Are you curious how your eCommerce site is performing compared to your competitors?
You might be tracking your eCommerce conversion rate.
But what you probably don’t know is that the most common way to calculate this rate isn’t very useful.
Google Analytics (and many other analytics tools) by default shows a sessions-based rate, which is calculated based on the number of site visits that turn into sales.
And site visits are not the best way to calculate the conversion rate of a site.
Note: Want insights to other metrics that impact your conversion rate? We can help. Contact us here.
Why a User-Based eCommerce Conversion Rate is Better
Sure, it can be nice to know how many site visits turn into a sale, but what does that really tell you?
The number of people that visited your site without buying anything.
It doesn’t tell you if those same people came back later and made a purchase.
A conversion rate based on site visits (“sessions” in Google Analytics) does not take into account longer sale cycles.
Because of this, your website might actually have a higher conversion rate than you think.
This is especially true if a high percentage of your customers visit more than once before making a purchase.
For instance, if a consumer is comparing a product across competitors, they might visit your site, then visit other sites, then come back later and make a purchase, totaling two sessions with one purchase.
In that scenario:
- The sessions-based conversion rate would be 50%.
- The user-based conversion rate would be 100%.
To give you a more concrete example, here are the rates for one of our clients in the travel industry:
- Sessions-based conversion rate: 1.96%
- User-based conversion rate: 2.24%
The user-based conversion rate is still not a perfect number.
Customers may visit your site then return from a different device, they may clear their cache between visits, they may a different browser to make their purchase, or they might take dozens of other actions that cause Google Analytics to miss that the person is a repeat visitor.
Even so, user-based conversion rate is a better reflection of your true conversion rate than the default sessions-based conversion rate shown in Google Analytics.
Here’s how the conversion rates break out by device type. As you can see, in every case, the user-based conversion rate is higher.
Why So Many Tools Default to Sessions-Based Conversion Rate
You may be wondering why so many tools use a sessions-based rate if a user-based conversion rate is generally considered the better option. The answer is that it’s much easier to calculate a conversion rate based on sessions.
An analytics tool doesn’t need to store as much data to calculate whether a session turns into a sale. Calculating a user-based conversion rate means going back in time to track all sessions from a single user.
This requires both more computing power and user tracking.
Note: Want help translating the numbers in Google Analytics into action steps to improve your results? We can help. Contact us here.
How to Track a User-Based Conversion Rate
Google Analytics now has a default metric called ‘Transactions per User’ that equates to a user conversion rate; however, it’s not a default metric.
You can find this metric by going to Reports > Audience > Lifetime Value > User Conversion Rate.
There are two problems with the metric:
- You can’t easily control its significant digits.
- It does not show as a percent for easy visual comparison with eCommerce (session) based conversion rate. In fact, the percentage-based conversion rate that’s shown in the bottom right corner is still based on sessions, not users.
To get the user-based conversion rate, we pull the data from the “Users” and “Transactions” rows to calculate the conversion rate. Using the example above, the numbers are:
- Desktop: 2,592 (transactions) / 97,487 (users) = 2.66%
- Tablet: 430 (transactions) / 19,938 (users) = 2.16%
- Mobile: 1,991 (transactions) / 108,735 (users) = 1.83%
The Other Common Mistake: Looking at Conversion Rate Too Often
Here’s one other suggestion about tracking your conversion rate.
It’s common for people to follow their conversion rate on a regular basis—monthly, maybe even weekly or daily. But doing so can skew your perspective of how your site is really doing.
The reason: you’re probably looking at your rate in a vacuum.
Think about all the ways people get to your site, such as organic traffic, Google shopping campaigns, social media channels:
- Each channel has its own conversion rate.
- They are all constantly in flux.
- They all add up to your overarching conversion rate.
If you make considerable changes to one of these channels, it will—for better or worse —dramatically impact your traffic and conversions.
You can imagine why your conversion rate would peak and then tank after a major ad campaign, and the temporary decrease in your conversion rate isn’t something to worry about.
If you see an overall increase in revenue after the campaign, it’s a win. And your conversion rate should level out (or rise) over time.
Instead of worrying over week-to-week or month-to-month changes to your rate, we recommend watching your conversion rate in these three situations:
- Looking at your year-over-year rate to see how your site is doing in the long-term.
- Watching your rate closely during major shopping times, such as the holidays, when quick changes are vital.
- Watching your rate after major site changes. And of course we recommend thorough A/B testing of any major change.
Increasing Your Conversion Rate is a Long-Term Strategy
Your site’s conversion rate should increase year-over-year through consistent product, promotion, and site strategy. Tracking a user-based conversion rate is just one way to see whether you’re building long-term customers.
(Note: If you’re interested in developing a full conversion rate optimization strategy, we can help. Contact us here.)