For anyone involved in ecommerce, metrics like conversion rate and cart abandonment rate are important metrics that are monitored at least daily, and for many companies more often. Since everyone loves to compare and see how their company stacks up, there are credible benchmarks published by analytics companies like IBM, Adobe and Google.
Unfortunately for ecommerce companies, these metrics are pretty bleak...
A conversion rate of 2 – 3% of all visitors is often seen as a benchmark, with 3% being a very ‘feel-good’ number.
A cart abandonment rate of 75 – 85% is pretty common.
What are they really doing...
One often-overlooked point is that not everyone who comes to your site is intent on buying. There are visitors who are looking for a physical store, some who are just not ready to buy, and some just merely researching or killing time.
Knowing that, basing a conversion rate on all visitors seems pretty arbitrary. This is where a funnel report comes in handy. Team that funnel report with some segments and you are on your way to a more accurate conversion rate.
To keep this post at a readable length some of the concepts and premises are going to be oversimplified. But apply the thinking to your situation.
A Common Funnel Report...
Unless your site has a serious usability issue (or an unusual use case of why you wouldn’t want visitors to see products), let’s assume that everyone who wants to purchase views a product.
Create a segment for visitors who view a product. An exception would be if your site allows visitors to save carts or wish lists. You can modify the segment to include these visitors too.
But where did they go...
In my experience working with many retail customers, that is actually going to reduce the number of visitors quite significantly (often by almost 50%).
Side note – there may be work to do to get the non-product viewers moving along the purchase process. Retargeting with display ads for anonymous visitors, or email for known visitors are super effective ways to do this. But that is another story for another day.
Apply that segment to your purchase funnel to see how that impacts the conversion rate.
Next let’s analyze the visitors even deeper into the funnel. Just a note, a handy metric to create is a ‘Cart Initiation Rate.’ It is simply a percentage metric ‘Carts Initiated’/’Total Visitors.’ You can also create this metric with the denominator Unique Visitors or Return Visitors, etc.
Side note – there are also things to review to understand the drop off of people who saw a product, but never initiated a cart. But, back to the funnel for now.
Create a segment for visitors who initiated a cart.
Not only can you think about the new Cart Initiation Rate metric. But by segmenting your Ecommerce Overview report by those visitors who begin a purchase, you now have a Cart Conversion Metric. And that Cart Conversion Rate is probably a much happier number than the overall conversion rate.
And thinking optimization, if you could do things to increase the Cart Conversion Rate, you widen the bottom of the funnel. If you can widen both the top of the funnel, and the bottom of the funnel, you can increase sales exponentially. And who wouldn't want that!