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E-commerce Conversion Optimization is not Conversion Rate Optimization

3-minute read

Digital leaders are under pressure to demonstrate a return on investment (ROI) on their e-commerce optimization efforts. Quantifiable metrics are the primary means to measure success and justify their investments. Since e-commerce is about making digital sales, an increase in spending towards conversion rate optimization (CRO) tactics should correlate to an increase in revenue. Except this isn’t always the case because CRO is a single metric and growth is dependent on achieving gains over several metrics.

An interesting e-commerce trend from early 2020 demonstrates why tracking CRO doesn’t always translate to revenue growth. During that time, e-commerce usage skyrocketed when people were told to stay home as a result of the pandemic. Conversion rates increased too, but months later revenue gains were not as expected. It turned out that while more people were buying online, the average order value (AOV) was 31% lower, so CRO was not a good indicator of actual revenue growth. It was only part of the picture.

Customer experience optimization requires a big picture view

If you go to the top of the Empire State Building, you get to experience a panoramic view of New York City. Now imagine you get to the top but you don’t walk around, instead you beeline for one of the telescopes, and start panning the horizon. Sure you may get excited about being able to see certain sights in more detail on the telescope. But if that’s all you look at, you won’t get the real experience of taking in the whole city panorama—which was the whole point of going up there.

An effective e-commerce optimization has to be about so much more than just conversions. It is about reducing friction, creating memorable experiences and providing value and relevance to customers so that they will buy today and again in the future. Focusing on a single metric like conversions doesn’t provide enough information to evaluate if a company is on the right path to achieving their growth targets.

It can be a bit like that visit to the Empire State Building. It may give you a close up view, but it’s not the full picture and the experience is not what it could be. By only focussing on CRO, you can’t tell if it’s really making an impact on customer experience and growth targets, or in what way. In fact chasing after a single metric like conversions could have a negative impact on other elements of the customer journey. This is because it takes multiple actions to impact growth metrics including conversions. Additionally negative metrics such as a high shopping cart abandonment can quickly erode the positive gains in conversions.

E-commerce conversion optimization needs more

Conversions alone are not a good indicator that companies are serving up memorable customer experiences or that they are on track to achieve growth targets. Companies need a way to tap into real-time user data and actions to be able to see which ideas and corresponding experiences get the most traction. Additionally, because customer preferences change rapidly and are influenced by many market dynamics, including what competitors are offering, companies need a way to be able to keep track of how customer behavior changes.

AI-driven optimization provides a solution to these needs by being able to track user interactions in real time to deliver meaningful insights on the best performing experiences. Artificial Intelligence is really well suited to solve these kinds of challenges and can get your going in the right direction within just a few weeks. Once the top performing experiences have been identified they become the foundation for further improvement and optimization as new ideas are added to the mix. This ensures that the user experience throughout the customer journey continues to improve and stays relevant and valuable. That’s when digital leaders can take a closer look at metrics such as conversion rate or cart abandonment and see the gains that have been achieved while optimizing. More importantly the metrics also show the impact on revenue in terms of lift.

Metrics are like telescopes that provide great insights on a single element of the customer experience, but they don’t showcase the full experience that can drive growth. Where is your company looking? Through the telescope or at the potential of the panoramic view? It’s the panorama view that creates the wow factor, that creates the memorable experience, and that’s what you want to be delivering to your customers.

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