Since opening our doors back in 2014, we’ve always prided ourselves on living and breathing two key principles at Lending Works: innovation, and putting the customer first in everything we do.
How to improve conversion rates
In a difficult climate, customer acquisition and lead generation present stern challenges for UK retailers, and a great deal of marketing spend invariably gets directed towards getting feet through the door. Unfortunately, this hasn't been with a great deal of success of late, with the high street seeing its worst decline in November footfall since the financial crisis, and this downward trend continuing in the months since.
This merely underscores just how crucial an ecommerce presence has become for UK retailers, and arguably the metric which most interests the top brass of retail outlets in this regard is conversion rate - or, specifically, how theirs compares with competitors.
How are strong are conversion rates in UK retail?
The first thing to point out is that UK retailers are doing a pretty good job of it from a digital perspective, according to the Monetate Ecommerce Quarterly. Based on retrospective data published in February, conversion rates came in at 4.04 per cent for Q3 2018, which is well above our US counterparts (2.23 per cent) and the global average (2.42 per cent).
The above KPI works on the basis of conversion rate by user, which differs to that of conversion rate by site visit. The latter inevitably produces much lower figures, but, even when measuring conversion rate via this approach, the UK continues to stack up favourably. Data from the Wolfgang Digital Ecommerce 2019 KPI report (for the 12-month period from July 2017 to June 2018) compared UK retailers with their European rivals, and our conversion rate of 1.8 per cent is still the highest – the closest challenger being Ireland on 1.6 per cent.
So why is the UK high street in such peril?
For many UK retailers, the fact that British stores are converting customers at a better rate than their European and global counterparts will actually mean precious little, given that only a relatively small proportion are competing at a cross-border level.
If anything, the above figures simply underline the intense competitiveness within ecommerce in the UK, and the considerable focus already being placed on conversion. Great news for ourselves as consumers, as this translates into better and more dynamic customer journeys. However, for retailers, it's another significant challenge to contend with.
That said, despite UK retailers demonstrating their prowess in terms of conversion, these figures should by no means be considered a ceiling, and there is much more that our ecommerce stores can do to unlock greater levels of conversion.
How can I measure my store's conversion rate?
As a simplistic calculation, conversion rate is the percentage of site visitors who complete a unique action. But, naturally, there is a bit more to it than this.
In terms of setting up conversion tracking, one of the more cost-efficient solutions is using Google Analytics. All you need to do initially within this tool is create a series of conversion goals. Such goals are not confined to completing a purchase either. For example, filling out a capture form, providing feedback, completing an on-site survey, or even just spending an allotted amount of time (or viewing a minimum number of pages) could be considered as key conversion identifiers on your site. Automated tools such as Google Analytics will track this for you, allowing you to analyse the data, and be well placed to make key strategic decisions.
Bear in mind that there are a number of different metrics within this conversion data that you should be tracking too. Here are some of the important KPIs to consider:
- Sources of traffic: Direct visitors, search visitors and referrals will typically have different levels of engagement, which is something you’ll need to factor in from a data analysis point of view. But the main thing is to ensure that your traffic sources remain well diversified at all times.
- New vs returning customers: Conversion rates will usually be a lot higher for returning site visitors. It’s thus important to separate the two, and also ensure that conversion processes are appropriately personalised depending on whether the customer has visited the site before or not.
- Value per site visit: This metric isn’t always easy to calculate, but, in principle, it is the conversion rate multiplied by the average cost of a purchase. However, you’ll want to try and work in other added value too, such as when a customer leaves a product review, or refers a friend to your store.
- Cost of each conversion: This follows from the above, in that even if you have a high value per site visit, your margins can be nullified if the average cost per conversion is too high. Focusing on driving free traffic, and trimming marketing spend where possible can help the cause.
- Bounce rate: If the visitor is not interacting with your site at all, it could be a reflection on the source of the traffic, or the landing page(s). The latter is something you can directly control, so if you’re seeing high bounce rates, review the customer journey and look for areas where you can improve.
How can I increase conversion rates?
There are a number of ways online retailers can look to drive conversion, and there are certain ducks you’ll want to have in a row. For example, things like an efficient returns policy, free shipping and adding customer reviews to your site are now almost an ever-present within ecommerce. Yet beyond covering the basics, we’ve highlighted six innovative ways that you can further ramp up your customer conversion rates.
1) A/B Testing
On-site A/B testing should be in your DNA, with a constant focus on optimisations. One of the areas of primary focus should be the checkout process. Streamlining it as much as possible is one idea for a test. Additionally, you could look at the effect of varying the size or prominence of your call-to-action buttons, or adding progress bars to the purchase/checkout journey. Or earlier in the process, you could test things like new product filters, or different content.
The point is that there is no shortage of areas to test, learn and optimise, and tools such as Optimizely enable you to implement these quickly and easily, while also making it simple to track and analyse results. As long as you have robust processes in place to measure success, you’ll be able to make considerable gains from ongoing testing.
2) Mobile optimisation
Interestingly, rates of mobile conversion consistently come in much lower than their desktop counterparts. At a global level, mobile conversion rates came in at around half of the equivalent rates for desktop and tablet from Q3 2017 to Q3 2018, according to the Monetate Ecommerce Quarterly.
This may suggest that customers are more likely to use their mobile for browsing, and their desktop or tablet to complete a purchase. However, according to Forrester, more than a third of retail sales in 2018 were likely to be derived from mobile devices, reiterating just how important mobile optimisation has become.
Aside from simply falling into line with ‘mobile first’, there are vital best practices to adhere to. To name a few, you’ll want to try and avoid pop-ups where possible, support mobile wallets, place greater emphasis on mobile design, and minimise friction in the mobile journey. It’s also worth noting that mobile cart abandonment rates are estimated to be between 60 and 90 per cent, so outstanding mobile UX clearly holds the key to unlocking this market of untapped, warm customers.
3) Useful content
Customers don’t simply want retailers to flog products at them. Providing valuable content to assist or educate them – even if it’s not directly related to the specific products you are trying to sell – can set you apart from competitors, and give the customer the confidence to complete the purchase. Furthermore, it’s a powerful tool when it comes to building trust in your brand, and transforming customer relationships from transactional to enduring.
Another significant benefit is that it will help to boost your SEO profile too, as the Google Algorithm continues to shift its focus onto guides and relevant content. And, depending on the nature of the content, it is very likely that this SEO boost will drive the sort of traffic that suits the segment(s) you are targeting, thus further enhancing conversion rates as a result.
4) Retail finance
According to Forrester, offering retail finance increases sales by an average of 17 per cent, and order values by 15 per cent. One of the primary drivers of this is the shot in the arm it provides to conversion rates, especially when a slick, frictionless customer journey is in place.
Rather than having to fill out lengthy forms to apply for a traditional loan or credit card, and wait for days on end to receive an outcome, modern retail finance providers deliver an instant decision for customers via a soft credit check allowing them to complete their purchase uninhibited. It’s also a powerful tool in making big-ticket items seem more viable to buy, given that the headline cost can be spread over bite-sized monthly instalments.
As a retailer, you can go about it a few different ways. You could go it alone, and simply add the relevant plugins to your site, or you could partner with a broker or lender. Particularly in the latter case, you’ll be well placed to integrate sophisticated journeys seamlessly into your platform, with a minimum upfront cost, and ongoing support should any issues arise.
5) Cart abandonment solutions
Cart abandonment is a major bugbear for all retailers, but also the lowest-hanging fruit for conversion. The good news is that there is a range of abandoned cart software which you can integrate into your online store (or through CRM tools such as Salesforce), which will send triggered emails to customers within a specified time period after they have exited the website with their shopping cart full.
You can also take this up a notch yourself, and add extra urgency for the customer to act by offering limited-time coupons or discounts if they complete their purchase before a nominal deadline. It’s not uncommon to see uplift in online conversion rates of 15 to 20 per cent as a direct result of responding to cart abandonment in an efficient, automated way which provides direct benefit to the customer.
It’s a word that you may hear ad nauseam, but personalisation continues to underpin website conversion. The days of simply adding the customer’s first name and hoping for results are long gone. Customers now expect dynamic personalisation when it comes to product targeting, offers, rewards, relevant content, payment options, customer support, communications and much more. Again, this is where tools like Optimizely and Google Optimize can play a big role in personalising your website, and, in tandem with other areas such as CRM, personalise the complete customer experience within your online store.
Of course, implementing deeper personalisation is contingent upon data capture, and in the current climate where fear of data breaches and fraud runs high, this can be easier said than done. What becomes all the more critical is building trust with the customer, communicating the personalisation benefits that they’ll enjoy by sharing their details, and using this to automate a world-class experience each time they visit your site. Ultimately, from your side, the rewards will be sustained improvements in conversion, with little or no ongoing resource required.
Our website offers information about saving, investing, tax and other financial matters, but not personal advice. If you're not sure whether peer-to-peer lending is right for you, please seek independent financial advice, and if you decide to invest with Lending Works, please read our Key Lender Information PDF first.
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