Conversion rate relativity theory

Today, the development of e-commerce is still a trend that more and more companies are getting into. Often, these are companies that are new to the concept of "metrics". When people dive into something new, they want to start with something simple. In the field of e-commerce, the concept of "conversion" is very common and frequently used. Usually, this term refers to the conversion of visitors into buyers (e.g. 100 people visited the store, 50 of them made a purchase = 50% conversion rate).

At first, it seems simple and it is considered an objective indicator that is influenced by the quality of the product, but there are nuances:

• Who should be considered in the conversion? Sessions? Unique users? By default, GA calculates conversion from sessions to completed orders, but businesses often mean conversion to fulfilled orders.
• How should conversion be calculated? (from sessions to orders or from sessions to sessions with orders (since there can be more than one order within one session))?
• Who is responsible for conversion and its changes? Marketing (as conversion heavily depends on the incoming traffic)? Product (as the quality of the product affects conversion)? Analysts (as "everything" affects conversion and all factors need to be considered)? IT (as "stable and fast service is a guarantee of high conversion")?
• Should conversion be a component of financial motivation and if so, for whom (product, marketing, IT, etc.)?

Well, there are 100+ more questions.

What is conversion rate optimization?

Conversion rate optimization (CRO) is a complex and multifaceted process that requires a deep understanding of the various factors that can influence conversion. In the ever-evolving world of e-commerce, it is crucial for businesses to continually analyze and optimize their conversion rates in order to stay competitive.

One of the key considerations in CRO is the quality of traffic. It is not enough to simply drive a high volume of visitors to your website; the quality of those visitors is equally important. By targeting the right audience and attracting users who are more likely to convert, businesses can significantly improve their conversion rates. This can be achieved through targeted marketing campaigns, personalized messaging, and effective segmentation strategies.

A real-life example of poorly structured communications in a team (internal competition): marketing discussed with the product how to improve conversion rate from marketing channels. marketing team said that they could buy “as much as you like” traffic and only the product responsible for converting it. to prove it to management they started a campaign on the Google display network with “more clicks” settings. Obviously, google's algorithm started to buy the cheapest traffic that can’t be converted and this “experiment” proved nothing.

Another critical factor in CRO is pricing. The price of a product or service can have a significant impact on conversion rates. It is important to find the right balance between offering competitive prices and maintaining profitability. Conducting market research, analyzing competitors' pricing strategies, and conducting A/B tests can help businesses find the optimal pricing strategy that maximizes conversion rates.

A real-life example on pricing analytics. Pricing specialist looked only on highlevel data of said to business that “we are in parity with our competitors” and show graphic with diagram that show we won in 50% of assortment, but when we looked in price ranges we understood that we won only cheepest assortment in range of 1-250 rubles and lost all higher price assortment.

In a competitive market, you need to integrate dynamic pricing that will take into account: competitors’ pricing, market situation, margin frames, etc.

Website performance is also a crucial element in CRO. A slow-loading website or a poorly optimized checkout process can lead to high bounce rates and abandoned carts. It is essential to ensure that the website is fast, responsive, and user-friendly. Conducting regular performance audits, optimizing page load times, and streamlining the checkout process can greatly enhance the user experience and ultimately improve conversion rates.

The quality of the product page is another influential factor in conversion rates. A well-designed and informative product page can instill trust and confidence in potential buyers. It should include detailed product descriptions, high-quality images, clear delivery methods, and relevant characteristics. By continuously updating and optimizing product pages, businesses can effectively engage users and increase the likelihood of conversion.

Whatever you do on the back or front side - if you can, do it through A/B tests.

In addition to these internal factors, businesses must also consider the competitive environment. Monitoring competitors' actions, identifying opportunities, and differentiating your brand can help attract customers who may have been considering alternatives. Additionally, seasonal trends and external factors such as weather can also impact conversion rates. For example, if a business sells umbrellas, conversion rates are likely to increase before and during rainy periods.

Ultimately, CRO is a collaborative effort that involves various stakeholders within a company. Marketing teams play a vital role in driving traffic and optimizing campaigns, while product teams are responsible for ensuring the quality and relevance of the offerings. Analysts play a crucial role in analyzing data and identifying patterns, while IT teams ensure a stable and fast website performance. By recognizing the shared responsibility of conversion rates and encouraging collaboration among different departments, businesses can achieve significant improvements in their conversion rates.

In conclusion, conversion rates are not fixed and can be influenced by numerous factors. By continuously monitoring, analyzing, and optimizing these factors, businesses can achieve higher conversion rates, increase revenue, and ultimately drive growth in the competitive landscape of e-commerce.

Simple steps to make your work with CR more collaborative

Based on my experience, there are a few factors which influence it most:

1. Clearly define the definition of the “conversion rate” (CR) metric and make sure that all your team understand it.
2. Make sure that the motivation of teams in your company is balanced. Example: If main metric in product is CR, and main metric in marketing is average order value - they can have conflict in prioritization on new features.
3. Make sure that people, who have motivation on CR, understand how they can influence on it. If main metric of some of your product managers is CR from all web sessions to complete orders, he realized some features with pozitiv impact in CR, but because of big share of traffic from search engines on your blog (with some popular article) your average conversion is going down - he will be disappointed. Depends on your unique situation - decisions can be different (for example, you can look only on conversion rate from branded traffic or product motivation can be depended on impact of his features (that you will see on a/b tests results).For example motivation for product can be not just "growth of CR from 5% to 6%", but it can be "realize in next quarter initiatives which will give impact for 1p.p. on CR" and this impact will show results of a/b test of this initiatives, so even if you will recieve some big traffic with bad conversion rate - it will not give negative impact on motivation of your product.
4. Teams, who have motivation on CR must have clear understanding of CR growth model. In other words, they should not think that the numbers only reflect your ambitions and are not based on objective factors

In conclusion, I would like to note once again that there are no functions in the team that do not affect conversion in any way, just as there is no function that alone affects it.

Сonversion is relative to the actions of the entire team.