Question 01. Can you give an estimation how much 25% higher conversion rate give in money?
Hard to estimate unless we get detail sales analytics report. But for product site you need to understand the product cost variation and higher conversion rate not always means higher revenue.
Assume, some products sell at $500 whereas other products sell at just $10. Let assume, on day one you sold 100, $10 products. So total revenue on day one 100x$10 = $1,000.
Next day, you got just 2 sales of $500 each. So, you generate revenue of 2x$500 = $1,000. Revenue wise, for both days you generate $1,000 each. But sales wise on day one you generated 100 sales and on day two you generated just 2 sales.
This means conversion rate of day one is much higher than day two. Hence, a higher conversion rate for day 1 than day 2. That is the reason it is hard to provide you exact revenue increase for a large eCommerce website.
If you have an average revenue per sale then you can roughly estimate. Here is an example:
For an eCommerce website for last 5 years, average sales value per item is $9. The current conversion rate is 1%. For 1,000 traffic it generates 1000 x 1% x $9 = $90 sales.
With a relative 25% increase by conversion, the current higher conversion rate will be 1.25%. So, from the same 1,000 traffic the site generates 1000 x 1.25% x $9 = $112.5
So, revenue-wise you generate $112.5 – $90 = $22.50 extra.
You can dynamically track sales value using testing tools like Optimizely, Hotjar, and VWO. So, if you put in place advanced tracking code then you can pursue variable sales amount.
Question 02. As a client and the person that will pay for this, he will want to know how much it will mean in actual revenue. I think you understand that. So we have to find a way to give a rough estimation for higher conversion rate. Without this, it will be hard to convince my client to test. What do you suggest?
We can’t commit anyone what exact revenue it will increase. We don’t have the control over traffic quality or the source of traffic. Even we don’t know what cost of product users will buy.
Our main goal is to stop sales leakage and improve website’s revenue. Due to the inconsistency of product value, the revenue also affected.
For example, one day you can sell several $10 merchandise. Other days can you can sell many $500 products. So, if the site sales wide range of products then we can’t have a specific revenue forecast. For the small range of products, you can give revenue estimation.
To get a rough estimation here is an approach.
Step 1. Check latest one-year sales report. Calculate average revenue per sale. Let assume average sales value is $20.
Step 2. Then examine how much traffic you get on the checkout page per month. Let expect 1,000 users per month.
Step 3. Examine current conversion rate on the checkout landing page. Let’s imagine the higher conversion rate is 50%. This means 1,000 x 50% = 500 sales occurred.
Step 4. Let acknowledge a relative conversion rate increased by 25% on the checkout page. Thus, the effective higher conversion rate on the checkout page is 62.5%. This means 1,000 x 62.5% = 625 sales occurred.
Step 5. Hence, sales increased 625 – 500 = 125
Step 6. Thus revenue increased, due to 25% relative sale increment on the checkout page is = 125 x $20 = $2,500 per month.
How do I check conversion on the checkout page?
Let assume you’ve installed and defined goals accurately on Google Analytics. Just follow below steps:
Step 01. Login to Analytics.
Step 02. Click on the Conversions tab
Step 03. Beneath Shopping analysis check the checkout behaviour
Alternatively, you can monitor the Multi-Channel Funnels or under “behaviour” you can see “site content”. Inside the “site content” section you can find “content drill down”, click that. On the right-hand section, you can see the checkout page.
Immediately, you can see improved conversion rate. If you’re helpless to find conversion rate then there must be a concern. You should examine the defined analytics goals. Don’t overlook to review the Google analytics code installation.
What is your current website’s conversion rate? How do you calculate the real money increment? Share your thoughts below.