eCommerce Conversion Rate Optimization Strategies, Tactics, & Case Studies
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Definitive Guide: eCommerce Conversion Rate Optimization
Conversion is important.
Today we begin a new series on how eCommerce stores can optimize conversions on their site.
We're going to dissect key pages from the most successful sites of 2020, including home, category, product, and checkout pages.
This guide will equip you with the exact tactics and strategies top eCommerce stores are using today, and how you can replicate their success.
Advanced Tactics for eCommerce Conversion Rate Optimization
1. Segment visitors based on past behavior
Each customer is different.
You cannot expect excellent results treating first time visitors the same as repeat customers. Nor should you treat customers interested in men's clothing the same as those interested in female's clothing.
Behavioral segmentation is the process of segmenting customers based on their past actions.
We wrote a full guide on eCommerce behavioral segmentation here.
Time on site > 10:00
Users who actively previously purchased and shopped around the site in the last month
# purchased items > 0
Users who have previously purchased
The simplest behavioral segments rely on only the behavior itself to categorize customers. Segmenting customers by behavior is the first step in creating personalized, relevant offers that increase conversion rates. As customer's behavior changes, so should your offers. This is the basis of customer lifecycle management.
2. Identify thresholds to further segment your audience
If you rely on behaviors alone to segment your audience, you will limit your ability to understand your prospect.
I like to overlay "thresholds" to further refine customer segments. Simply put, a threshold is a tipping point in a specific metric. One common example is the current cart value of a visitor.
Below, Hydro Flask targets segments who have under $60 in their cart with a personalized message bar.
You should use thresholds to be more precise in your customer segmentation. You can combine this information with personalization software to create tailored messages like Hydro Flask.
3. Offer free shipping to increase conversion rates
Unexpected shipping costs are the most common reason for abandoned carts.
Unfortunately, shipping costs continue to increase, making this type of offering more difficult. However, it is imperative that you are transparent with shipping costs. CPCStrategy found that free shipping is deemed "critical" to 73% of customers to make a purchase and will encourage 93% of shoppers to buy more online.
So how can you offer free shipping to increase conversion rates without destroying your profits?
The simplest solution is to combine the above segmentation strategies to selectively offer free shipping when it is profitable to you. Hydro Flask is but one example. Below, Drunk Elephant uses the same strategy, but goes further highlighting the benefit of expediated shipping.
Here, Drunk Elephant uses a behavioral segment targeting customers who haven't met a threshold of $75 cart value to first, communicate that shipping is currently not free, but second, that it could be free if they add more to their cart.
4. Implement Email My Cart Triggered Emails
Triggered emails are a well established ecommerce conversion optimization tactic.
Unlike other marketing tactics which are initiated by you, the brand, triggered messages are only sent when a customer satisfies a pre-defined condition. However, we've found many stores failing to implement the full range of triggered email capabilities.
In our studies, email my cart triggered campaigns had the highest conversion rates. In fact, almost 25% of customers enrolled in these campaigns made a conversion by campaign end, higher than even shipping cart abandonment campaigns!
Below you can see how one ecommerce store utilizes email my cart triggered messages. When a customer is about to terminate the session without make a purchase, but has already put an item into their cart, they interrupt the abandonment with a simple popup offering to save their session.
After, they are able to follow up with the customer to increase the chances that they aren't forgotten.
5. Implement Out of Stock Triggered Emails
Along with Email My Cart campaigns, custom "Out of Stock" campaigns are also neglected.
The pattern is similar to email my cart. When a customer attempts to purchase an item that is out of stock, a dynamic popup is displayed offering them to join a waitlist.
We've found across our customer base that out of stock campaigns perform extremely well, converting as high as 13%.
6. Integrate personalized recommendations in your welcome campaigns
An effective welcome series can increase your ecommerce conversion rates.
One of my favorite tactics is to personalize the offers you embed in your welcome series. Before opting in, customers engage with your site. Connecting their behavior in an anonymous session to an email opt-in provides an opportunity to make a more personal engagement.
This email from Mercari is a fantastic example. The subject line sets up a beautiful expectation that the contents will be relevant - "10 items from your recent search".
Upon opening the email, I see dynamically generated recommendations based on my last session.
Why Every eCommerce Store (including you) Should Care about CRO
You know conversion is important.
Unfortunately, there is a wide gulf between knowing you should do something - and actually doing it. To get to action, you need to be both intellectually and emotionally convinced that it is worth the time and investment.
The good news is that conversion optimization will always matter and always pay off in the long run.
Here are just a few reasons why.
1. Directly multiply profits
First, and most clearly, multiplying your conversion rate will directly impact your revenue and profits.
What is less obvious is how conversion rates have a disproportionate effect on your profits.
This is due to the way your costs are structured. Your business incurs fixed costs everyday, regardless of what your sales are. But, every incremental sale only incurs the variable cost of the product being sold.
Let's assume your store pays $100,000 in payroll and facilities a year, and currently creates $120,000 in revenue.
Your store currently converts at 1%, with an average purchase price of $100, and an average profit of $50.
Doubling your conversion rate to 2% would
Increase your revenues from $120,000 to $240,000 (2x).
Increase your profits from $20,000 to $80,000 (4x)
In other words, doubling your conversion rate (revenues) does not double your costs. Because of this, when you double your conversion rate, you'll double your revenue and more than double your profits.
2. Lower Your Cost per Customer Acquisition
Second, when you increase your conversion rate, you are also lowering your cost per acquisition.
While this is another obvious point, the implications are tremendous. Spending less on your variable cost of business means you generate more profit per sale.
This is great by itself, but the real power comes in what you can do with that extra net margin - specifically unlocking additional channels of lead generation.
3. Add Channels for Lead Generation
Advertising is getting more expensive. It's actually kinda scary.
MarketingDrive reported in February of 2018 that Facebook ads cost a whopping 43% more on average.
The cost to reach audiences in Facebook is expected to continue to rise, with the company tightening inventory and increased competition.
The trend is real across marketing channels.
As the image above shows, over the course of a single year, most categories in Amazon's sponsored product listings increased by healthy double digits - with Electronics increasing 89% year over year.
However, companies with higher conversion rates are at a distinct advantage when bidding against other companies.
The added margin you have allows you to profitably outbid your competitors, converting still more customers, and on in a virtuous cycle.
4. Increase Affiliate Benefits & Pay
Similarly, your ability to partner with affiliates grow in lock-step to your ability to convert traffic.
Affiliate partnerships through Instagram influencers, Youtube, Snapchat, and even Twitch continue to drive attention and massive sales.
In 2016, a study was released showing that the average ROI from these campaigns were 11x that of display advertising.
However, currently the major way influencers and affiliates are compensated is based on their reach. It is up to you, as a store, to convert that traffic.
Increasing your conversion rate not only makes influencer marketing possible, it allows you to invest in your relationships and reward affiliates with higher than average benefits.
How to Identify CRO Opportunities
eCommerce conversion optimization can be tricky.
Most sites we see have hundreds or even thousands of pages. Each page can have dozens and dozens of elements on it. How do you choose what to test first?
To answer, it is important to understand the primary costs of A/B conversion rate optimization.
3 Primary Costs of CRO
Big Changes (almost) Always Win
Given the costs associated with conversion optimization, it is almost always better to go for big wins.
This is especially true if
1. You would be happy with overall conversion rate gains
2. Your site doesn't generate a massive amount of traffic to reach statistical significance quickly
3. You've already collected a number of research based, battle tested eCommerce CRO improvements.
If you’re reading this article, you have access to tons of research based ideas. The bottleneck for most teams will be manpower and implementation.
There is not enough time or resources to single out every improvement and test them individually. This graph from Conversion Rate Experts sums it up nicely:
“Your new version has an 80% higher conversion rate than the existing version. As you can see in the graph, the time taken to detect that improvement would be just two days….
If you were looking to detect a 10% improvement, then the split-test would take several months to conclude.
The moral of the story is that small improvements take ages to detect, disproportionately and counterintuitively so.”
In other words, shooting for larger changes greatly reduces the time cost in implementing conversion rate testing, and greatly optimizes the human and financial capital required.
"Shooting for larger changes greatly reduces the time cost in implementing conversion rate testing, and greatly optimizes the human and financial capital required."
How to Find the Biggest Opportunities for CRO
There are two tactics you should employ to identify the biggest opportunities for conversion rate optimization.
Every site has checkpoints that all prospects have to go through to become a customer.
There are checkout pages, product page layouts, and upsell thank-you pages. Focus on the pages that the majority of prospects go through.
Which of your pages get the most traffic?
If one category accounts for 80% of sales, invest in that category before the others. There isn’t any point investing resources to pages that are currently not being seen.
By creating big changes to the most prominent pages on your site, you will literally accelerate your results by magnitudes.
Have you identified the most important behavioral segments for your store? And have you implemented content personalization on the most important areas of your site?
Using Product Recommendations to Improve Conversion Rates
Product recommendation engines are incredibly effective at improving conversion rates. There are three broad types of engines: collaborative filtering, content based filtering, or a hybrid model between the two.
eTailers can set personalized merchandizing rules to maximize sale volume.
In fact, product recommendation stats show that these techniques can increase conversions by 550%.
Casper Case Study
Our first eCommerce conversion optimization case study is Casper.
As of January 2018, the company has raised over $170M. Since opening in 2014, the company has passed the $600M cumulative in revenue benchmark.
For this case study, I went back and time and grabbed Casper’s homepage in 2015. I then compared it to its current homepage to see what optimizations the Casper team has made over the years.
5 Key Improvements Casper Made Above the Fold
First, we’re going to look at how Casper has optimized it’s homepage above the fold.
For this article, I chose 700px as the height to be considered. You can see the two homepages below.
Casper made 5 major updates to its homepage.
1. Specific, Benefit Driven Headline
Between 2016 and 2018, Casper updated the messaging they used.
The updated copy carries two significant improvements.
First, it is benefit driven. While the 2016 headline hints at better sleep, it’s phrasing is generic. “Perfect”, “everyone”, as well as the tagline “well slept” are not as powerful or direct as simply stating comfort.
Second, the 2018 version utilizing social proof and authority (a common theme in the update) in a simple, concise way through the words "award-winning".
2. Added Trust Elements
The second biggest difference between the two homepages is the use of trust elements.
In 2016, Casper did not include any trust elements above the fold. By 2018, Casper had implemented a unique testimonial/press/review bar bleeding into the next section.
While logo bars are common, I haven't seen many sites use a combination of social proof elements in the bar. Casper makes use of good press, product reviews, and company rewards in one section.
3. Implemented "End State" Hero Image
Images are a powerful way to create context and emotion on your page.
While both hero images were high quality and exhibited Casper’s target audience, there are a few key improvements the 2018 version has.
The second image captures the primary benefit of a Casper mattress better, namely a great night’s sleep. It also does a fantastic job echoing the copy of “award-winning comfort”, with a multitude of plush pillows and serene scene.
4. Improved Call To Action Copy
Both the 2016 and 2018 versions of the homepage displayed a singular call to action button in Casper's brand color purple.
However, the copy itself changed from "See the Products" in 2016 to "Shop the Mattress".
While the changes are subtle, I believe the CTA in 2018 is more compelling. It is specific to Casper's flagship product, and shop is a stronger, almost presumptive close verb than see.
5. Expanded Navigation
As with the CTA copy, Casper updated their navigation to be more specific.
In 2016, Casper hid their products under a single category called "Shop". Before customers could even see a product, they had to hover over this tab to find a dropdown menu.
This extra step is counter-productive, and is annoying to shoppers.
In 2018, Capser made significant improvements. They removed this top level hierarchy and replaced it with the major product categories that they offer. This benefits Casper by
Using Technology to Improve Conversion Rates
Before, eCommerce stores were forced to use static sites.
Every customer experienced the same, pre-defined experience. However, with personalization technology, eCommerce stores have the ability to create powerful, dynamic, behavior based customer segments.
How to Create Behavioral Segments
Personalization technology can unify your data across channels to create precise behavioral segments. We've defined 3 effective formulas to create your own behavioral segments here. Below is a quick example .
Time on site > 10:00
Purchase Rate > 0
Session is within the month
Users who actively previously purchased and shopped around the site in the last month
Bought items > 0
AOV > $50
On black Friday
Users who bought on Black Friday with > $50 AOV
How to Multiply Sales with RFM Segments
RFM analysis is an excellent framework for implementing behavioral segments. RFM stands for "Recency, Frequency, and Monetization". Barilliance gives you the power to define specific RFM segments, but you can also do an RFM analysis via excel. You can learn more here.
Ultimately, conversion optimization is about presenting the right offer to the right customer in a compelling, relevant way.
To speak to your prospects at an individual, 1:1 level, you need to leverage personalization software and techniques.
Finally, to see how Barilliance helps hundreds of eCommerce stores increase conversion rates, you should request a demo here.