Conversion rate, or the number of visitors to a website that become actual online buyers, is a fundamental e-commerce metric that’s well understood by many online retailers.
For many direct-to-consumer e-commerce businesses, visitor-to-buyer conversion rates are the single most important business metric that digital marketers and e-commerce managers track closest. That’s because even a small one-tenth of a percent change up or down in how many visitors convert to buyers from home and product pages or from e-mail and paid search campaigns can make a huge difference in generating more—or less—web sales.
“Conversion rates will always be the most important metric as it’s all about getting the order and the bottom line,” says Lauren Freedman, president of e-commerce research firm The E-tailing Group Inc. “Conversion rates also suggest the strength of the user experience, giving sellers pause as they consider and prioritize improvements to their e-commerce roadmap. If improvements are properly made, conversion rates will improve and sales can grow exponentially, making them the most important force.”
In business-to-consumer e-commerce, many digital marketers know and understand web analytics and analyze buyer behavior in ways that drive conversion rates higher. Many online retailers, after years of selling online to consumers, also have the digital marketing resources and expertise to convert more visitors to buyers and strategies to convert first-time buyers into return customers.
But B2B e-commerce can be far more complicated because of the complexity and diversity of the products and services business buyers purchase online from sellers. Understanding B2B conversion rates, and developing strategies that convert more purchasing and procurement directors from first-time buyers into repeat customers, can be problematic for many online B2B sellers, say e-commerce consultants.
Nonetheless, conversion rates are an important metric tracked by B2B sellers. In fact, a new survey of more than 40 B2B sellers by B2BecNews finds that about 61% of companies on a scale of 1-10 give a score of 8 or higher when asked: “Where 10 is most important, how important is knowing your conversion rate relative to running your business?”
But in B2B e-commerce, tracking conversion rates is a challenge for many companies because they first must understand how business buyers are using e-commerce and digital technology to make purchases, say e-commerce analysts. “I’m really not sure if B2B companies are tracking quite the granularity of conversion rates—especially as it relates to new vs. returning customer,” says Jay Schneider, e-commerce analyst and director of client strategy for consulting firm B2X Partners. “Some might know and will have some understanding of the conversion rates between mobile and desktops well as registered vs. non-registered customers”
In order for a B2B seller, whether a manufacturer, distributor or wholesaler, to better understand the importance of conversion as a key metric in growing sales, companies first need to understand how prospective, new and repeat buyers digitally interact across all channels, says Karie Daudt, vice president of customer experience and marketing for Insite Software Solutions Inc., a provider of e-commerce technology
“Conversion is a good statistic, but you need to also take into consideration if the order actually converted through traditional channels,” she says. “It is possible that the customer started the online purchase, but needed assistance and completed it with a customer service or sales representative.” It’s also important, she adds, for the seller to determine “the average order values through traditional versus digital interactions.”
B2B sellers also may need to think of conversion rate as a metric that can be interpreted and applied to several sales channels, Daudt says. “Sellers need to clarify what they mean by conversion, as in B2B conversions aren’t just purchases,” Daudt says. “For example, a conversion may be when someone converts from guest checkout to registered customer but a more sophisticated distributor might define a conversion as a download of a catalog or information, completing online forms, or a specific response to a call-to-action.
B2B conversion rates also may vary widely across various sales channels. For instance, it’s not unusual for a small niche B2B seller adept and experienced at e-commerce to have a conversion rate as high as 75% for repeat buyers to its log-in portal, Daudt says.
But that ultra-high conversion rate takes into account a number of factors, including online product availability and inventory, how easy and convenient the purchase process is for repeat buyers, and how tightly integrated a seller’s e-commerce platform is with a buyer’s back-end enterprise resource planning system, Daudt says.
“The smallest companies or ones really new to digital commerce might see 50-70% conversion rates, but that’s pretty high for a more mature system,” she says. “It can depend on how long they’ve had their e-commerce system in place.”
In business-to-consumer e-commerce, the 2018 median combined desktop and mobile conversion rate of the Top 1000 web merchants ranked on annual online sales by Internet Retailer is about 2.5%. In comparison, nearly 40% of B2B sellers taking part in the B2BecNews survey did not know or track conversion rates. Of the sellers that did track that metric, about 30% of sellers listed their desktop visitor-to-buyer conversion rate at 3% or less.
For one small Minneapolis manufacturer and marketer of workplace safety gear, better tracking of conversion rates and converting more browsers into buyers occurred when the company completed an upgrade to a new e-commerce platform. In 2016, Ergodyne switched over to a more agile e-commerce system from Magento, now a part of Adobe Systems Inc. (Inn September 2018 Ergodyne was acquired for an undisclosed price by Kleins Tool Inc., a maker of handheld tools based in Lincolnshire, Ill.)
The redesign made it easier to check inventory levels, speeding up order processing, and included a quick-order tool where buyers could enter SKU numbers or upload a product file to complete an order online, Ergodyne says.
With better technology making it easier to update product pages faster, do more segmented marketing and more quickly react to changes in business buyer behavior, the conversion rate on some product pages increased by more than 50% on some B2B product pages. Overall conversion rates range from 6% to 8% on B2B online transactions and from 3% to 5% on business-to-consumer transactions.
“We can increase conversion because now we can look more closely at activity by channel,” says Ergodyne senior digital marketing manager Theresa Kuske.
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