What is the average conversion rate?

October 15, 2009

This is a question that I hear time and time again.  Everyone wants to know how to evaluate their conversion rate performance.   Well, fact is, there is no such thing as an average conversion rate …at least one that carries any meaning.   It is kinda like asking what is the average height of every person on the planet?  If such a number could be calculated, it would be useless.  

When reviewing your conversion rate performance, it is continuous improvment that counts.   Actual conversion rates will vary just like actual mailing response rates.   The actual rate will depend upon the product, the customer or prospect segment being targeted, the offer, the timing, etc. etc.   What is meaningful and actionable is to track your conversion rates by incoming unique visitor streams and test programs or actions that deliver a better result.   (i.e. Test against the control.)  

Let’s say you are evaluating customer conversion rates.   They will be much higher than prospect conversion rates.  Also, higher if they are multi-buyers with higher RFM performance.   Conversion rates will also be boosted if you have a lot of unique or hard to find products and if you have a high percentage of consumables (repeat purchase needed) items in your offer.   List, offer, creative, pricing, media channel will also affect the conversion rate.   You goal is continous improvement over time on like for like marketing programs.    So, catalog multi-buyers, after a mailing of a new catalog might convert at 15-20%.   Lapsed customers responding to a reactivation mailing or email might only respond at 2%.   

On the prospect side, here again it depends on the offer, list/segmentation,  prospect profile, promotional vehicle , timing, price, landing page, etc.   Having said that, I would not be surprised to see a prospect response online of .5-2.0%.   If you hit 5% you have a real winner! 

Remember too, conversion rates are just one short term measurement.  Important, yes.  Are they everything?  No.   Your overiding measurement should always factor in  your expected LTV (lifetime value) of a new or repeat customer.   It is not what you spend to get a new customer, nor is it solely about the conversion rate or AOV  but rather what you get in return over a one, two or three year period.   It’s all about measuring the necessary steps to achieve the maximum ROI over the LTV of the customer. 

So don’t be mislead by an average conversion rate statistic that is higher or lower than your current conversion rate.   Keep focused on the detailed performance measurement of all prospect and customer streams that come to your site and make sure you are testing to achieve continuous improvements.

2 Comments | Catalog, General eCommerce, eCommerce Usability, eMerchandising | Tagged: , , , , | Permalink
Posted by terryjukes

UK Opportunities for Multichannel Retailers Offering Ecommerce

May 20, 2009

A couple of studies by eDigitialResearch and etailing consulting firm IMRG, had some interesting information about UK shoppers.   It shows some great opportunities for multi-channel retailers in the UK market.  Here are just a few:

  1. Three quarters of the shoppers surveyed say they prefer returning goods to retail stores and 52% prefer hopping online with multichannel retailers.Great news for those already in the multichannel world – just by having a store or catalog, you start with an advantage.  Head starts are always good!
  2. Satisfaction scores were down a bit in April compared to last fall, 78.3% and 79.6% respectively. With the importance placed on having a “conversation” with your shoppers – this could be a great opportunity.   Talk with your customers and find out what they think you can improve about your shopping experience.  Give them the opportunity to voice their desires – and then follow up with action.
  3. 50%of those surveyed said they would cancel a web purchase if their preferred payment method wasn’t an option. Competition is just a click away, and shoppers will simply leave if you don’t offer what they demand.  Make sure your ecommerce website offers their preferred payment methods and other UK-specific ecommerce features that they have come to expect. 
  4. 45% said they would spend more time looking for bargains online too. If your ecommerce platform is flexible enough, this one should be easy.  Online promotions, coupons, “outlets,” and “bargain bins” attract the attention of shoppers looking for a deal.  You can also try updating your meta-descriptions to include “sale” or “discount” pricing for better conversion from search engine results pages. 

How are you planning to meet the needs of UK shoppers?

1 Comment | Catalog, General eCommerce, MulitChannel Retail | Tagged: , , , | Permalink
Posted by Anna Slyter

What? Ecommerce Has a Limitation?

March 31, 2009

Sometimes it seems like there is no problem a good ecommerce website can’t fix. Paper and postage costs too high? Use your email marketing to reach customers rather than mailing. Need new customers? Optimize for search engines and find a whole new audience that is looking for your products. Want to decrease customer service calls? Add or improve a “frequently asked questions” page on your ecommerce website that addresses your customers’ concerns.

What more could you want from a channel? The $21 billion that e-tailers lost out on last year, that’s what.

A study released on March 17, 2009 by Javelin Strategy and cosponsored by eBillme and First Data said a fear of online shopping caused $21 billion in lost sales during 2008. The survey also suggests that smaller online merchants will suffer the most, since 40% percent of online identity theft victims will only purchase from well known sites such as Amazon.com.

I don’t know about you, but I see 3 great opportunities for multi-channel retailers.

  1. You can improve your current ecommerce website to address the concerns of these security-minded shoppers. The Javelin Strategy survey reported that these five factors would convince customers to shop more frequently:
    • Assurance that information is being processed securely (83%)
    • Offering zero liability against identity theft (81%)
    • Stronger security at the store website (80%)
    • A guarantee that the purchase will match quality expectations (80%)
    • A guarantee for the best price online (79%)
  2. Consider selling your products on Amazon to reach that 40% of identity theft victims who will purchase from them. Selling on Amazon lends trust to your company and can help you reach new customers. With the right Amazon integration software, you can easily integrate with your back end systems to maximize efficiency.
  3. Use your direct marketing expertise to reach out to security-conscious shoppers and highlight your other channels. Maybe they can order online and then come to the store to pick up and pay. Perhaps they can call in their order and pay by money order. That’s a great strength of catalogs and brick and mortar – you can meet shopper expectations in multiple ways.

Are you using your direct marketing experience to make you shoppers feel secure? Tell us about it.

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Posted by Anna Slyter

Where’s the URL?

February 4, 2009

catalogwithurlI love browsing through catalogs (it makes me feel like I’m still multi-tasking when I’m watching TV.)  I got a great one this week and they had some really nice sweaters that I wanted to order.  Naturally, I wanted to order online – actually picking up the phone and calling is so inconvenient. 

 

I went to my trusty computer and typed in the company name and a “.com” thinking I’d get the website, but that didn’t work.  So, I grabbed my catalog and looked on the front cover – no URL there.   Flipped it over to the back side – no URL there either.  Inside cover – nope. Finally found it on the order form in the middle of the catalog in teeny-weeny print. 

 

So, I started to wonder, why would a company not want to make it easy for me to know their URL – especially when it isn’t just their company name followed by “.com”?  Why would they want shoppers to have to search for it?  Or Google it and potentially get distracted by other sites, or find bunches of coupon sites so they can pay less than they would have?  Or wonder enough to run to their computer and blog about it?

 

I started checking the other catalogs I got this week.  Only 1 out of 5 had the web address on the front cover.  2 managed to put it in small print on the back of the catalog and 3 hid it somewhere inside the catalog. 

 

Catalogs are no longer an entity to themselves.  They can successfully drive BUYERS who’ve finished browsing to your site.  Make it easy for them – get that URL on the front of the catalog. 

1 Comment | Catalog, General eCommerce, MulitChannel Retail | Tagged: , , , , | Permalink
Posted by Anna Slyter