Ecommerce is growing incredibly fast — up more than 15% year over year in 2018, and on track for even more growth this year.
But because of that growth, the competition is incredibly fierce. There are hundreds of thousands of ecommerce businesses vying for the consumer’s short attention span, and we’re not even talking titans like Amazon.
Today’s customers expect a perfect experience — from your social media ads to your product pages to your checkout process to your email marketing to your packaging. Unfortunately, at each step along the customer journey, there’s an opportunity for buyers to decide they’re not interested in buying and drop out of your ecommerce sales funnel.
The only way to succeed in today’s cutthroat ecommerce industry is by having a smooth experience that delights and engages consumers every step of the way. But first, you have to figure out when and where you’re losing customer today. Here’s how to optimize your marketing strategy and improve your ecommerce sales funnel for higher revenue.
A Brief Rundown Of The Ecommerce Sales Funnel
In ecommerce, the marketer is really in charge of the entire customer experience, from the first interaction with your brand, through their first purchase, and beyond.
To create a truly delightful experience, you have to put yourself in the shoes of your buyer. If you were a new customer going through the process of making a new purchase, are there any areas that are lacking or that you might get stuck?
If your answer is “no”, then you should be well on your way to massive growth and record revenue. But for most of us, there are always areas of opportunity to improve. Let’s start by identifying the four parts of a typical ecommerce funnel:
Awareness: The very top of your funnel is all about getting in front of your audience, whether that’s through an organic Google search or a paid Instagram ad. Your goal is to get them to your brand homepage and realize that you have something of value to offer.
Interest: This is the hook that starts to reel a potential customer in. They are actively interested in your brand story and starting to pay closer attention to your products.
Desire: This is where passive engagement turns to active. The consumer is actively browsing your products and considering making their first purchase — possibly looking at reviews, product details, and more.
Action: The end goal of every sales funnel is for the consumer to complete a purchase and become a customer.
How To Accurately Measure Each Part Of Your Ecommerce Funnel
Now that you have a refresher on the sales funnel, let’s take a look at how you can measure the conversion rates at each stage and move your buyers to the next step. There are several key sales funnel metrics that you can use to figure out how each part of the funnel is performing:
1. Awareness Generated
This is a high-level metric to understand how well your brand is engaging net new buyers at the top of the funnel. Here’s how to calculate it:
- Traffic to your site each month, by campaign and by revenue. Over time, you can start to see what campaigns are working most effectively to draw in buyers at the top of the funnel. You should also tie your campaigns directly to revenue, to make sure they are effectively converting new buyers and driving them to make a purchase.
2. Time Spent
Measuring how much time consumers spend in each stage of the funnel can help you to identify any snags or hiccups in the customer journey where buyers drop off. To do this, use the below equation:
- Average number of days from the first contact with customers until the day of the first purchase = average length of your sales cycle. In order to do this, you do need to be able to use identity resolution to connect anonymous buying behavior to known customer behavior.
- Split up your sales cycle and analyze the average length of time buyers spend in each stage of the sales funnel. That will show you where buyers get stuck, whether it’s while browsing, at checkout, when clicking through from your email list. You should also take a look at your repeat purchase rate to see if you’re cultivating customer loyalty.
3. Conversion Rate
While awareness and time spent are important, what really matters is revenue. The conversion rate equation is below:
- Number of consumers who initially entered the sales funnel/Number of consumers who ultimately made a purchase X 100
According to Retail Touchpoints, the average conversion rate for retailers is somewhere between 20%-40%. Use the above equation to make sure you’re somewhere in that wheelhouse and from there, figure out ways to improve.
How To Improve Your Ecommerce Sales Funnel
Now that you have some benchmarks to measure conversion through your funnel, let’s talk about sales funnel optimization. Here are a few ways you can work to improve your sales funnel:
1. Think Different.
Steve Jobs said it best. You need to stop looking at what all of your competitors are doing and start thinking about how you can differentiate yourself from the crowd.
Start by answering the following 2 questions:
- What makes your brand unique?
- Why should consumers choose you over a competitor?
From there, figure out a plan to make sure your audience knows the answer to the above questions and follow up. Anyone can come up with a creative campaign, but if you don’t have anything of value to say, it’s going to fall flat.
2. Be Hyper-Focused On Channel Optimization
This may feel like low hanging fruit, but I can assure you it’s not. How many times have you engaged with a retailer only to be frustrated by the buying process? Your buying experience needs to be flawless. It should be easy, engaging, and enjoyable.
Your customers should be able to engage with you across various channels without disruption and with a consistent, world-class experience. Here are a few ideas to get started on improving:
- Cross-channel consistency: As mentioned above, channels don’t matter to consumers. The average buyer will bounce around between multiple channels and expect you to capture that information so they don’t miss a beat. For example, if they add something to their cart in the mobile app, they expect it to also be in their cart on your ecommerce site. Make sure you have the right tools in place to accomplish this.
- Landing page analysis: When was the last time you analyzed the elements of your landing page? How are your CTAs and product recommendations performing? Make sure you’re diligent about analyzing and optimizing all elements of your landing page for success.
- Email marketing performance: Make sure you’re hitting all the core email marketing campaigns, including personalized cart abandonment, replenishment, discounts, and more. You should always be testing and tweaking your email messaging to improve results and get more people to buy now.
- Building a community: Some of the big players in the retail industry have truly built a community around their products. A few that come to mind include Patagonia Active Works initiative, Lululemon’s Community efforts, and Tom’s free shoes mission. Think about how you can move beyond just a retail brand and really make an impact and connect with your audience in a much more meaningful way.