A Drop in 1% In Conversions Could Actually Help Your E-Commerce Business
It’s true and I’ll prove it in just a moment…
If you’re struggling to scale the revenue in your e-commerce business, I think I might have a solution for you. And it’s easier that you may think.
What I discovered is: Was 4 Primary Reasons why Most E-commerce store fail..
- Low Cart Value
If you find yourself not being able to raise your volume because of high CPA’s, the best solution for this is to increase your cart value.
Increasing your cart value will allow you to generate more revenue, which in turn will allow you to pay more to acquire a customer. In short, whomever can pay the most to acquire a customer wins the game.
Right now, competition is fierce on the Facebook ad network. It’s because everyone and their mother is jumping on the E-Commerce bandwagon.
Not to worry though, there’s still a ton of money to be made if you follow these steps closely.
However, here’s the kicker: There is a good chance that increasing the cart value will also decrease your conversion rate as well. Believe it or not, this could actually help your business to grow…
It might sound crazy but here’s what I mean:
A while back, I couldn’t get my campaigns profitable for one of my ECom stores. My cart value was $20, and it took about $20 for me to acquire a customer as well.
On smaller tests I could acquire a customer for around $10 to $15. But when I started to scale, my CPA’s would go up to around $20 or $25. And like you’ve probably guessed already, it would kill my campaign dead!
However, with a few tweaks to pricing and some optimization, I was able to increase my cart value to over $45! As you can see, my average order keeps going up as I test new things.
It’s been working so well that I’ve been able to get my cart value to over 53 bucks!!
So how does this effect my business?
Let’s do some numbers and see….
Here was my initial campaign metrics.
1000 Clicks @ 3% conversion = 30 Acquired Customers/Sales x Avg Order – $20 = $600 Revenue
Cost = 0.30 Avg – Total = $300 Profit = $300 *Not net profit as you have to account for product cost and shipping which is usually a third.
30 Conversions x 20 Avg order = $600
1,000 Clicks x .30 CPC = $300
$600 – $300 = $300
Here are the new numbers after I was able to increased my cart value
1000 clicks @ 2% conversion rate = 20 Customers/Sales x Avg order – $45 = $900 Rev
Cost = 0.30 Avg – Total = $300 Net Profit = $600
20 x 45 = $900
1,000 x .30 = $300
$900 – $300 = $600
As you can see, even though my conversion rate dropped by 1%, I actually made more money. Simply by increasing my cart value. Doing this more than made up for the difference.
Here Are 4 Hacks You Can Implement Now To Increase Your Cart Value :
- Persistent Cart – Persist them to add more items to the cart in order to qualify for free shipping.
- Bold Apps Upsells – Upsell or bundle other products to increase your cart value.
- Add shipping cost – Try adding multiple price for shipping cost – Example: Priority Mail : $9.99 Expedited Mail : $19.99 Express Mail : $29.99
- Increase Your Price
– I find many of my students get into e-commerce start making some money and then get scared to raise the price on products worrying it could effect conversion rates. This is where running a projection would help. Example: If increase cart value by $10.00 by lose 1% conversion rate what would that look like with a few hundred sales per day?
Remember, you might see a slight dip in conversion but there’s also a great chance of the price increase making a huge difference on the bottom-line.
If for some reason your campaign still isn’t performing the next step is to work on increasing conversion rates.
Which Brings Us To #2…
- High CPA Cost – Are you paying too much to acquire a customer. CPA just stands for cost per acquisition or simply cost per sale.
In my next post I’ll show you how to LOWER your CPA cost.
Please comment below if you have any questions