This is why company leaders waste money unnecessarily.
There are countless professional literatures discussing why we should not compare ourselves or our performance to others. However, human frailty and especially curiosity often drive us to measure our knowledge and results against those of other companies. I have brought a little treat for those who want to position themselves similarly on the map of online commerce.
Benchmarks in marketing – very simply put – mean averages. We can search for e-commerce conversion rates, email open rates, average click costs for Facebook ads, and practically anything that can be measured in some way.
Yes, but: today we still find ourselves in a situation where there are very few reliable domestic reference indicators available on the internet. The reason for this is that we are a small country, so the sample size necessary for sampling is smaller, from which anyone could then calculate a representative value.
Fortunately, however, there are a few sources that can be relied upon.
What is the average conversion rate?
Before I reference any source, I will answer the question myself first: it depends. On the industry, the age of the webshop, the season, and many other factors. Although such answers give me the chills too, unfortunately, there is indeed no universally valid, set-in-stone e-commerce benchmark. There are markets where 0.5% is completely acceptable, and there are those where 9% is still considered low.
Let’s take a closer look at these two extreme cases through two real examples.
Let’s assume there is a recently launched webshop that sells premium items. The average price of the products ranges between 100,000 and 300,000 forints. Now think about it: how much do you ponder before paying such an amount? It’s natural that you might hesitate for weeks or even months. You compare different offers, read numerous reviews about the product, and only then do you make the purchasing decision.
In such cases, it is completely acceptable that there are no – or very few – impulsive purchases. Thus, it cannot be expected from any marketing tool to bring immediate conversion. At this point, it is worth checking the Multi-Channel Paths under the Conversions tab in Google Analytics, specifically the Top Conversion Path.
This shows where the given online channel stands in sales over the past maximum 90 days. There was a case where our partner's Google Ads direct conversion rate was indeed 0.51%. However, upon closer examination of the results, it turned out that we owe a quarter of the total online traffic to this source, but it typically played a role as the first touchpoint during the purchase. Users later returned directly or through other means, and only then placed their orders. The Ads conversion rate also remained low, but it is an essential element of sales.
For purchases requiring less commitment, we can expect a higher conversion rate. In the case of daily consumer goods, a 4-5% conversion rate is not uncommon, while in truly niche markets, rates above 9% are not unimaginable.
Speaking of benchmarks...
Webshop Experts Kft., which also operates Shoprenter, conducts the Great Webshop Survey among its clients every year. In the latest research, the average conversion rate came out to 1.81%. According to the measurements of Conversific, available under Shopify, the best webshops convert above 2.13%, the average is at 1.19%, while the worst convert below 0.51%.
However: these are just the big averages. It is also necessary to look at how individual marketing channels perform separately. Let's look at an example again.
In the case of a webshop selling well-known and not overly expensive products, the order of the most commonly used marketing tools generally looks like this when considering conversion rates:
- Aggregator sites (Árukereső, Árgép, etc.)
- Organic source – Google
- Direct website visitors
- Newsletters
- Click-based advertisements (Google Ads, Facebook ads)
- other channels
The order is completely logical when you think about it. In the case of a price comparison site, the user is already more likely to have selected the product they want to buy. Here, the only question is where they will order it from.
Those arriving from organic results place greater trust in the merchants at the top of the results list. They spend more time browsing the content and are more likely to become buyers.
With properly thought-out online communication, it is negligible that links are not UTM parameterized. Therefore, a larger proportion of Direct visitors consists of users who already know the website and intentionally return for some reason. They are the most valuable potential customers in the long run.
The effectiveness of newsletters greatly depends on how the database was built previously and the quality of the emails. From the very beginning, value must be provided to subscribers, stories, interesting facts, industry news, so content that TRULY interests them. In this case, success is guaranteed.
In the case of click-based advertisements, there is a little devil lurking in the user's mind, thinking that they are trying to sell something to them. No matter how interesting the first impulse is, a kind of defense mechanism automatically kicks in, which hinders the purchase. Of course, this does not mean that these advertising forms should be forgotten, but based on experiences from recent years, they are becoming less suitable for promoting direct purchases.
An important aspect is what percentage of visitors come to the website from mobile devices and how many use it from desktop computers. While mobile shopping has become completely commonplace in the West, our compatriots are still quite hesitant about it. My experience is that the conversion rate for those arriving from smart devices is about half or a third of that for those visiting a webshop from a desktop or laptop. There was a significant advancement in this area in 2019, but it's better to look into it. You can also do this in Analytics, under the Audience, Mobile, Overview tab.
You can also break this down at the channel level, but an entire article could be written about its depths.
What almost everyone forgets: to measure, to measure, and to measure
Fortunately, today Google Analytics is no longer alien to entrepreneurs, but the culture of analyzing the data collected here is still patchy. In addition to the free tool, there are dozens of other solutions available to uncover the shortcomings of websites. With their help and a few small refinements, more can be extracted from the results.
The experience of the past 10 years is that domestic SMEs no longer allocate resources for this. And I intentionally used this word: either time or money must be invested in order to uncover the weaknesses of a website with various analytical software, the reasons for customer churn, or to test different ideas.
They forget that when starting their business, they invested a lot for the sake of profit. Time, money, energy. Yet I see that they are afraid of software that is often available for just a few thousand forints per month. They do not understand, or do not want to understand, that the future lies in the data, and that to transform the data into commercially interpretable information, they will certainly need more than just Google Analytics.
