Measuring Conversions for Ecommerce Web Sites

In our post entitled Focus on Revenue, Not Rankings, we discussed the importance of measuring conversions on your web site. Today we’re going to look at one type of web site: an ecommerce web site. For our purposes, an ecommerce web site is one that sells products or services directly online through a checkout process.

Understanding conversions for an ecommerce web site is pretty straightforward: a conversion is a successful online sale. The value of the conversion is the value of the transaction. Let’s look at an example of a fictional site that sells bicycles online, Mikey’s Bikeys. Using this information, we can calculate the conversion rate for Mikey’s site:

• In April, Mikey’s site had 5,000 visitors
• In the same month, he had 50 separate sales
• Sales totaled $7,500 (average sale = $150)

The conversion rate is simply the number of sales (conversions) divided by the number of visitors: 50 / 5,000 = .01, or a 1% conversion rate. Put another way, 1 out of 100 visitors to the site make a purchase.

Mikey’s goal is to get his monthly sales up to $15,000 (double his current average). How can he accomplish this?

• Double his traffic.
  Assuming Mikey could maintain his 1% conversion rate, an increase in traffic would translate into an increase in sales. He may try offline advertising to drive people to his website (radio, TV, newspaper), PPC ads, an SEO campaign, adding more informational pages to attract buyers in each phase of the buying cycle, or other methods to drive qualified traffic to his web site.
  
• Increase his conversion rate from 1% to 2%.
  To double his sales, Mikey needs to increase his conversion rate by only 1%. This small increase from 1% to 2% will double Mikey’s revenue. He may try streamlining his checkout process, making his “call to action” (add to cart) more clear, adding testimonials or other items to increase visitor confidence, or adjusting his SEO and PPC campaigns to exclude unqualified visitors.

What else could Mikey do to increase his conversion rate? Post your comments below.

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