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Conversion Rate Optimization

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Digital Marketing - Study Notes:


The conversion rate is the percentage of people who come to the site, who go on to take the action that you want, which, in most examples, is buying your good or service. So let’s take an example of a clothing retailer. So there’s a whole host of people coming to the site to a variety of different marketing channels. We refer to these people as traffic, and some of these people are going to drop out at each stage of the buying process.

So for example:

  1. When they arrive on the homepage, people will have a look around, and a certain percentage of those people will just decide that, “Now, the style of this brand or the style of these products or even the look of this website is not for me, and so we’ll leave.” But a good portion of the original traffic will stay.
  2. So they’ll go and look around, potentially click on a product category, like Jeans, go into that, look at the range of offering there. Again, some more people will leave at this stage because the price points are wrong or the product offering’s not quite right. But again, a portion of that population will stay.
  3. They’ll click on a product, go on to a product page, and again, look at the price, the product specification. And hopefully, as many of those stay as possible, and they’ll put that product into their basket.
  4. Then, once the product’s in the basket, ideally, they go and review that basket and proceed to check out.

And again, each stage of the checkout will lose a certain percentage of the traffic. Whether it’s because it’s too difficult for them to put their address in or they want to go and check where the prices are better on other sites, we’ll lose a certain amount of people at each stage.

But at the end, we’ll end up with a percentage of people who’ve gone on to buy the product. And the process of conversion rate optimization is about making changes to the website and analyzing the data, so that the percentage of people left at the end is as big as possible.


So as we’ve just discussed, at each stage of the process, we’re going to lose people from the buying process, and so we need to try and minimize that. And the way that we do that is by doing three things.

Define value proposition and revenue model

First of all, we start with the basics, which is all about understanding your consumer and understanding how your offering gives them value. So what is about you that makes them choose you over your competition? Is it that you’re cheaper, is that your service is better, is it that your brand resonates with them more?

Choose e-commerce platform

Secondly, we need to choose an e-commerce platform that delivers against that. So there are certain e-commerce platforms that are brilliant for displaying a massive range of products and making those products easy to find. There are other e-commerce platforms at the other end of the spectrum that are tailor-made for showing one or two products in an incredibly compelling way. And you need to choose the one that supports your value proposition most closely.

Choose channels and marketing approach

Thirdly, we need to use marketing channels and target appropriate consumers who drive the right type of traffic into the funnel in the first place. So if all these things work well together, you get the right type of people coming to the site, who have displayed with a value proposition that relates to them, and then the site is easy for them to navigate and go all the way through the conversion funnel to purchase at the end.

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Graeme Smeaton

Graeme Smeaton is the founder of Royal & Awesome. Along with a proven track record in defining and delivering marketing strategies that drive significant growth and create real shareholder value, Graeme is highly commercial. He has extensive experience managing PLs and other key financial statements, while being an operational board director of AFG Media Ltd, and has experience negotiating with suppliers, distributors and licensing partners.

By the end of this topic, you should be able to:

  • Identify the impact of logistics, packaging, purchasing, distribution, and payment options for an e-commerce solution
  • Evaluate e-commerce revenue models and the advantages associated with different e-commerce solutions 
  • Critically appraise the requirements for managing e-commerce customers in accordance with current laws and legal guidelines

    Data protection regulations affect almost all aspects of digital marketing. Therefore, DMI has produced a short course on GDPR for all of our students. If you wish to learn more about GDPR, you can do so here:

    DMI Short Course: GDPR

    The following pieces of content from the Digital Marketing Institute's Membership Library have been chosen to offer additional material that you might find interesting or insightful.

    You can find more information and content like this on the Digital Marketing Institute's Membership Library

    You will not be assessed on this content.


      E-Commerce Strategy
      Graeme Smeaton
      Skills Expert

      The E-Commerce Strategy module will introduce the characteristics of the e-commerce business model and will help you understand the corresponding business requirements and decisions that flow from their value proposition. You will learn to recognize the strengths and limitations of different e-commerce solutions and common payment methods. Finally, you will respond to a range of different illustrations showing how the level of customer service affects an e-commerce business in an industry where trust is key to the purchasing decision.