We share our secret weapon that has driven thousands of dollars in revenue per month for dozens of ecommerce sites.
The goal is obvious – you want to make your online store more money. How to go about that effectively is where many marketers fall short. Our team has developed a tried and true formula that conceptualizes the ingredients necessary to bring more traffic and revenue to your website.
The formula: revenue = traffic x conversion rate x average order value
Think of this formula as a starting point – a way to wrap your head around what it takes to grow online revenue. By breaking the components down to traffic, conversion and order value, it makes it much easier to prioritize efforts and chip away at the objective.
Here’s an example:
You have 100,000 sessions coming to your website (traffic), 2% of them buy something (conversion rate), and your average order value is $100. That means your revenue would be $200k.
How do you actually use it?
So you’ve got the formula, now what? The next step is to look into what it takes to improve each piece of the equation:
- Traffic
There are dozens of ways you can increase traffic to your website. Start out by understanding where your website traffic is coming from now and evaluating areas of opportunity. Use Google Analytics’ Acquisition section to get a view on your website’s recent performance, and consider these areas:
- Direct traffic comes from people who know about your business and type in URLs directly. The amount of direct traffic a website gets is usually correlated with other marketing you’re doing. For example, if you sponsor an event or run a TV commercial, people will hear about your business and seek out your website directly.
- Referral traffic is from people who are linked to your website from another website. These referral links could come from a manufacturer’s “where to purchase” lists, news articles, or review sites such as Yelp or Capterra.
- Social traffic includes links from social media networks such as Facebook, Instagram, and LinkedIn. You can increase your traffic from social media by posting more often, expanding your follower base, and including links to your website in your posts.
- Organic traffic comes from people who searched for your brand name, product name, or keywords you cover on your website and found your website to click through. You can increase organic traffic by investing in search engine optimization (SEO) to improve your search engine ranking and likelihood of being discovered. Check out this cheat sheet for improving SEO traffic.
- Paid traffic is from people who land on your website after clicking on an advertisement. You can get more paid traffic through display ads on third-party websites, paid search on search engines such as Google, ads on social media or sponsored content.
- Email traffic includes click throughs from email flows or campaigns you’ve sent out to your subscribers. You can increase traffic from email by sending more campaigns, gaining new subscribers or refining your segmentation strategy.
Tip: Google Analytics offers benchmarking data for businesses your size and in your industry. This means you can see how the percentage of traffic you’re getting from each channel listed above compares to others. Find this report in Audience > Benchmarking > Channels.
- Conversion Rate
What share of people who visit your website actually purchase? Again, there are a lot of potential areas to focus on improving. Here are some examples:
- Products. How well are your products described and displayed on your site? How does your pricing stack up against competition? Do you feature special offers such as free shipping?
- Purchase process. How hard or easy is it to complete a purchase? Do you require registration? Can you lower shipping costs? Understanding your customer journey is a great first step to improving your purchase process. Learn how to map out the customer journey in this HubSpot article.
- What type of traffic you’re getting. Some traffic is more likely to convert compared to others. For example, a customer who already knows your brand and types in your URL is probably already primed to purchase, versus a customer searching for your product category who is new to your brand. Consider investing in the channels of traffic with higher conversion rates.
Tip: In the US, typical ecommerce conversion rates range from 2-4%. See how you measure up: Search for “ecommerce conversion rates by industry” to find more detailed data for your industry.
- Average Order Value
Another way to increase overall revenue is to focus on increasing the average order value. You can do this by:
- Encouraging the purchase of additional products. You can do this through cross-selling, upselling or bundling products. Read more about ways to improve customer acquisition cost in this article.
- Free shipping. Increase the likelihood of purchase by testing different minimum order values to qualify for free shipping.
- Invest in traffic with high order value. Certain types of traffic tend to purchase more per order. For example, if referral traffic from a manufacturer website tends to be higher value, how could you get better visibility on that website? If you sell bikes and bike parts, how could you improve search engine ranking to get more bike-keyword traffic?
Every successful marketing strategy begins with a solid foundation. We hope this formula is that for you and allows you to begin plugging in your own metrics in order to identify key opportunities and grow your online revenue.
Questions? Our team is here to help, reach out.