How to Balance eCommerce Conversion Optimization Against Transaction Risk
There are a million different concerns fighting for your attention when you’re running an eCommerce business. You have to engage in product research, marketing and SEO, loss prevention and risk management, A/B testing, logistics…all on top of the basic practice of serving your customers. But, even with all those forces demanding consideration, you should rank eCommerce conversion optimization near the top of the priority list.
Of course, optimizing conversion is not as simple as enticing shoppers to click through and complete a purchase. There are plenty of “dos” and “don’ts” to consider; taking the wrong approach can create problems you never anticipated.
Whether you’re launching a new business, or just looking to streamline existing processes, here are some of our top tips and best practices for eCommerce conversion optimization.
Defining your Objectives
You need to define your target conversion rate. However, it’s important to be conscious of the factors influencing this calculation.
While averages can vary quite a bit based on different factors, the average eCommerce conversion rate in the US sits at right around 2%. This means that getting people to complete a transaction will still be a struggle, even in product categories that see above-average conversion rates. Most of your site visitors will leave without making a purchase; you want to be realistic about this before deciding on a target.
Next, you need to identify the factors that will have the most influence on your conversion rate. Some of these may include:
Opportunity is Knocking.
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Some Conversion Optimization Practices Can Lead to Chargebacks
As we see, eCommerce conversion optimization is a tricky calculation. The key is to identify a target conversion rate that makes sense for the unique dynamics of your business. But, eCommerce conversion optimization is important, you have to look beyond simply getting shoppers to complete purchases. You need to account for risk, too.
Some points of friction in the transaction process are useful barriers that are in place to minimize the threat of chargebacks. Without these barriers, you could end up facing payment reversals tied to a number of loss sources:
- Account Takeover: This occurs when a fraudster gains access to a legitimate buyer’s account and submits unauthorized purchases.
- Synthetic Fraud: The fraudster uses stolen information from multiple individuals to “invent” a fake user.
- Buyer’s Remorse: A legitimate buyer regrets making a purchase, and views the chargeback process as an easy way to recover funds.
- Dissatisfaction: The buyer believes that the goods or services received failed to live up to their expectations.
- Family Fraud: A relative of the cardholder completed a purchase without the knowledge, or authorization, of the cardholder.
These are some examples, but there are other issues that might arise as well. This is why it’s important to balance eCommerce conversion optimization against chargeback risk.
Optimize Conversion Without Causing More Risk
Fortunately, there are some best practices that can help you optimize eCommerce conversion and control chargebacks at the same time.
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Evaluate & Adjust
Finally, it’s important to review your success from time to time and consider areas in which you might improve.
Trends in product, device, and checkout preferences change constantly. So do payments industry rules and the protocols governing transactions, fraud, and chargebacks. To keep up with these changes, you must gauge your success at eCommerce conversion optimization on a regular basis.
The most obvious indicator: does your conversion rate increase or decrease over time, as compared to risk? Examine your stats on a weekly, monthly, quarterly, and yearly basis to try and identify trends that develop over time. If you notice something questionable, like a creeping uptick in chargebacks, look for ways to address the problem.
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What is eCommerce conversion optimization?
eCommerce conversion optimization refers to the process of improving your customer’s shopping experience for the purpose of increasing sales. This can involve optimizing landing pages, category pages, or other points of customer contact.
How do you optimize for eCommerce?
The key to eCommerce conversion optimization is defining your objectives, then identifying facets of your business that impact conversion the most. Some of these include product category, customer experience, location, content, and average ticket value.
How does eCommerce conversion impact risk?
There’s a close relationship between conversion and risk management. Adopting practices that are too aggressive at capturing buyers can cause your fraud and/or chargeback rate to spike.
What is the most used testing method for improving conversions?
A/B testing (creating two separate destinations on your site, then sending different customers to each of these destinations) is generally the best way to gauge the effect of any changes.
Can you improve conversion without causing more risk?
Yes. There are numerous eCommerce conversion optimization practices that have a positive impact on your general risk. Examples include crafting good product descriptions, making returns easy, and providing live, round-the-clock customer assistance.