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Biz Ladies: Improving Sales by Understanding Conversion Rate

by Stephanie

biz_ladies_conversion_rate

It’s always exciting to see that people are enjoying your products, services and blog enough to visit your site regularly, but the real question always is how to convert those viewers into customers. So today we are getting a detailed introduction on how to improve your sales by better understanding conversion rates by the lovely Arianne Foulks of Aeolidia. Arianne breaks down – in such easy-to-follow instructions – all of the figures, data and information you will need to help determine and understand your conversion rate, and then apply it to gaining those customers you want. Just a heads up…you may need to dust off those calculators (or in my case, chisel them out of fossilized storage) for this post! – Stephanie

Read the full post after the jump…

This article is for you if you have an e-commerce website and you feel that you should be getting more sales from it. Are your shoppers dropping out before checkout or bouncing off the home page without exploring further? Do you have a lot of abandoned carts? Are you wondering if you need a better website, or if you just need more visitors?

One of our newsletter subscribers, Stacia, asked us:

“I’d love to learn more about the best ways to convert sales. I have a lot of people visit but fewer buyers than I would like.”

This is a big question with no single answer, but you’ll be glad to hear that it’s not as mysterious as you might think. I’ve been digging into this knotty question lately, and of course we’ve gained a lot of experience over a decade of working with designers and makers on their websites at Aeolidia.

Here is how to decide if you have a problem, and what to do about it, if so.

What is your goal?

You may think you aren’t getting enough sales, but it’s going to be hard to get where you want if you don’t know where that is. Is there a number of sales or a dollar amount which will be sustainable for your business? What about a second goal number that would feel like success to you? Before you start getting into the math of website conversion, get clear on what you need (the minimum amount of sales to be able to turn a profit) and what you want (the amount of sales that you’re aiming for to be able to grow the business to where you want). You can then take that range and see what can be changed to get there.

What efforts are you making now to reach your goal? What do you feel is working, and what may be a waste of time?

How much money do you bring in now, and how much of an increase will take you to where you want to be? What’s a reasonable timeline to try to accomplish this in?

What is a conversion rate, anyway?

Your conversion rate is the percentage of visitors to your site that convert into customers, by making it all the way through checkout and purchasing from you. If 1,000 people visit your site and you get 20 orders during this time, this would be a 2% conversion rate, which is considered pretty standard for e-commerce sites.

conversion-rate-math

(Number of sales you got) ÷ (Number of visitors you had) = Your conversion rate for that time period

You can work that number backwards to help you with your goal. How many sales did you decide you wanted in a day (week, month)? If you want 20 sales, you need 1,000 visitors – if your site and customers are average. You may have an amazing site or a truly engaged audience, and so you will need less visitors to get 20 sales.

(Number of sales you want) ÷ 0.02 = (Number of visitors you need)

In the example calculation above, our shop had 1,000 visitors last month and we had 20 sales. With these numbers, I find out that our conversion rate is 2%, meaning 2% of our visitors will buy something. I’ve run the numbers and determined that we need 900 sales a month to stay afloat. Dividing that from the 2% conversion rate we just found, I find out we need 45,000 visitors per month to expect that many sales.

A higher conversion rate will mean that we need less people to get those 900 sales (for example, at a 5% conversion rate, I only need 18,000 visitors to get that same 900 sales). You can see why improving your conversion rate is a valuable use of time!

If you are interested in more in-depth numbers and stats, just do a quick Google search for “e-commerce conversion rate” and you will get piles and piles of info. Most articles I’ve read suggest that 1-3% is average, and 6-9% would be considered successful.

Where do I get the numbers to calculate my conversion rate?

If your e-commerce software shows you good conversion stats, you’re all set, and don’t need to do any extra work. Here is what Shopify will show you:

shopify-conversion-stats

A nice thing about the Shopify stats is that they show you step by step where you’re losing people, and can be helpful in determining where the sticking point or roadblock is.

If that info isn’t prepared for you, you will need to check your web stats and compare it to your sales. If your e-commerce software or web host provides great stats, use those, otherwise most people will be using Google Analytics to do this. Your best bet is to set up Ecommerce Conversions in Google Analytics, but if you don’t yet have that set up, there is a simple way to grab your numbers.

google-stats

Log into Google Analytics to find out how many unique visitors (this means actual people, not multiple visits from one person) you had during the period of time you’re tracking. Once viewing your stats, go to the Audience link, and click Overview. Adjust the calendar using the date tool on the top right, and look for the number next to “Users”:

If you don’t have any kind of stats for your site, sign up for Google Analytics now, and get that code on there! Wait a few days, and then start seeing what’s going on.

Take your number of sales for any given period, and divide it by your unique visitors (not your total page loads, but the actual people on the site – the “users” number in Google Analytics) to find out your conversion rate, as explained above (Basic Conversion Rate Math).

(Total sales) ÷ (Number of visitors) = Your conversion rate

Keep in mind that if your visitor numbers are on the low end, this rate won’t be consistent or reliable.

Conversion rate isn’t the be-all and end-all of measuring success! For instance, maybe you’d rather get half as many customers, buying more products per order or more expensive products. Or maybe you need more customers and you need them to spend more.

Another good thing to look into is how your conversions from this month compare to past months, or how this year compares to last year. Are things improving or not?

Comparing conversions can be great to do when you make a big change, such as redesigning your website, switching e-commerce platforms, changing your product offerings, taking new photos, etc. Did the change help or harm?

How do I interpret my conversion rate?

Here’s where things can get messy. All you have are numbers here. You aren’t thinking about where these people came from, why they’re on your site, what they’re looking for, how well your product meets their needs. Realize that you don’t have a full picture when you’re doing this kind of mathematical analysis, and don’t expect a clear answer with an easy solution.

With your number and your goal, it should be pretty easy to decide broadly where to focus your efforts. For example, if you’re getting 25 visitors a day, don’t expect many orders. Fiddling around with your website is going to be a waste of your time. You need to focus on getting more people to the site, above all else.

If you’re getting thousands of people to the website each day with not enough sales, then don’t worry about increasing your marketing efforts right now, but instead figure out how to fine-tune your website so that people will purchase.

If you are somewhere in between, for instance – the amount of visitors you get isn’t pitiful, but also isn’t impressive – my instinct is to bring more people in and see if it leads to enough sales. If not, you now have a nice stream of people to test out some website changes on.

You can also use common sense here. If you know your website is ugly and hard to use, make some changes. If you know that you barely get any traffic to the site, start there instead.

Okay, barely anyone visits my site. Now what?

If your website is terrible and no one knows about it, use this time to make a website that’s worth sending people to. If your website is pretty good, but no one knows about it, it’s time to increase your marketing efforts. This tack is usually a “you gotta spend money to make money” method, unless you have the time and know-how to promote your site, but just haven’t bothered (wha?!)

This article on our blog about Freshie & Zero’s experience points out how important these marketing efforts are (and if you’re serious about it, an intern or employee who knows what she’s doing will be able to pay for herself):

“Sales are up across the board, and it’s really a combination of two things: Aeolidia’s redesign of the website plus the motivation to market it from my session with Jena at Aeolidia. After speaking with Jena, I knew that marketing was essential and something I was capable of doing. Unfortunately, I knew I was never actually going to do it because I just did not have the time. I had been coasting in my business for the last few years (having two babies will do that to you!), and it was time to actively market my brand again instead of just trying to keep up with demand. (I had already hired two production assistants, so I was better at keeping up with orders.) I had barely placed any ads in the last several years nor had I pitched anything to anyone! Now I have a beautiful website that better showcases my jewelry, so it made it easy and exciting to jump in and invest in a marketing strategy. I was ready to show it off!

I decided that when the trade show craziness started to wind down after Valentine’s Day, I would hire a marketing assistant to implement all the strategies I needed to propel my brand further. Now that I have that fabulous assistant on our team, we have worked together on pitching to the media, figuring out social media, and making advertising decisions. It’s fun to have help to bounce new ideas off with regards to our marketing. Since taking more time to market Freshie & Zero, I’ve gotten more inquiries from bloggers who are interested in a feature, more wholesale inquiries, more customer interaction, and dare I say, more respect from the media outlets I am currently pursuing. I would not have had the confidence to do this without Aeolidia’s site and logo redesign as a spring board. It was the catalyst I needed!”

Nothing makes us happier than seeing a creative business get the attention it deserves – but it takes persistence!

I have a lot of visitors, but paltry sales. Now what?

Congrats, you’re getting the word out and the website is pretty busy. But why aren’t they buying? Your website probably needs some adjustments in user-friendliness and in how engaging it is.

If you’d like to adjust your current site to increase sales, I’ve gathered many of my best ideas together for you in an article on our blog: Improving Website Conversion – shipping strategies, social proof, changes in content, a round of user testing – there are many ways you can improve your website without needing to know what exactly is going on “under the hood.”

My site is good, I get a lot of traffic, and my conversion rate is average. How can I improve?

Congratulations! You’re average! Wait, I’m sure you don’t want to settle for average, right?!

Rather than trying to get more people to your site, it would be wise to try to convert more of the people you’re already getting. Once you’ve improved your site (and thus, your conversion rate), any new visitors you’re able to bring in will be more valuable to you. More visitors AND a higher conversion rate would be great.

This can be a fun spot to be in, because you’re no longer struggling, but can instead refine, improve and watch those numbers creep steadily up. All of my tips in the Improving Website Conversion blog post are worth trying, and I’m sure you’ll be able to come up with some ideas of your own as well.

Keep in mind that your conversion rate will be high when your marketing efforts are targeted to your perfect customer, and conversions will go down if you advertise in the wrong places. Getting 30,000 new visitors from a motorcycle enthusiast website isn’t going to help a ceramicist.

Further reading

If you like this kind of nerdy business stuff, you’ll like getting Aeolidia’s creative small business newsletter in your email inbox. I work to make these timely, helpful, and to include information you may not have thought of. My tips on making improvements yourself are simple to take action on, and can improve sales and create interest in your business. Subscribe here!

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Comments

  • Excellent info, Arianne! Current conversion rates and goals = something every biz owner should have in their mental “back pocket” all the time!

  • just read this and is very interesting ~ my computer was visiting Apple Store ~ looks like I have some calculations to do because I definitely need to improve my Website conversion rate and improve Marketing

  • Ok, because I have already referred back to this post three times, I really just want to thank you. This is some of the most practical advice I’ve received. Using this math, I have a clear goal in mind for my business. Thank you for sharing your wisdom!

  • As always, Arianne, you tackle the nitty-gritty in a helpful, accessible and straightforward way. Great post that goes beyond the typical platitudes about promoting your business. Thanks!

  • Great article. I think a lot of people look at their store stats and/or set up Google Analytics and stick the code on their site, then get discouraged, even disinterested, when they look at the numbers and don’t understand what they’re looking at or how they can interpret them. I’m going to forward this article to friends and clients because I think you explain it in a very understandable way. Thanks!

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