Is Your Site’s Great Convert Rate Hiding Greater Problems?

According to MarketingSherpa, Forrester and others, the industry average convert rate for most E-Commerce shopping sites is somewhere around 3%. Where does your site rank? Much higher? Before you break your own arm trying to pat yourself on the back, dig deeper. A high Web site convert rate could be masking some serious problems with your marketing and merchandising practices. If this metric starts to climb, ask yourself these questions before you start popping campaign corks.  (image below by brockvicky)

1. Am I pricing my products too aggressively? A key sign of being priced out of the market and leaving profits on the table is an astronomic convert rate. If you’re blowing product out the door with little to no margin, you could be crying uncle by the end of the month.

2. Am I acquiring my customers cost effectively? How much did you spend in acquiring the customers that are feverishly grabbing product from the shelves? If you’re spending $50 per customer to buy a $49 product – something smells rotten in Denmark.

3. Did I mis-judge demand? Sometimes you bring in the latest Tickle-Me-Elmo without even realizing it. Or, more realistically you find a hidden gem in your product mix that is brought to light because of seasonality, virtual bundling or changes in site design and product highlighting. You could blow through inventories and leave many customers wanting.

4. Is my merchandising or promotion cycle out of whack? There are folks out there who live to beat the system. If I unwittingly find a deal hanging out there because of a long-lost coupon code, or whatever, I’m as happy as the next guy. But, there are those out there that love to game the system by double-dipping, stacking or whatever. They can clear you out before you even know what hit you. Then, the only one who’s happy is the guy who bought all your stuff and is now re-selling it on Ebay. Whah…

The moral of the story is to be wary of the rising convert rate. This metric is celebrated far more often than it is scrutinized. Comments? Shoot me a line, or comment below.