For leaders of ecommerce businesses, understanding purchase conversion rates is key to long-term success. “Conversion rate” refers to the percentage of website visitors who ultimately move from browsing or scrolling to completing a particular action, such as making a purchase.
Checkout, which is one of the most important stages in a customer’s journey, offers many opportunities for improving conversion rates. However, there are a variety of ways for ecommerce companies to think about conversion rates and how to optimize them at each stage of the conversion funnel.
A thorough plan to improve your payments funnel will address complex issues that could slow the purchase process or prevent customers from completing a purchase, including false card declines, friction at checkout, fraud risk, and more. When done well, your payments funnel can increase customer satisfaction, overall conversion rates, and revenue.
Here is what you need to know about ecommerce conversion rates and how a fine-tuned payments funnel can help improve yours.
What’s in this article?
- What are common ecommerce conversion actions?
- How do I calculate the conversion rate for my ecommerce business?
- What is a good ecommerce conversion rate?
- What is ecommerce conversion rate optimization?
- Strategies to increase your conversion rate
What are common ecommerce conversion actions?
There are many types of actions website visitors may take that businesses can measure as conversions. Beyond ecommerce, website conversion actions could include anything from signing up for an email newsletter to downloading a report to completing a purchase, depending on the business goals. But for ecommerce websites, web orders are the most meaningful conversion action to measure.
Businesses can also collect additional analytics related to website visitor behavior—including bounce rate and exit rate—to provide context to conversion rates and help determine the best conversion optimization strategy.
How do I calculate the conversion rate for my ecommerce business?
Ecommerce conversion rate is the percentage of site visits that resulted in an order (the key conversion action) during a given period of time, relative to the total number of site visits during that same period of time. To calculate the conversion rate for your business, first establish a set period of time to examine. Then, determine the number of conversions that were completed—as well as the total number of unique visitors to your website—during that time.
Divide the number of orders by the number of total visits. Then multiply the total by 100. For example, if your website has 50 orders out of 1,000 unique visitors, you will have a 5% conversion.
What is a good ecommerce conversion rate?
In 2023, the average global ecommerce conversion rate was 3.68%. New ecommerce businesses often aim for a conversion rate of 1%–2% and try to increase it from there. That said, what constitutes a good ecommerce conversion rate can vary according to factors outside of your control, such as industry and seasonality, as well as actions within your control, such as refining your payments funnel and maintaining a well-functioning website.
Other metrics—such as time on site, bounce rate, return on ad spend, cost per acquisition, click-through rate, and interactions per visit—all indicate the health of your conversion funnel.
What is ecommerce conversion rate optimization?
Ecommerce conversion rate optimization (CRO) refers to a wide range of strategies that can increase the percentage of website visitors that convert. This can be conducted at any customer touchpoint on your website, from your homepage to product pages to the checkout experience.
Ecommerce conversion optimization is an ongoing and evolving practice, not a one-time fix. Conversion is affected by many aspects of your business. Embrace a diverse array of optimization approaches—and continually experiment and refine these approaches— to increase your conversion rate.
Strategies to increase your conversion rate
Because so many elements of your business can affect your conversion rate, it can be difficult to know where to start.
Think about the most important steps in your conversion funnel, including the moment of purchase. There are a variety of strategies you can employ to make your customer’s purchase experience as quick and easy as possible, which will increase your conversion rate and, ultimately, grow your business.
Here’s an overview of tools and strategies you can use to help boost your number of purchases and conversion rate:
Create an exceptional payments infrastructure and interface
Details are important when improving your business’s payment experience: you’ll need to refine each infrastructure component, policy, and operational workflow. But be sure to consider the customer experience as a whole, reviewing the interconnected functionality of all of these pieces and processes. For ecommerce companies in particular, the purchase experience should be smooth, which requires efficient and reliable payments infrastructure and an intuitive user interface. Here are a few solutions that make this possible:
- Stripe Checkout gives businesses access to prebuilt hosted payment pages that are optimized for conversion out of the box.
- Stripe Payment Links allows businesses to sell online without a website by generating a link or QR code to a stand-alone payments page that can be sent to anyone with browser access.
- Stripe Elements is Stripe’s suite of rich UI building blocks that help businesses design a secure payments experience that perfectly matches their site and drives conversion.
Reduce friction at checkout
If customers face barriers at checkout, they might leave without completing the purchase. Creating a frictionless checkout experience doesn’t just improve your conversion rate—it leads to a higher customer lifetime value (LTV).
Ultimately, optimizing your checkout process for conversion is about speed and ease of use. The less work customers must do, the more likely they are to complete the transaction. So reduce the number of clicks customers must make and fields they need to manually enter information into.
For ecommerce businesses, it’s important to invest in solutions that support an effortless checkout experience. For instance, Link autofills customers’ payment information, which can drive up conversion rates by over 7% for logged-in users. With Link, customers can check out with one click.
Tackle fraud and prevent false declines
Online fraud can cause significant financial losses and have serious consequences for your business operations. In 2022, Stripe found that more than 70% of business leaders around the world have had to divert resources to combating fraud. Although fraud prevention should always be a top concern for ecommerce businesses, overcompensating in your approach can have major costs, too. Often, businesses that work to mitigate fraud inadvertently block legitimate charges (called “false declines”), which can drive away customers for good.
Businesses should proactively address fraud prevention while preventing false declines. Stripe Radar is a fraud detection and mitigation solution that uses machine learning (ML) trained on data from millions of companies around the world. Stripe continuously updates Radar’s algorithm to address changing fraud patterns and evolving business needs. It also fully integrates with other Stripe products, making it simple and fast to access other payment information, such as shipping addresses or other customer details.
Tools that make it easier for customers to quickly authenticate themselves help prevent false declines. Stripe Adaptive Acceptance uses ML to reduce the likelihood of a false decline and recover the revenue that false declines often block.
Offer a variety of payment methods
Businesses can suppress their conversion rate by failing to provide a sufficient variety of payment options. Stripe data shows that card payments drive only 40% of global ecommerce. If your business accepts payment methods that match your customers’ preferences, you will be able to reach more customers globally, reduce transaction costs, and increase conversion rates.
International businesses will need to consider a wide range of preferred payment methods within different countries and regions. It can be difficult to know which payment methods are relevant for your business and are preferred by local customers. With Stripe, you can accept 50+ of the most popular payment methods across the world, including cards from major card networks.
Buy now, pay later (BNPL) payment options allow your customer to finance their purchase and pay it off in installments, often without interest or additional fees. This gives your customer more flexibility at checkout. BNPL services, such as Affirm, Afterpay, and Klarna, are presented alongside other payment options at checkout.
Customers are more likely to make a large purchase if they can pay it off over time. BNPL allows businesses to reach more customers, since people who might not be able to buy a certain product—or put a large purchase on a credit card—will be able to make a purchase and complete checkout quickly. Your business will also be paid up front and benefit from a boost in average order value and conversion rate.
BNPL services make purchases less daunting for customers without requiring businesses to manage financing, which can help your business with increasing conversion and growing revenue.