In today’s world of eCommerce, it’s becoming increasingly important to understand how your users are using your site and how successful your site is in converting them to customers. All too often, companies put their products online then sit back and wait for sales to come in (or not come in – ugh). Unfortunately, it’s not that easy. Knowing how well your site is performing is critical to the long term success of your company, and if you’re not analyzing the behavior of your users, your chance of succeeding or growing will be greatly reduced.
With the tools available today from most eCommerce and web analytics programs, it’s very easy to dig deep into user data to get a better understanding of how well your site is performing. If you’re like me, you’ll spend hours each week monitoring, analyzing and using this data to make your site, products and organization better. At the very least however, here are 5 statistics that I think you absolutely should know.
General Conversion rate – This is the most basic of numbers that you should know. It’s essentially the number of sales you’ve made divided by the number of unique visitors to your site over a given period. Industry averages vary widely depending on the sector you’re in. Depending on whose statistics you look at, the average conversion rate for an ecommerce site is around 2.5%. Don’t use this as a benchmark however. Your industry could be higher or lower. What’s more important is how your site is performing over time. If you conversion rate is decreasing over time, this could indicate a problem. If your conversion rate is much lower on mobile devices vs desktop, then perhaps your site is not very mobile friendly. Keep in mind that this is a very basic statistic and the number on its own won’t tell you much, but watching how it trends or digging deeper into the number can help you understand if your site is performing well in terms of converting users to customers.
Add to Cart rate – This is the number of users who visit a product landing page divided by the number of users who add this product to their cart. So basically a user sees a product, gets the price and details and decides “I’d like to add this to my cart”. Again, industry standards vary widely depending on sector, but across the board, this number tends to be about 7.5%. Once again, don’t use this as your standard. It’s more important to watch your number and see how it’s trending. If it’s going down or is lower than you think it should be, you need to try to figure out why. Is your price too high? Is the photography not appealing? Is it confusing to the user what the product is? Is it hard to find the “Add to Cart” button? There could be hundreds of reasons. It’s your job to figure out why.
Just as with the general conversion rate, it’s important to dig deeper into this number if you can. What is the Add to Cart rate across different products? If you have one product that is converting at 15% and one that is converting at 5%, you have to ask yourself why one is doing so well, while the other is not.
Cart Abandonment Rate – This to me is a big one and one that we spend a lot of time analyzing at Wicked Good Cupcakes. This is basically the number of users that add an item to their cart, but do not make a purchase. Across the industry, this number is alarmingly high. Depending on what source you get the data from, this number can be as high as 80% (http://baymard.com/lists/cart-abandonment-rate ). This means that for every 10 users that add an item to their cart. Only 2 complete the checkout process. That’s incredible to me. Basically, someone has looked at the product page. Decided that they would like that product. Added it to their cart, and then quit. Why? Well, there are a number of reasons. We’ve done a lot of research and improving of our site to combat this number. We’ve taken the attitude that most of these people must be abandoning because either the process to checkout or complete the order is too confusion or arduous, or perhaps there are hidden fees (such as taxes, shipping, handling fees) that were not exposed up front to the user. As a result, our Cart Abandonment Rate is currently only 35%. At one point in time, this number was closer to 60% for us, but over time, we’ve made modifications to our checkout process that we felt would decrease this number. So far, it looks like it’s working. Just to put it into perspective, going from a 60% abandonment rate to a 35% abandonment rate is the equivalent to a 63% increase in sales.
I personally believe that this is one number you should focus a lot of time on since you’ve basically won over the user – they’ve decided to add your product to their cart. So why didn’t they complete the purchase?
Product Conversion rate – Similar to the General Conversion Rate, this is the number of specific products sold divided by the number of unique users who have visited that product’s landing page. So basically a user goes to a particular product page. Gets the info about the product, then buys the product. It’s important to track this number individually across products individually as well as an aggregate across all products. The aggregate number can tell you how your site is performing in terms of ease of use, but the individual product rates will give you an idea of which products are attractive to your users. If you have one product that has a Product Conversion rate of 10%, but another is only 2%, then you have to ask yourself why this one product is performing poorly compared to the other one.
This is another number we watch very carefully over time. Whenever we make a change in either price or page structure to our products or product landing pages, we see what effect it has on this number.
Refund/Return rate – This number is very important to the health of your business, but is often overlooked. This number is not so much a product of your website (a change in how your checkout process is constructed obviously has no effect on this). It’s more of an indicator of your product or your success in delivering what was expected. This number varies incredibly across different sectors. The apparel sector suffers the highest refund/return rate with some online stores reporting returns as high as 50%. The reason is simple – customers buying clothes often aren’t sure which size to go with so they do what’s called “bracketing”. They’ll order the size they think will fit them, plus one size higher and one size lower to be safe. When the article arrives, they’ll try on all three and return the 2 that don’t fit.There are of course other reasons for refunds or returns. The quality of the product or the product arriving late are two common reasons. What’s most important is knowing what this number is and what it represents to your company in real dollars. Understanding what each refund or return actually costs you (in lost product, packaging, shipping fees, etc) is important to understanding the real profitability of your business. Just as with the other statistics mentioned earlier, it’s less important how you compare to the rest of the industry. What’s more important is to understand how that number is trending. If it’s increasing, you need to ask yourself why and address the issue.
There are literally dozens more metrics that you can dig into to understand how your company is performing, but understand these 5 is the first step in my opinion. It’s important to understand is that there is no single way to improve any of these numbers. There are many variables that are involved. They key is to watch how they are trending over time and try to understand what you might be able to do as an organization or with your website to improve these numbers. Use them as another indicator or tool when assessing your direction. A little knowledge can be a powerful thing.