Ten Metrics That Can Help Demystify Your Conversion Rate (with Free Google Analytics Custom Report Template)
Stores, agencies, and employees are always looking to improve conversion rates. There’s a whole industry focused on increasing this metric. But conversion rate isn’t the end all be all of ecommerce.
With all the focus on conversion rate, stores are often missing out on key metrics that can indicate an issue with the site and traffic. They’re also missing key levers to pull that could increase revenue and profit (a true measure of a store’s value).
We’ll walk through:
- Why conversion rate isn’t always the best metric to optimize for
- Why there’s been such a strong focus on conversion rate
- KPIs to watch aside from conversion rate
Why Everyone Focuses on Conversion Rate
When you want to know how your store is doing, you often head to your analytics platform to check the conversion rate. How many visitors landed on your store and made a purchase? We all want to know that our conversion rate is constantly going up. It’s good, right?
Why has there always been such a strong focus on conversion rate?
Often, it’s the easiest way to see how your site is performing over time. You can get a general sense if your overall marketing strategy is working. You can see if a sale is doing well based on how the conversion rate is faring compared to the average or other time periods.
If we improve our conversion rate, the thinking goes, we know we’re doing something right.
Why Conversion Rate Isn’t The Only Metric
Although conversion rate is a good bellwether for how the site and marketing are doing in general, it can miss more nuanced aspects of the site.
For example, conversion rate can go way up if you lower the prices of your products. If you have a huge sale, you may see an increase in conversions, but you also might see a decrease in revenue and profits.
A store selling $5 items may have a 10% conversion rate, while a store selling $500 items has a 1% conversion rate. But that doesn’t tell us how much revenue or profit either store is making.
The overall conversion rate also doesn’t take into account the motive of each visitor. It assumes that each visitor has the same chance of converting. Blog visitors tend to convert at much lower rates than someone clicking an ad. But the conversion rate doesn’t tell us that. If you have a lot of blog visitors, your conversion rate is going to appear very low.
It’s better to look at conversion rate around specific areas of the site like certain landing pages or a traffic campaign going to a landing page. This gives you a better idea of what is working and what needs improvement.
Ten Other Metrics to Track
We don’t want to tell you not to track the conversion rate, but we want you to start taking other KPIs into account as you track the health of your store.
In terms of on-page metrics, this can include page load times and bounce rate. A slow loading site is going to drive visitors away (and can result in a low conversion rate). It’s important that you know your pages are loading as fast as possible before you start trying to optimize your copy or design.
Bounce rate is also a good indicator that something is wrong. It doesn’t tell you exactly what is wrong, but a high bounce rate can mean:
- A mismatch between the traffic source and landing page content
- Low buyer intent
- Slow loading page
- Technical bugs on the page
- Item is out of stock
Once a visitor is on your store, then you want to pay attention to their behavior.
- Are they using the search bar?
- What are they searching for?
- Are they adding to cart?
- When they add to cart are they abandoning at a certain point?
In Google Analytics, you can change your settings to track on-site searches. This is a great way to understand what visitors are looking for and if they are finding the right product. If people are searching for “masks” but you don’t sell any, that’s your audience telling you what they want. Or if they search for “Pillowcase” and have a high search exit rate, that could indicate that the search results are not relevant.
At what rate are visitors adding an item to cart? There’s no “good” add to cart rate, so it’s something you should compare over time to see if you improve. But if you notice that a very low percentage are adding to cart, that could mean a few things:
- They lack buyer intent or motivation to buy.
- They are missing certain information.
- They have fears or doubts about buying.
Now we get into the metrics every store owner and manager loves to check: ecommerce metrics. These include:
- Revenue per user
- Lifetime Value
- Subscription rate/churn
When you look at conversion rate, you should also be paying attention to these metrics listed above. If your conversion rate went down, but your AOV went up, that might not be such a bad thing. But if you looked at conversion rate alone, you’d be alarmed.
Depending on what you sell, you might look at lifetime value or subscription rate and churn. If your product is something like a puzzle, you probably won’t get much insight by looking into lifetime value, as visitors will buy one or two puzzles (except perhaps a small percentage of die-hard puzzle enthusiasts).
Looking at these metrics and optimizing for them can cause the conversion rate to fluctuate, but can improve revenue and profit. Try running A/B tests that optimize for increasing revenue per user such as:
- Including add on items in the cart
- Offering a free gift with orders over $100
- Promoting higher priced products on collection pages
In the end, if your store has a 50% conversion rate but no profits, it’s not a good business. But if you can increase revenue and profits, even though conversion rate might dip, you’re improving the overall business.
Although we advise looking at more than just conversion rate over time, these are just metrics and they can’t tell you exactly what is happening on your store. They can act like an alert system to tell you when there might be a potential issue you need to dig into.
If you’ve found that the bounce rate for your new Facebook ad campaign to a certain landing page has consistently been around 50% but one week it’s at 70%, that’s an indication that something might be wrong (loading time, technical bug, item is out of stock, etc.).