What is the conversion rate? Why is it important? How to improve it?
Today we would like to talk to you about the business conversion rate. It is probably the most important metric of any eCommerce since it allows us to identify the number of visitors who become customers. One of the great advantages of online stores is that they can attract a large volume of visits, but converting those visits into buyers is not so easy.
In this post, we tell you what the conversion rate is, how to increase it with digital payments, and how to review the main KPIs of sales volume in your business.
What is the business conversion rate?
The conversion rate is the percentage of users who perform a specific action (a purchase, a registration, a download, etc.) on a website. In eCommerce, what we usually want is for visitors to make a product purchase. To obtain the conversion rate, it is necessary to divide the number of targets achieved by the number of single users visiting the website.
For example: if your online store has received 1000 monthly visits and only 100 have been converted into sales, the conversion rate of your eCommerce would be 100/1000 = 10%.
Digital payments influence conversion rate
Have you ever wondered what factors influence the conversion rate of your business? Digital payments are one of the main key factors in boosting this indicator. Here are the reasons:
- In-context payment. They allow you to buy and pay without being connected to an online store while doing other things: "Buying the dress of the influencer we follow on Instagram or buying a coffee just by voice while driving and pick it up ten minutes later." (BBVA)
- Speed, simplicity, and security. Being faster, more convenient, and more secure, users are increasingly demanding digital payments at the time of purchase. When consumers turned to the Internet during the pandemic, many businesses were not prepared for omnicanality or eCommerce. Therefore, they had to update their models and adapt to other virtual trends, such as simplified payments. (JP Morgan)
- One-step transaction. Digital payments avoid overly long processes and allow the purchase to be made within the same page. The customer feels more satisfied by not having to browse through thousand different windows before making the payment.
- Integrated payments. They have opened up an opportunity for independent software vendors (ISVs) to add a new revenue stream. They also provide the merchant with the ability to accept payments quickly and securely with their business management software.
ECommerce has become a lifeline for many businesses. An online store that does not have sufficient digital payment methods is very likely to increase its shopping cart abandonment rate. This negatively influences its conversion rate.
However, opening an eCommerce is not the only way to acquire new payment methods. In physical retail, during the COVID-19 pandemic, contactless payment and checkout-free purchases have increased, thanks to QR code registration from smartphones.
Are you looking for a sale or an opportunity to build customer loyalty? Digital payments make the difference your business needs.
What do KPIs mean in eCommerce?
Business intelligence and management control in your payment methods (dashboard) are your best allies to analyse your KPIs (Key Performance Indicator).
Key performance indicators are values that show whether a business is meeting its planned objectives. In eCommerce, this tool makes it possible to accurately determine how well the company is performing.
Below, we have compiled 3 key KPIs in eCommerce:
- Sales revenue. It seems like a logical indicator, but many businesses are not aware of the information their data provides. To make sense of it, sales revenue needs to be viewed in the context of business expenses (facilities, equipment, staff, production).
- Abandoned cart rate. This indicates the percentage of users who abandon their cart after adding one or more products. When the figure is high, it could indicate poor optimisation in the purchase process.
- Number of related products. It allows us to know in detail the products that can be purchased in a complementary way in your eCommerce, something that is very useful for cross-selling strategies.
The conversion rate we talked about in this post is also a KPI.
PayXpert helps to review sales volume KPIs
What you don’t measure, you can’t improve. PayXpert's Data Management service offers a global overview of merchant payment transactions. Knowing transaction activity or sales volume is key to making better decisions and reaching the full potential of your business.
At PayXpert, we help review sales volume KPIs by currencies, geography, websites, payment types, and business models. The advanced statistics module allows you to explore data and understand your customers and acquirers. In addition, the following features are available:
- Multiple complementary views.
- More than 20 filters and 2 grouping options.
- Conversion of data into consistent and interpretable tables.
- Access to filtered lists of transactions.
The program runs insightful performance reports by analysing your past data and comparing it with current data (real-time, statistical, analytical, sales, and customisable reports). In short, it saves time and has revenue reports at your fingertips when you need them.
Data you can use
- Risk management, to analyse and control in real-time your anti-fraud actions.
- Transaction activity, to review your sales by transaction status.
- Sales volume, to get an overview of the sales of your business by type of payments.
Data review timelines
To learn more about your customers' behaviour, you will be able to review your data in real-time whenever you need to.
Conclusions on digital payments
The reasons why digital payments increase the conversion rate lie in their ease, speed, and security. It is everything the user needs when paying for a purchase. Not only do they avoid time-consuming processes to complete the transaction in a single step, but they can also be easily integrated with business management software.
In addition to justifying the increased conversion rate, these reasons also mark the main payment trends today. During the COVID-19 pandemic, many trends have been simplified (contactless, leap to eCommerce, omnichannel shopping). This has also signaled the beginning of a shift in the way consumers engage in physical and online commerce.
Traditionally, obtaining a product in a physical store required three steps: searching for the desired product, informing the shop assistant, and paying for it. The next transformation will reduce these steps to just one: product selection. Payment will be made without going through the checkout.
When friction is removed from the retail shopping experience, the benefits multiply (satisfactory user experience, reduced losses, speed of payments, operational cost savings).
After using instant payment services, people wonder why all payments cannot be this fast and easy. Real-time payment and access to funds on the day of sale could revolutionise the way businesses manage their finances.
Ultimately, digital payments bring convenience, speed, and security, which has a real impact on increasing sales and conversion rates.
If you have any questions, give us a call. At PayXpert we can help you.