Conversion and Abandonment Rates in eCommerce Sites

Number of visits or hits your e-commerce site gets is not alone enough to understand your e-commerce business is doing well. You may be getting hits but not making sales out of that. So the question is “are you getting a good deal of orders over your e-commerce site?” To understand this we need to be familiar with the simple terms like “Conversion Rate” and “Abandonment Rate”. In this article, I will try to explain what these mean, how they are calculated and how you can achieve better results.


Conversion Rate

Conversion rate is the rate of orders you received divided by the visits your site got. So the formula is:
Conversion rate = #orders / #visits

For example If you had 100.000 visits in July and you received 5000 orders, and you have 50$ average order, then your conversation rate for July is:
5000 / 100000 = 0.05 = 5%
This means you were able to convert 5 out of 100 visits to actual orders with an average order of 50$.
It is also possible to calculate this with the number of unique visitors instead of visits, but in this case the value you will get is called Customer Conversion Rate.

So what should be your site’s conversion rate. There is really no measure for this. Only you can try to get better and better. But according to Internet Retailer Magazine, “conversion rates generally average in the 2.5% range, but rates that reach 8% are not uncommon and some sites report conversion rates of 18% and higher.”
Here is another good article about conversion rates Top 10 Converting Websites: The Similarities and Differences

Abandonment Rate
This is the opposite of “Conversion Rate”. Often called “Cart Abandonment”. It means that the visitor has created an order or in other words added products to his cart but he did not finish the ordering process and left the order incomplete. The abandonment rate can be calculated as follows:
Abandonment Rate = 1 – (#of orders / #of created carts)

For example If you had 10.000 carts created in July and you only received 1.000 orders with an average order of 50$, then
Your abandonment rate is 1 – (1.000 / 10.000)  = 0.9 = 90%
This means 90% of the carts were not converted to orders and maybe you missed 9.000×50$ = 450K$ sales.

How to increase Conversion Rate. Conversion Optimization.
Actually it is all about your unique selling proposition and how you make your visitor’s life easy.  But first you would need to closely monitor the visitors activity on your website, analyse it and try making sense out of it. Here are some simple things you should be carefull about:

  • Make a good site design, keep it rich and simple. Have a good and strong navigation system
  • Be bold, clear and honest
  • Position yourself correctly : know your audience and pay attention to your pricing policy
  • Avoid complicated processes
  • Communicate well with the visitors : give feedbacks as much as possible during each phase of the order fulfilment process
  • Provide flexible payment options and emphasize security and credibility
  • Provide as much information as possible about your product including reviews and comments and try to display all product attributes, a product with no definition does not make any sense to anyone
  • Establish a strong returns policy
  • Try to offer discounts and promotions
  • if you are a multinational operation, be careful about the cultural difference in different countries

Another important factor is Lead Management in other words use AIDA (attention, interest, desire, action) to move the visitor the conversion funnel. Some of the critical elements of this process are:

  • call-to-action buttons
  • landing pages with forms
  • thank you pages

You should be careful about how, where and when you use these as they can create negative effect on the visitors and maybe cannibalize your transactions.

How to prevent high Abandonment Rates
We can list many reasons for cart abandonment, it differs from site to site. But a Forrester research on this shows the most common reasons for cart abandonment as

  • Inform the users about shipping costs before they start checkout process, 
  • For those who saved the cart for later consideration, try using persistent carts. If you have the user information, keep the cart in database even if it is incomplete, if not store it in a cookie. If somehow you managed to receive the email address of the visitor, send an immediate email stating the status of abandoned cart and enable the user to get back to its cart using this email.
  • Many people also are scared to register, so if possible try avoiding the registration and let the user continue as guest user.
  • Try to minimize the number of steps in your check out process, optimum number of steps is 4.
  • Try avoiding too many postbacks, if possible use dynamic inline checks for the information you gather from user
  • Try to offer support with live chat or phone, and get ready to take over the cart and assist the user through the checkout process
  • Try to follow all items in the “Conversion Optimization” section above.

Conclusion
These are not all, but as you can see there are many ways to optimize your rates, all you need to do is track and monitor your visitors and of course on the backend work with vendors or employees who at least have an idea about the e-commerce basics and help you or guide you through the process to achieve better results.

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