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The Balance Between CR and AOV – Must Know To Boost Your E-commerce Store

By HappyPoints on June 21, 2019 0 Comments

Tell Me More about CR and AOV

If you are a newbie, the chances are you are unfamiliar with these terms, although they play a crucial role in the success of your store. Here is a brief explanation:

  • Conversion Rate (CR) – this marks the percentage of visitors to your website that goes ahead with the purchase. For example, if you have a 20% CR, it means 20 out of 100 people that visited the website bought at least one product.
  • Average Order Value (AOV) – this is quite self-explanatory as it marks the average value per customer order.

The question that arises now is which one is more important – CR or AOV? Many people would rush to say the former, but would they be right?

The Importance of Balance

Before we head into a discussion on properly balancing conversion rate and average order value, let’s discuss profit. After all, isn’t this what all merchants strive for at the end of the day? If you want to properly calculate net profit, the simple equation is:

CR * AOV * Visitors * Margin

You are now familiar with CR and AOV, but let’s mention that margin marks your profit from a product after its total cost is deducted. If you multiply these four factors, you can calculate your net profit. This is important because the ultimate goal is to maximise your revenue. Getting these four factors in the right balance is the way to profit the most from your e-commerce.

If you are wondering whether you should focus on CR and AOV, the key lies in achieving balance. Imagine this scenario – you do not have a large conversion rate, but the average order value is over $500. In this situation, you can still optimise your profit despite having a relatively small CR.

Alternatively, your CR may be huge, but that is not worth a lot if your AOV is under $10. It affects your profit and doesn’t deliver the highest efficiency of the store. That is why you should look to optimize your e-commerce in a way that will motivate more people to buy more products – that will increase both your CR and AOV and enable improved balance and, therefore, increased revenue.

How to Optimise Your Shopify E-commerce?

There are numerous factors that you can utilise to optimise your e-commerce and provide the ultimate user experience. Here is some that are crucial for you to consider:

  • Page loading time – nobody likes to wait for ages for the page to load. The general rule of thumb is that the conversion rate decreases as the loading time increases. If you want to check the speed of page loading, you can head to the Web Page Test. Choosing a good theme, optimising image capacity, and deleting unnecessary plugins are excellent ways to accelerate loading times.
  • Optimize product pages – it is only natural that the products you are selling have a critical impact on CR. However, optimising product pages can increase the number of sales. Among other things, make sure to include a tempting and precise description, high-quality photos, and a clear call to action.
  • Price – if your prices are unreasonably high, it will affect the number of sales you make. On the other hand, the low cost might mean that you are not making enough profit, so the key is in striking the right balance.
  • Trust – establishing trust with the customers and boosting your online reputation is an excellent way to increase your profit and optimise your e-commerce. Some useful tricks for boosting your presence include SEO, utilising social media, as well as reaching out to influencers.

Conclusion

We reached the end of our article. Did you enjoy it? I hope that you found some great advice on how to optimise your Shopify store, as well as why CR and AOV play an important role in managing e-commerce. If you would like to share your opinions on the topic, do not hesitate to do so. If you liked the article, please spread the word by sharing it with your friends on social media!

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