SUMMARY
With a large pool of data sets to deconstruct and analyse, tracking the right growth metrics for D2C brands is easier said than done
In his masterclass at Inc42’s recently concluded D2C summit, Khilan Haria, head of payments product at fintech unicorn Razorpay, decoded the metrics for boosting conversion rates of D2C brands
Fixing the conversion issue requires meticulous care as a one-second lag in page load time can reduce conversion rates by 7%, said Haria
A perennial problem for digital-first direct-to-consumer (D2C) brands is the low conversion rate when it comes to driving business growth. Globally, the average ecommerce conversion rate lies between 1.7% and 2.5%, according to various studies. But this has never been greatly overstated, and few have worked on finding the right solutions.
Conversion rate is a key metric to measure business success, and anything below 3% could be worrying, say experts. But there are many reasons for such outcomes, some beyond the control of a company.
For instance, most businesses build a huge customer acquisition funnel that often brings consumers 5-6x a brand’s target demographic, which underscores the scope for improvement in terms of higher overall sales.
Brands, too, understand the critical importance of this growth metric. In recent years, quite a few D2C companies have developed better strategies to market their products and leveraged social media to improve customer engagement. But in most cases, these attempts involve nothing more than betting on current market trends for reaping short-term rewards. In short, it is a hit-or-miss story every time, and long-term fixes are still missing.
As growth is often accelerated by better revenue generation, D2C brands need to understand the fundamentals of poor conversion and work on the metrics to improve them. But this is easier said than done. There can be a massive pool of metrics to explore, and each may tell a different story when analysed from a different angle.
So, how can brands make sense of the key metrics that will help them take corrective measures?
Khilan Haria, head of payment products at Bengaluru-based fintech unicorn Razorpay, took up this problem in his masterclass How D2C Brands Can Boost Conversions By Optimising Their Payment Experience. The session was hosted at Inc42’s recently concluded D2C Summit, 2021, helping brands understand how to correctly measure critical metrics for conversion and translate that knowledge into actionable insights.
Check out the intriguing session below or read on for a snapshot of this insightful masterclass
Understanding Conversion
According to Haria, a D2C brand should have a problem-first approach when optimising conversion rates. Instead of fixating on improving conversion arbitrarily, a brand should first understand the reason/s behind drop-offs.
The first step is to look at conversion as a primary metric and compare it with the historical data of the business to understand its performance, or a lack thereof.
Conversion metrics can also be divided into different cohorts and segments to pinpoint the issue further. For instance, if mobile users’ conversion rates are higher than website users, it may indicate that the brand should work on the website’s payment gateway to improve its metrics.
To elaborate further, Haria cited the example of Teabox, a Siliguri-based tea startup where he worked earlier. In that company, he was assigned the task to improve conversion rates.
Haria segregated the metrics geography-wise to understand them better and found that conversion rates in the US were much higher than in India.
Upon further analysis, he found that the lower conversion rate was caused by payment failures and higher pricing. The Teabox team worked on these issues in the following months and improved the conversion rate significantly.
“I used to believe that once I had convinced someone to buy, conversion rates should be high. It was a moment of realisation for me when I expected a company’s conversion rate to be close to 80%, and in reality, it was 30%. When there is a genuine drop-off, D2C brands need to understand how they can bridge the gap,” said Haria.
Three Tenets To Improve Conversion
No doubt there can be an infinite number of metrics that may influence conversion. But taking care of three major areas can give business an instant boost in conversion. So, check this out:
Page load time: User experience (UX) matters most in conversion, and slow-loading pages often result in cart abandonment. According to Haria, Indian websites usually take four-five seconds to load. This requires major improvement as a one-second delay can reduce conversion by 7%.
Optimised web design for a clear call to action: Most D2C brands invest a lot of resources to bring a unique look to their platforms. But few companies optimise their digital interfaces for conversion. Highlighting some basic mistakes made by many websites while developing their UI/UX, Haria explained that any web page on any device should never have more than one action to perform. Even if a brand wants a user to do multiple things on a single page, it should highlight the primary task so that customers do not get confused.
Understanding the heatmaps: It is another crucial factor that must not be overlooked when brands build their websites. Simply put, a heatmap is a colour-coded graphical representation of data that tells you how a web page is performing. Using heatmaps and other similar tools (clickmap and scrollmap, for instance), businesses can easily gather data on visitor behaviour and modify their content and design to meet user expectations. D2C brands should optimise their web pages to direct users’ attention where they want it to be.
Interestingly, while the dark mode is in trend, it is usually not optimised for directing and controlling a user’s attention to a specific area. So, businesses should ideally avoid using dark mode for their web pages.
Key Payment Levers To Boost Conversion
Towards the end of his masterclass, Haria explained how certain features on a website’s payment page could make or mar conversion rates. In fact, this is where a buyer finally decides whether to go ahead with the purchase or not. So, the Razorpay executive discussed five industry best practices to help build a robust payment system and thus improve conversion rates. Here is a snapshot of the key payment levers.
Give enough payment options: To ensure maximum conversion, customers should have access to as many payment options as possible, so that cart abandonment never happens because a customer’s way of payment is not accepted. Ideally, a payment gateway should cover all major credit and debit cards, UPI, digital wallets and net banking besides EMI and buy-now-pay-later options.
Make payment easy: A brand’s platform should always have an option to save credit/debit card details and virtual payment addresses (VPAs). Haria said that saved card details could increase conversion by 5-7% while VPAs improve it by 3-5%.
Give accurate information: Payment failures may happen due to many external factors, but displaying the right error message every time (what has gone wrong and what the user can do next) can reduce the rate of cart abandonment by 1%. Similarly, ‘smart’ retry options can boost the conversion rate by 1%.
Incentivise payment: D2C brands should always tie up with major banks and fintech players to give extra discounts at the payment stage. This will help increase the number of repeat customers and incentivise prepaid orders, bringing down the COD (cash on delivery) deals.
Quickbuy helps: This works for brands dealing in high-value purchases. The idea is to reduce the number of steps a customer has to take before buying an item. The product page should always have an option for directly purchasing instead of taking it to the cart.
“Doing it all by yourself can be overwhelming, though. I would suggest picking up a SaaS suite for all these complexities to improve not just the payment infrastructure but the payment experience itself,” concluded Haria.
Catch all the insights and knowledge shared at The D2C Summit 2021 — right from what Haria conveyed at his masterclass to learning from sessions that hosted popular brands like FirstCry, Lenskart, boAt and more. You will find it all at The D2C Academy.
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