017

Meet Customers Where They are in the Buying Process – The Decision Path

Why Targeted Messaging Matters You are looking for new ways to get more customers. If you could only find people at just the right moment with […]
Most Recent PostsView all
June 7, 2018

From Brick-and-Mortar To Online: How to Connect with a Niche Audience

As an eCommerce business, every penny counts. If you want to be successful, you have to carefully balance spending money to generate business and the profits […]
May 11, 2018

Impact on Ad Rank and SERP’ real estate

The importance of extensions and how they can increase your SERP’ (search engine results page) real estate and ad rank Different kinds of extensions – One […]
March 27, 2018

How to Create a Payment Method in Magento 2

Sometimes you might need more than the standard out-of-the-box payment method. Perhaps you have an agreement with a credit card processor and a solution for their […]