Decoding Your eCommerce Conversion Rate - 5 Key Metrics

When you log into your Shopify dashboard, the first thing that often catches your eye is your basic conversion rate.

It's a vital statistic, but it's just the tip of the iceberg when it comes to understanding your eCommerce business's performance.

In this article, we explore five key metrics that will help you understand your customers' experience on your site and identify opportunities to enhance your conversion rate.

1. New vs Returning Customers: A Tale of Two Journeys

The journey to purchase differs significantly between new and returning customers.

Newcomers often require a more substantial nudge - involving ads, emails, and reviews - before they make a buying decision. Their conversion rate is generally lower, given their unfamiliarity with your brand.

In contrast, returning visitors, especially those who have previously purchased, tend to have a higher conversion rate. This is particular the case for customers have a familiarity with your product and brand which leads to a more straightforward decision-making process.

For a deeper understanding, segment your conversion rate analysis by new and existing customers to discern how each group navigates and experiences your site.

2. Marketing Channels: Diverse Paths, Different Outcomes

Each marketing channel creates a unique ecosystem that influences consumer behavior and decision-making.

Social media, for instance, excels in engaging new customers who generally have a lower conversion rate (see metric 1!).

On the other hand, email marketing is a powerful tool for nurturing long-term relationships, enhancing customer lifetime value through repeat purchases from your existing customers.

3. Site Search Conversion Rate: Understanding Customer Intent

Customers typically visit your site with two goals: finding a specific item they want or discovering something new. This metric is a window into how effectively your site meets customer needs and guides them to a purchase.

A good search experience should result in a conversion rate double the site average. A low conversion rate here might signal a need to reassess your search functionality.

4. Landing Page Conversion Rate: A Reflection of Your Funnel's Effectiveness

The conversion rate of your landing page is a critical indicator of your marketing funnel's health. It reveals the alignment (or lack thereof) between your ad promises and the landing page content.

A high rate signifies a smooth transition from ads to landing page, while a low rate might highlight a disconnect. This metric also varies by channel source, providing insights into where to focus your optimisation efforts.

5. Revenue per Session: Beyond Conversion Rate

While conversion rate is important, it doesn't paint the full picture of your business performance.

Consider two hypothetical businesses - one with a conversion rate of 1% at an average order value (AOV) of $300, and another with a 2% rate at $100 AOV. Despite a lower conversion rate, the first business outperforms in revenue.

Assuming 1,000 sessions

Business #1: $3,000 Revenue (1% x 1,000 x $300)

Business #2: $2,000 Revenue (2% x 1,000 x $100)

This example illustrates the significance of considering revenue and AOV alongside conversion rate. To do this we can use Revenue Per Session to provide a quicker and more holistic view of your business's financial health.

Business #1: $3 revenue per session

Business #2: $2 revenue per session

Understanding sessions, AOV and conversion in tandem offers a more nuanced view of your eCommerce business, guiding you to make informed decisions.