Leverage #1 for more sales: optimise conversion rate, increase repeat purchases

Today's €500,000 question on Who Wants to Be a Millionaire? is: What adjustments should an established online shop make to generate more sales with the best possible ROI?

• a) Aggressive advertising
• b) Lure customers with ruinous discounts
• c) Optimise the conversion rate
• d) Create a channel on TikTok

The correct answer, of course, is c) optimise the conversion rate. According to marketing agency customedialabs, the average bounce rate of an online shop is 75 per cent. Three-quarters of all site visitors turn away without becoming buyers. It is obvious how much sales potential is hidden here. All these people, who have already shown interest in your offer through expensive marketing or hard-earned social proof, just need a little nudge to finally convince them to make a transaction. In this article, we explain which measures are most promising for optimising the conversion rate.

Key Performance Indicator: How to calculate conversion and bounce rates

For the sake of completeness, let's start with a quick update on our conversion and bounce rate KPIs:

The bounce rate is the percentage of visitors who leave your site without making a purchase. It is calculated as follows

Number of non-transactional visitors / number of visitors x 100 = bounce rate %.

This is in contrast to the conversion rate. It describes the percentage of all shop visitors who complete a purchase. The formula is

Number of visitors with a transaction / number of visitors x 100 = conversion rate %.

Since there are only two options - visitors buy something or they buy nothing - the same applies:

Bounce rate % + conversion rate % = 100%

Data analysis: how to get the numbers to calculate conversion rates

So far, so simple. But how do you get these figures? The best way is to first connect your Shopify store to Google Analytics. This is not difficult. Shopify gives you detailed step-by-step instructions. Once the connection between Shopify and Analytics is set up, you are almost there. Now follow these steps:

1. Sign in to your Google Analytics account and navigate to your store profile.
2. Click on "Discover" in the left sidebar.
3. Select "Site content" and then "All pages".

You will now see a list of different metrics that document the behaviour of your site visitors. One of these is the bounce rate. All you need to do is subtract this number from 100 to get the conversion rate. If you also want to know when and where your visitors bounce, follow these steps:

1. Click Exploratory Path Analysis in the left sidebar.
2. Select 'Behavioural flow'.

You get a view that shows you the path visitors take through your site, and when they pull the rip cord and bounce. However, we can predict with a high degree of certainty where most cart abandonment occurs: at the checkout.

The checkout: the killer of the conversion rate in the online shop

Once a shop has outgrown its infancy and established itself in the market, the weak points are no longer on the home page or product pages - otherwise the shop would never have made it this far. In most cases, the bottleneck is at the checkout. This is where aspects of online retailing give potential customers a headache: Money and payment methods, personal information, delivery, which they are helplessly exposed to, and the sword of Damocles of making the wrong purchase and having to return it. As a result, the bounce rate at the checkout is high - and so is the potential to optimise the conversion rate. Let's take a closer look at these four factors and how they can be optimised:

#1 Payment methods: consider country specifics and build trust

The most common reason for abandonment at checkout is the lack of a visitor's preferred payment method. No one likes to accept an alternative, no matter how secure it may be.

Basically the following applies: The most popular payment methods in a country are mandatory! In Germany, these are PayPal (24%), purchase on account (23%) and direct debit (22%). But the winds of change are already blowing in our European neighbours: in the UK, France, Italy and Spain, the number one payment method on the web is debit or credit card. If this is not offered at the checkout, the bounce rate is correspondingly high. This is where it is important to build trust. A 2021 study by the Baymard Institute in Copenhagen shows that 17% of respondents have left a shop in the last three months because they "did not trust the site with their credit card details". Therefore, emphasise the security of your site in as many ways as possible at the checkout. For example, place the SSL certificate right next to the credit card number input field and link to your privacy policy.

Cosmetic measures can also help: If the credit card number field is highlighted in a different colour, it actually looks more secure, according to the Baymard Institute. Pre-formatting in blocks of numbers, like on a credit card, also helps. When the number entered is easier to read, customers are less likely to enter incorrect information.

#2 Input forms: Less is more

Abandonment reason number two is confusing forms that ask for too much information. No one wants to lose control of their personal information or spend 15 minutes filling out address fields. You can optimise your conversion rate with these measures:

1. Only ask for relevant information: Salutation, title, first name and surname separated ... What for? The main thing is that you get all the information that belongs on the address label. Don't bother your customers with unnecessary questions. Do not include information such as a telephone number. This is about closing the sale, not about dodgy marketing.
2. Tick the billing address box: The delivery address is almost always the same as the billing address. So make sure you check this box by default. Every click you save your visitors contributes to an improved conversion rate.
3. Use ghost text:  Ghost text is the text, usually in light grey, that underlies a form field and indicates what should be entered in it. The famous 'Max Mustermann' could be entered under 'Name'. This is a simple way of telling visitors what they need to enter - in this case, first name and surname.
4. Activate Shop Pay: Google AutoFill is great, but as we all know, two is better than one. We recommend that you enable Shopify's Shop Pay service for your store. This will recognise returning customers and automatically fill in their email address, credit card details and delivery and billing information.

#3 Shipping options: Finding the golden mean

The shipping options you offer are also critical to your conversion rate. But it's a slippery slope: too little choice and customers will jump ship because they don't have the option they want. Too many choices and they feel overwhelmed and confused. This is where the balance has to be struck.

Always tailor your delivery options to your target audience and your offer. An older audience - socialised by the Quelle catalogue in terms of shipping - is more willing to wait a few days for their parcel than millennials. The insured parcel is probably less in demand for breakfast cereals than for expensive electrical goods. Experiment a little with your shipping options and don't be afraid to remove the least popular options. Alternatively, a thorough competitor analysis or direct customer survey is always a good idea. For the perfect conversion rate, however, it is important to address two other shipping issues:

International shipping

If your business operates internationally, the complexity of shipping increases. Depending on the destination country, the number of shippers and therefore the number of offers can be reduced or multiplied. Finding the best offer and keeping track of them can be difficult and time-consuming.

We recommend leaving this to the machine. For Shopify Plus customers, there are certified partner applications that can search for the right shipping provider worldwide and adjust shipping costs in the shop in real time. Some of the best known names in international shipping solutions are ShipperHQ, Shippo and Easyship.

Free shipping

Merchants are also often asked whether they should offer free shipping. There is no clear answer to this question. However, the following principles apply to domestic shipping: If you are shipping within Germany, the value of the goods plays an important role. Buyers are more likely to pay shipping for expensive products than for cheaper ones. The size of the item is also important. Items that fit in the letterbox are not perceived by customers as parcels. In this case, they are rarely willing to pay extra for delivery. Finally, and most importantly, is the behaviour of the market leaders. As long as Zalando delivers fashion for free, no other boutique can afford to charge for postage. Unless they want to put themselves at a serious competitive disadvantage.

If the delivery comes from abroad, buyers are usually prepared to pay shipping costs. They understand that their parcel has travelled a long way and that there are costs involved. They also accept shipping costs for inexpensive items. This is because exclusivity usually plays a role here. People who order inexpensive goods from overseas are usually unable to get them locally and are therefore not averse to paying shipping costs.

#4 Returns: Clear communication and exchange instead of refunds

After all, the fear of returning a product is one of the main reasons people abandon a purchase at checkout. To improve your conversion rate here too, follow these tips:

1. Show goodwill: An exchange may cost you money, but you won't earn anything if the purchase is cancelled. Make your exchange terms generous and offer more than the law requires.
2. Speak clearly: Always make the terms of return as clear as possible. Legalese is out of place here. Include an additional link to your return policy at the checkout. This creates transparency.
3. Keep the process simple: If a return is made, don't put any obstacles in the customer's way. That means no phone calls, no emails, no chatbots. Instead, a returns portal where users can easily initiate the process themselves and have their returns slip sent to their mobile phone.
4. Provide incentives for sharing: Anyone who orders from you is showing interest in your products. They want to buy something and have usually just ordered the wrong size or colour. So make sure that an exchange is more attractive than a return. For example, by offering a longer exchange period or a voucher.

Optimise your conversion rate: Turn first-time visitors into repeat buyers

By implementing these measures, you can quickly see a significant improvement in your conversion rate. This alone is a huge win, as it costs up to five times more to attract new visitors to your shop than it does to convert existing ones.

But good things come to those who buy from you, and those who buy from you usually do so again - up to 92 per cent of all shoppers will return if they are satisfied with a store's range and service. And repeat customers are the best customers because:

1. A repeat shopper spends up to 41 percent more than a first-time shopper.
2. Regular customers are more likely to try new products.
3. They are also receptive to up-selling and cross-selling offers.
4. Repeat buyers are happy to give you good reviews and improve your social proof.
5. They incur fewer costs because they order more selectively, return less frequently and have to contact support less often.
6. Regular customers are less price-sensitive; once they have found their brand, they will not switch brands just to save a few euros.

In total, regular customers account for 66 percent of the average online shop's sales, even though they make up only a third of the customer base. Sure, it's not going to bring you €500,000 in one fell swoop. But in the long run, you can look forward to significantly more sales. If that's not reason enough to start optimising your conversion rate right now and get more repeat customers, we don't know what is.