CRO for e-commerce: Why, When, and How to Boost Conversions

Conversion Rate Optimization (CRO) isn’t just a buzzword—it’s a practical way to maximize the value of your existing website traffic. In this guide, we’ll explore why CRO matters, when to prioritize it, and how to approach it step by step to help e-commerce store owners and marketing managers achieve meaningful improvements in conversion rates.

What is CRO, and Why Does Your E-commerce Store Need It?

CRO stands for Conversion Rate Optimization—a set of strategies designed to turn more website visitors into paying customers. It’s all about improving the percentage of visitors who complete a desired action (like making a purchase) compared to the total number of visitors.

When you’re in a long-term relationship with your ad budget, but your heart knows that the real love is ‘CRO’ 💘.

During the pandemic, e-commerce saw a huge spike in ad spending, which led to higher cost per click (or CPC). But after the world returned to “normal,” those costs didn’t drop. That’s when it became clear: e-commerce businesses can’t just rely on ads. They need a smooth and effective conversion funnel to truly succeed.

Today, CRO is a must for growing e-commerce businesses because it allows you to increase revenue without spending more on ads. Let’s break this down with a simple example:
Imagine your online store gets:

• 1 million visitors per month (MAU = 1,000,000)
• 500,000 euros spent on ads (Ad Spend = 500,000)
• A 1% conversion rate (CR = 1%)
• An average order value of 180 euros (AOV = 180)

Now, let’s calculate the ROAS (Return on Ad Spend):

ROAS = (MAU * CR * AOV) / Ad Spend = (1,000,000 * 1% * 180) / 500,000 = 3.6x

This means that for every euro spent on ads, you earn 3.6 euros in profit (or 1.8 million euros total). Not bad, right?

But what if you could boost the conversion rate to 1.5%—without changing anything else?

ROAS = (MAU * CR * AOV) / Ad Spend = (1,000,000 * 1.5% * 180) / 500,000 = 5.4x

Now, you’re looking at 2.7 million euros in revenue—a million euros extra without spending more on ads. That’s why CRO matters.

When is CRO Most Effective for Your E-commerce Business?

CRO works for almost all online businesses, but it’s especially helpful in the following situations:

1. When Ad Spend Isn’t Delivering Results

If your ads are getting clicks, but sales aren’t improving, it’s a sign that you should focus on optimizing your website’s conversion funnel. Ask yourself:

• Does your site work perfectly across all devices and browsers?
• Does it load in under 5 seconds?
• Do you have specific landing pages tailored to your ad campaigns?
• Have you tried increasing ad budgets, but the sales are still flat?

If you answered “yes” to most of these, but sales aren’t growing, it’s time to focus on your website’s user experience and conversion journey.

2. When Your Conversion Rate is Below Industry Benchmarks

Conversion rates can vary depending on several factors, like:

• Geography (country, city, region)
• Device type (mobile, desktop, tablet)
• Industry (e.g., fashion, tech, beauty)
• Seasonality (holidays, sales events)

To check if your conversion rate is lagging, compare it to industry benchmarks, like the ones shared on this site. If it’s lower than the average, it could be time for a conversion boost.

3. When You Have Enough Traffic to Test

A/B testing is a powerful CRO tool that allows you to compare different versions of a page to see which one performs better. However, to ensure meaningful results, you need a sufficient volume of traffic. Otherwise, you could end up waiting months—or even years—to gather enough data. Imagine running a test for an entire year!

Fortunately, several free tools can help you estimate the required audience size in just a few minutes. For example, Optimizely offers an online calculator to easily determine the sample size needed for your test. If your website has enough traffic, go ahead and run the A/B test. If not, focus on increasing your traffic first.

The traffic sample calculator will help ensure you have enough data to turn those clicks into conversions!

How to Increase Conversions with CRO: The Step-by-Step Process

Step 1: Gather Insights

The first step is understanding your visitors’ behavior. Use tools like Google Analytics to identify potential bottlenecks in your conversion funnel. These are areas where visitors drop off before making a purchase. The more detailed your insights, the better your strategies will be.

Step 2: Generate Hypotheses

Once you’ve gathered data, create hypotheses about how you can improve the user experience. For example, if users who use your search bar convert better, your hypothesis might be: “If we make the search bar more visible, we can increase conversions.”

Step 3: Design the Test

Now it’s time to test your hypothesis. Create different versions of the page (e.g., one with the improved search bar) and set a clear primary metric (like conversion rate) to measure success. You’ll also want to establish proxy metrics—indirect indicators that can show if your changes are working (e.g., add-to-cart rate or click-through rate).

Step 4: Run the Test

Launch the test and wait for results. You’ll want to gather enough data to ensure your results are statistically significant. Many A/B testing tools, like Dynamic Yield, can help track and analyze data, making it easier to identify a winning test. If not, you may need a calculator like this one to manually calculate statistical significance.

Relying on statistically significant A/B test results ensures you’re optimizing for real performance, not just assumptions.

Step 5: Analyze and Scale the Results

After the test, analyze the results and decide whether to scale the change, stop the test, or optimize the experiment further. If a variation works well for one segment (e.g., mobile users), you may want to scale it specifically for that group, rather than applying it to everyone.

Real-Life Example: CRO in Action for a Major Retailer

Step 1: Insight

We found that the bounce rate for users landing directly on a product page was X% lower than for users who landed on a product list page.

Step 2: Hypothesis

We hypothesized that adding personalized product recommendations would help keep users engaged and reduce bounce rates.

Step 3: Test Design

We set up an A/B test with 4 groups:

• Control Group: No recommendations.
• Variation 1: Product recommendations based on top-sellers.
• Variation 2: Product recommendations based on user preferences (or affinity).
• Variation 3: Product recommendations based on recently viewed products.

Step 4: Testing

The test showed that recently viewed products reduced bounce rates and increased conversion rates, while preference-based recommendations worked best for email marketing.

Step 5: Scaling

We scaled the recently viewed recommendations for returning users and used preference-based recommendations for email subscribers. This segmented approach led to higher conversion rates across different user types.

Conclusion

CRO can be a game-changer for e-commerce businesses, but it requires expertise and time to get right. Random changes won’t cut it. A systematic approach like A/B testing and user journey analysis is the key to success.

If you’re struggling to see results or feel overwhelmed by the testing process, we’re here to help. As experienced CRO specialists, we can guide you through the entire process, identify growth opportunities, and help you boost conversions without the stress.
Feel free to book a no-commitment call with us and discover how we can help your online store reach its full potential.