Beyond Sales: Understanding Conversion Rate and How to Improve it
Are you noticing that your physical store is getting a lot of foot traffic, or your website is attracting a lot of browsers, but you’re just not getting the sales volume that you expected? Is your business just breaking even though it seems like you’re making a lot of sales?
If your answer to any of these questions is yes, then you may need to examine one of the most important key performance indicators (KPI) of your business, which is your conversion rate. The conversion rate is a common marketing metric that tells you the percentage of people who visit your store or site who end up following through with purchases.
Calculating Conversion Rate
To arrive at this percentage, divide the number of people making purchases by the number of people who visit your store or website and multiply by 100. While the equation is simple, the number you arrive at will divulge a wealth of valuable information about your business. The conversion rate will tell you:
- The effectiveness of your marketing and sales strategy;
- Whether your store or website is a strong sales funnel (how well it is set up to guide visitors, step-by-step, towards making a purchase);
- How much money is being left on the table in terms of the number of people visiting your store or site but not buying your products, and
- Whether you need to improve your customer service or buying experience.
Web Traffic vs. Foot Traffic
For a variety of reasons, the average conversion rates for brick-and-mortar stores are far higher than for eCommerce or point-of-sale websites, and you will need to employ different strategies to improve the customer experiences for both.
According to data gathered by Kibo, the average conversion rate for eCommerce sites in the US was 2.8% in the second quarter of 2021, while, according to Shopify, the conversion rate at brick-and-mortar retail stores is naturally far higher, usually ranging between 20% to 40%, depending on the sector and location of your business.
The main reasons for this wide disparity are that people tend to buy items when they can speak to a store associate and physically see and touch a product – which they obviously can’t do online. Additionally, when a consumer makes the effort to go to a physical store, they often do so with the intention of purchasing an item, whereas when people are surfing the web, they are typically just window shopping – at least virtually.
Further differentiating the two is that, according to Shopify, roughly 78% of all impulse buys are made in brick-and-mortar stores rather than through eCommerce sites.
Conversion Rate Optimization
When it comes to point-of-sale websites, many small business owners make the mistake of focusing only
on the volume of web traffic they are getting. Of course, this tendency is only natural – after all, the more people who visit your site, the more sales you’re bound to get, right? Not necessarily.
It’s more likely than not that people who surf the web and stumble upon your site may not be looking to purchase anything, or that your website isn’t a strong enough sales funnel.
This is where the practice of conversion rate optimization (CRO) comes in. While search engine optimization (SEO) is the practice of attracting visitors to your site via keywords, alt text, etc., it is markedly different from CRO, which is the practice of operating your site in a way that drives lead generation and sales.
Ways to improve your website’s CRO include:
#1 Conduct Customer Surveys
Talk to your web designer about incorporating customer surveys into your site. The survey can pop up after a customer purchases a product from your site, or when a browser is about to move on from your site. The survey can ask them questions about their customer experience and about your site’s sales process. You can also ask them what you can do to make the sales process run more smoothly. It could be that you’re not offering enough discounts, or that your website design is unappealing. You will never know until you ask.
The answers you get will help you reevaluate your sales process and give you a good idea of why browsers are visiting your site without purchasing anything. There are several survey software packages you can obtain to help you conduct customer surveys, and some of them are even free.
#2 A/B Testing
A/B testing may be one of the most important marketing tools out there. A/B testing is when two or more variants of a digital asset – such as an email or a web page – are shown to users at random, and statistical analysis is used to determine which performs better in terms of customer conversion. Put simply, it’s a technique used to determine the effectiveness of a web page or other digital asset and can ensure that you are building your company’s digital presence in the most effective manner.
The testing may reveal to you that one page is more visually appealing to potential customers, or that one page is easier to use over another. Executing this type of testing is crucial in terms of CRO, because it lets you know what browsers of your site wish to see when they are considering making a purchase. There are a host of A/B testing software packages out there, with prices ranging from $100 to $250+ per month.
#3 Deliver Content That Pertains to Each Step of the Sales Process
If you feel your website conversion rate is too low, you might not be providing enough content to guide your potential customer through each step of the sales process (in other words, your site is not a strong enough sales funnel). You should be providing informative, easy-to-read content that educates your customers through each step. Generally, those steps are:
- Educating them about your product or service.
- Stoking their interest in your product by making them aware of how it can help them in their personal or professional lives.
- Setting yourself apart from your competitors with positive reviews and testimonials, and
- Offering them a demo (if applicable) of your product and negotiating a price.
Increasing Conversion Rate for Physical Stores
If the conversion rate for your brick-and-mortar retail store isn’t as high as you want it to be (under 20%), then there are several factors you may wish to examine to improve that number.
- The first factor is the performance and training of your sales staff. Your staff members are the ones who are primarily responsible for the shopping experience of your customers. Much like you should offer helpful content to guide web browsers through each step of the sales process, your sales associates need to effectively educate, provoke interest and demonstrate the product (if applicable) to the potential customer.
- The second factor is improving store and product layout and enforcing safety measures, such
as social distancing, to make customers feel safer. One of the first techniques is to make sure that you are pairing complementary products. For example, you may want to showcase coffee mugs next to bags of ground coffee that you are selling, or display matching pants with T-shirts that are on display. This is also a good way to encourage shoppers into making impulse purchases. Prominently featuring your most popular products next to products that you are looking to sell more of could help.
- You should experiment with different visual displays, lighting and color schemes. These may seem like frivolous details, but remember, people tend to buy what looks visually appealing, so these details could make all the difference. Also, according to Shopify, the average shopper makes three unplanned purchases in four out of every 10 stores they visit, so displaying your merchandise in the most visually appealing way may go a long way in increasing your sales.
- Practice good inventory management. Few things frustrate shoppers more than finding out that a product is out of stock after they’ve made the effort to drive to your store to purchase that product. Make sure you stock up on your most popular products, and predict the times during the year when certain products will be the most popular. Given the current supply chain disruptions businesses are experiencing due to COVID-19, it may be prudent to overstock on popular items.
- Offer special sales or discounts at regular intervals and advertise them in print or online. Few things attract more customers than the allure of discounted prices or the occasional buy-one-get-one (BOGO) sale. Offering these several times per year will definitely boost your average conversion rate on an annual basis.
Conversion Rate Should be Top of Mind
There are few aspects of your business that will be more important to you than your conversion rate. Increasing your conversion rate means higher profits and more revenue per customer for your business.
The strategies in which to do so vary from online to brick-and-mortar, and from industry to industry. If you feel you are in over your head with these strategies, then an investment in an outside or internal marketing consultant may be your best bet.