5 Things You Should Do Now to 10X Your Store’s Conversion Rate [Research]

What makes an online store convert well? What does the data say about stores that have a 9% (and higher) Ecommerce Conversion Rate instead of the average 1.33%? 

We analyzed the 150 online stores with the highest conversion rates, some with over ten times the Conversion Rate of the average store, and found five principles that can help explain their success:  

  1. They Care About Customer Experience
  2. They Regularly Analyze Their Data
  3. They Optimize their First Point of Contact With the Customer
  4. They Invest in High-Converting Acquisition Channels
  5. They Control the Customer Journey

Conversion Rate is decisive for business success because there’s a direct correlation between conversion rates and profits. But, because there are so many variables at play, it can be difficult to determine how to fix it if it’s underperforming (if you don’t know your Conversion Rate you can calculate it here).

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At Compass, we have access to data from thousands of ecommerce stores. More than $10 billion dollars in transaction data goes through our system each year, from sources such as Google Analytics, Shopify, BigCommerce, Magento, Paypal, Stripe, Facebook Ads and Amazon Seller. That gives us a unique advantage when it comes to analyzing ecommerce data.

So we set out to analyze our dataset to discover what it means to have high conversion rates and what top stores are doing to keep their performance so high.

1. Top Performers Care About Customer Experience

Our analysis found high conversion rates in ecommerce businesses of different sectors and development stages. Some earning over a million in revenue, while others are just starting, making their first few thousand dollars.

According to our survey, in both these scenarios most of the entrepreneurs interviewed showed a deep care for their customers’ shopping experience:

Too many new entrepreneurs focus on advertising in the early stages while focus should be on customer experience Click To Tweet

“Too many new entrepreneurs focus on advertising in the early stages and channel too much resources there,” says Luq of Flavour City SG, one of the small business in our sample with the highest conversion rates. “While it is important to get traffic in, the earlier stages should focus more on building a solid value proposition/product offering and making sure the customer experience is on point.”

Customer experience, as highlighted by Luq, is the top concern of the owners and managers of the stores we analyzed, regardless of size.

Ciaran Jackson of Ember and Earth, Trina Felber of Primal Life Organic and Michael Siemen of  Dave’s Sweet Tooth also said improving customer experience through design as their main focus for achieving good conversions.

Alison Bell of Broth of Life and Ben Scrivens of Fright Rags highlighted the importance of relating with their customers in a meaningful way to get the shopping experience right.

A deep understanding of their target market helps them create better, personalized experiences that resonate with their customers. This is evidenced by the high Average Number of Pages Per Visit on their sites.

Companies in our study get an average of 4.51 Pages Per Visit. In comparison, the number of pages per visit in the average online store is only 2.7. Amazon[1] has an average of 9.8 pages per visit while Best Buy’s number is 4.87.

A high number of Pages Per Visit is a sign that customers are happy with their shopping experience. Happy customers are more likely to make a purchase, contributing with a higher conversion rate.

Ecommerce Conversion Rate - PPV

2. Top Performers Regularly Analyze their Data

Improving customer experience through a deeper understanding of the target market has a lot more to do with data analysis than it may at first appear.

When we asked about their routine in our survey, most of the high-performing stores said they regularly use data to enrich their understanding of the target market and create a better customer experience.

“Analytics, Analytics, Analytics!!” says Michael Siemen of Dave’s Sweet Tooth. “Get as much information as possible from as many sources as possible. Be sure to use the behavior flow chart in Google analytics. If you see a drop point on your site that is much greater than other areas, take a close look at why. Especially if it’s on a page that deals with the cart or shipping prices. It’s a huge indicator of a website problem, something people don’t like on your site, or possibly a shipping cost issue.”

Ryan Guldberg from I See Me recommends looking at data several times a day.

“Google Analytics is a fundamental tool and we use it hourly. You have to know why people are doing things on your site and how to correct behaviors with testing different options. We also have been using Compass for a few months. It’s interesting to see how we’re stacking up with our peers.”

3. They Optimize their First Point of Contact With the Customer

A critical element in stores that have great conversion rates is a good first contact with the customer. In ecommerce, this means perfecting landing pages.

Well-crafted landing pages are critical for good conversions and profitability, but difficult to get right. The average store loses the majority of their potential buyers (over 60%) during the first encounter.  

While many entrepreneurs worry only about the homepage, ecommerce experts agree that managing several points of entrance is the best way to design a perfect consumer experience. In our sample we found that top-performing websites have, on average, 267 landing pages.  

High-converting #ecommerce sites have an average of 267 landing pages. More data here: Click To Tweet

But how do these landing pages perform? One good way of looking into landing page performance is examining bounce rates. A bounce happens when visitors have a bad first impression with a page and leave without performing any actions on the site.

Bounce rates:

Our top 150 stores have similar bounce rates (43%), compared with Best Buy (41%) and Amazon (37%). In contrast, the average online store has over 60% of their users leaving without performing a single action.

Ecommerce Conversion Rate - Bounce Rate

Many best-practice articles about ecommerce conversion rates recommend that high converting website should contain the following information in their landing pages:

  • Offer free shipping
  • Display a phone number
  • Have a high number of landing pages (more than 100)
  • Have a Category Menu on the homepage
  • Have a Search Bar on the homepage
  • Add an “In-the-press” section on the homepage

Our numbers, broken out in the graph below, indicate that the majority of the stores in our sample have websites with 100 landing pages or more as well as a Phone Number, Category Menu and Search Bar. Free shipping and  “in-the-press” sections weren’t seen very often.

Ecommerce Conversion Rate - features

4. They Invest in High-Converting Acquisition Channels

An earlier Compass research showed that the acquisition channels that produce the highest conversion rates for online stores are:

  • Google Adwords (3.77% average Conversion Rate)
  • Organic Traffic (3.70% average Conversion Rate)
  • Facebook Ads (2.49% average Conversion Rate)

So it was no surprise to find that these are also the most used acquisition channels in our sample.

Organic Traffic:

Our best 150 stores get, on average, 33% of their traffic organically from search engines. This is higher than Amazon (24.78%) and slightly lower than Best Buy (34.55%). What’s more, in 50% of them, organic is their biggest source of traffic.

Ecommerce Conversion Rate - SEO

Google Adwords and Facebook Ads:

On the paid side, Google Adwords and Facebook Ads are the most used paid acquisition channels in our study. Over 54% of top-performing stores use Google Adwords to acquire customers, while 28% use Facebook Ads

Social Traffic disappoints:

Organic, Adwords and FB Ads are important traffic sources to top #ecommerce performers. Social traffic disappoints Click To Tweet

While Organic, Adwords and Facebook Ads are important drivers of traffic to our sample, social traffic disappoints.

The percentage of social traffic (i.e.: traffic from social sites that isn’t from paid ads) to our top 150 stores, such as Facebook, Twitter and Instagram is only 5.8%. This is slightly higher than Amazon (4.45%) and Best Buy (2.34%).

This is despite the fact that 30% have more than 5,000 followers on Instagram, 27% have more than 5,000 followers on Facebook and 10% of them have over 5,000 followers on Twitter:

Ecommerce Conversion Rate - Social

As seen in the graph below, in our sample there’s no correlation between larger social media followings and high conversion rates. Average Conversion Rate in stores with more than 5,000 followers on Twitter (9.7% CVR), Facebook (9.23% CVR) or Instagram (9.75% CVR) in our sample are similar to the average Conversion Rate in the sample overall (9.20% CVR).

Ecommerce Conversion Rate - Followers

*ALL  = Average Conversion Rate of our entire sample of 150 stores

5. Top Performers Control the Customer Journey

The customer journey is the funnel-shaped path consumers take from being a stranger to becoming a client. This journey starts on acquisition and may take several points of contact before it’s complete. Each point of contact is carefully orchestrated by the owners and managers of our best-performing stores.

Ecommerce Conversion Rate - Funnel

We found that the majority of our sample uses three main tactics to improve their customers’ journeys:  

1. Top of the funnel: Retargeting

Over 97% of the stores analyzed use retargeting to help them control their customers’ journeys. Retargeting works because it reminds potential buyers of a product or store they’ve already seen, helping to keep it top of mind while they’re making a purchase decision. It increases conversion rates by bringing them back to the site.

The most popular remarketing softwares for stores in our sample are Google Remarketing, Facebook Retargeting, Pixel and Adroll.

Ecommerce Conversion Rate - Remarketing

2. Mid-funnel: Email Marketing

Email Marketing helps convert visitors into leads by exchanging email addresses for the promise of sending them promotions or content.

Email is an effective tool to control the customer journey because it brings customers one step closer to becoming a buyer, improving Conversion Rate.

The majority of our sample (68%) uses Email Marketing apps to help them collect email addresses and send them email newsletters and other types of email marketing. The clear leader in usage of Email Marketing apps was Mailchimp (see graph below).

3. End of the funnel: Reviews

When a prospective client lands on a product page, she’s almost at the end of the customer journey. Top-performing stores use customer reviews to reassure customers and encourage them to take the final step: making a purchase.

Over 62% of the stores analyzed use applications to help them gather and manage customer reviews. The most used Reviews app in our sample is Shopify Reviews, followed by Yotpo.

High-converting stores prioritize investment in technologies that can help control the customer journey, especially via Retargeting, Email Marketing and Customer Reviews. According to BuiltWith, companies in our sample spend between $250 and $500 in technology services every month.

Conclusions

Our research found that the top-performing 150 ecommerce stores that use Compass have a lot of behaviors in common.

In our interviews, most of the stores’ managers and owners highlighted the importance of habitually analyzing data to improve customer experience. This means controlling the entire journey of the buyer, from strangers to customers.

In researching Compass’ dataset we saw that even though many companies in our sample have large social media followings, the best results still tend to come from sources such as Organic Searches, Social Advertising and Search Engine Marketing.

Our survey demonstrated that our top 150 companies prioritize the the first interaction between a visitor and their stores, which translates into a high number of landing pages and low bounce rates.

Finally, most of our sample uses Retargeting, Email Marketing and Reviews to control the customer journey instead of leaving it to chance, giving visitors a final push towards becoming a customer.    

To get a more comprehensive and personalized report on your store’s Conversion Rate, broken down by acquisition channels, sign up for Compass today. It’s free and it will give you a complete benchmark report built especially for your business in under three minutes.

Free Conversion Rate report »

About this research

Since Average Transaction Value (ATV) has a significant impact on conversions (see graph below), we chose to look into the top 30 stores in each of the five most commonly seen ATV brackets in our system, instead of the best performers overall. These were:

Ecommerce Conversion Rate - ATV

In our sample, 65% use Shopify as an ecommerce platform. Other common platforms were Magento (7%) and Woocommerce (3%). The vast majority of our sample (90%) has monthly revenues between $1,000 and $1,000,000, while 10% of the stores analyzed have monthly earnings of over $1,000,000.

We compared our findings with numbers from average ecommerce stores as well as with Amazon and Best Buy (data from Smart Insights) whenever possible to get a full picture about how their performance compares to the overall market. We also ran a survey with the managers and owners of these stores to understand how they think about Conversion Rate.


[1] All data about Amazon and Best Buy in this article is from Smart Insights (May 4th, 2017).