# How to Boost the ROI of Your Ecommerce Store

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## Table of contents

- What is ROI in ecommerce??
- Why should you measure ROI for your ecommerce store?
- 6 strategies to boost ecommerce ROI
- Conclusion

Every ecommerce owner aims to increase profits. This can be achieved by increasing the number of sales, expanding the customer base, and reducing the costs involved in running the business. No matter how much your sales increase, if your profits aren’t growing, you’re truly not achieving your goals of increasing your ROI.

Understanding and increasing ROI is not just a goal but a necessity for the success of your ecommerce business. In this guide, we’ll discuss the concept of ecommerce ROI, how you can calculate it, and some strategies that can help you improve ROI for your online store.

## What is ROI in ecommerce??

**Return on investment (ROI) is a metric that calculates an ecommerce store’s profitability relative to the costs involved in making that profit. It helps the business determine its investments' effectiveness by comparing gains to related expenses.**

### How to calculate ROI?

To calculate ecommerce ROI, you can use the below formula:

ROI = (Net profit / Cost of investment) * 100

Here, Net profit = Total revenue – Cost of investment

Where, total revenue refers to the total amount of money generated from ecommerce sales, and cost of investment refers to the total expenses incurred to generate that revenue.

## Why should you measure ROI for your ecommerce store?

Measuring the ROI of your ecommerce store provides valuable insights into your business performance and directs your marketing efforts. Here are some reasons why you should measure ROI for your ecommerce store:

1.  ### Assessing marketing efforts
    

Measuring your ROI helps you better understand the performance or effectiveness of your marketing campaigns. You can analyze metrics like average order value, conversion rates, and customer acquisition costs to determine the effectiveness of your marketing efforts and make informed decisions.

2.  ### Allocating resources
    

Understanding ROI helps you allocate your marketing budget to channels and campaigns that yield the highest profits. This allows you to get ideal customers by investing in the best strategies and generating more revenue.

3.  ### Identifying cost reduction opportunities
    

By tracking ROI, you can identify areas for improvement and cut unnecessary marketing costs. This includes streamlining business operations, optimizing marketing budget, and retaining customers to increase profits.

## 6 strategies to boost ecommerce ROI

1.  ### Focus on SEO
    

There’s much more to consider in SEO beyond keyword research, SEO-focused content, and on-page optimization to increase your online store’s visibility and get organic traffic. Here’s how you can use SEO to increase your ecommerce ROI:

-   Optimize product pages: Optimize product and category pages by inserting target keywords in the key elements URL, title tag, main copy, and alt tags. Including the primary keyword improves ranking in search results, drives more website traffic, and increases the likelihood of conversions.
    
-   Improve website architecture: If your website structure confuses people and makes finding what they’re looking for hard, you must fix it. Ensure your ecommerce website architecture is simple and easy to navigate. Link all main category pages and best product pages to the homepage. When people find what they’re looking for, they’re more likely to stay on your website for longer and explore your products, increasing the probability of conversions.
    
-   Optimize site speed: Site speed is another important consideration. The likelihood of a bounce [increases by 32%](https://www.thinkwithgoogle.com/marketing-strategies/app-and-mobile/page-load-time-statistics/) as the page load time increases from 1 second to 3 seconds. Thus, optimizing site speed is essential to reduce bounce rates and enhance customer experience.
    

  

2.  ### Increase repeat purchases
    

  

Ecommerce businesses should retain current customers to grow their brand and achieve long-term success. According to [SmallBizGenius](https://www.smallbizgenius.net/by-the-numbers/customer-loyalty-statistics/), 65% of a company’s business is generated from existing customers.

Customers who make repeat purchases are satisfied and perceive value in your brand. This leads to more sales, which further translates into higher profit margins. Also, retaining existing customers is cheaper than acquiring new customers.

Here’s how you can increase repeat purchases:

  

-   Use loyalty programs to incentivize customers to share product reviews or testimonials. This strategy works well to shift from one-time sales to keeping customers returning and fostering customer loyalty. You can also use VIP programs to offer better rewards for repeat purchases with perks such as early access to new products or exclusive sale events.
    
-   Offer your current customers flat-discount coupons, BOGO, free shipping coupons, and percent-off discount coupons. This will give your customers a good reason to choose your brand over others, ensuring a competitive advantage.
    
-   Encourage your existing customers to share your brand with others through referral programs. For instance, reward loyal customers with $20 off their next purchase when they refer a friend.
    
-   Offer subscription services that charge customers a specific amount weekly, monthly, or yearly to receive regular deliveries of your products. For instance, Apple One, a subscription bundle for premium services at a monthly price, allows users to access and enjoy a range of Apple services and keeps them returning for more.
    

To learn how to increase repeat purchase rates, check the guide below.

<div class="highlight-gray"> <p> <strong>💡 Related guide: <a href=https://www.mailmodo.com/guides/repeat-purchase-rate/></strong>How To Increase Repeat Purchase Rate With Interactive Emails?</a></p> </div>

3.  ### Display social proof
    

>“In general, when we are unsure of ourselves, when the situation is unclear or ambiguous, when uncertainty reigns, we are most likely to look to and accept the actions of others as correct.”
>
>\- [Robert B. Cialdini](https://www.goodreads.com/quotes/7359810-in-general-when-we-are-unsure-of-ourselves-when-the), Influence: The Psychology of Persuasion.

Integrating customer reviews and testimonials on your website and social media builds trust with potential buyers, impacting their purchasing decisions. With more people seeing good reviews about your products or services, the cycle of [social proof](https://www.mailmodo.com/guides/social-proof-examples/) boosts your brand name.

Here’s how you can use social proofs on your website:

-   Include testimonials on the home page and social ads. Seeing good customer experiences boosts your visitors’ confidence in purchasing from you, improves the brand image, and spreads brand awareness.
    
-   Add customer reviews and ratings on the product pages. Since customers associate higher product ratings with better quality, they’re more likely to buy the product.
    
-   A/B test your social proof to find the best one to work for your brand. Experiment with various types of social proof to identify the best options or combinations. You can also test different positions ( above the fold or near the CTA button) on your landing page to find where to place testimonials for maximum impact.
    
-   Using social proof during the checkout process can encourage customers to finalize their purchases and lower cart abandonment rates. Further, merge it with FOMO (fear of missing out) to show how many other shoppers have added the same product to their baskets.
    
-   Incorporate social proof in emails to bolster trust, increase engagement, and drive conversions.
    

To learn more about using social proof in email marketing, check out our guide below.

  

<div class="highlight-gray">

<p> <strong>💡 Related guide: <a href=  https://www.mailmodo.com/guides/social-proof/ ></strong>How to Use Social Proof in Email Marketing to Get More Sales?</a></p>

</div>

4.  ### Use retargeted ads
    

According to a survey by [Vibe.co](https://www.vibe.co/blog/what-is-retargeting-and-how-does-it-work), 37% of customers like retargeted ads because they like the products displayed.

Retargeted ads reengage visitors who have shown interest in your brand before. These ads can motivate them to return and complete the desired action, such as purchasing or signing up for your services. They increase the chances of converting visitors into paying customers, increasing your sales.

Here are some good practices you must follow when using retargeting ads:

1.  Begin retargeting with one retargeting platform. Choose a platform, such as Google Ads, familiarize yourself with it, and use it to the fullest.

2.  Experiment with different frequencies of retargeted ads to find the right frequency of ads to run. Sending too many ads makes them seem unpleasant. At the same time, don’t display your ads once or twice. People need to see your ads a couple of times before they return.

3.  Avoid using the same ad repeatedly. Create new retargeted ads to increase the probability of getting visitors back. It is recommended to create new ads and test them with A/B testing to identify the best ones.

4.  Track the information of retargeted ads as it gives valuable insights that you can use to improve and optimize your ads.

  

5. Use existing information to display personalized retargeted ads for products in which users were interested previously. This targeted approach makes the ad more relevant, increasing the chances of conversions from potential buyers.

  

### 5. Offer personalized product recommendations

[Amazon generated 35% of its ecommerce sales](https://www.mckinsey.com/industries/retail/our-insights/how-retailers-can-keep-up-with-consumers) from recommendations. This number reveals the impact of personalized recommendations.

Providing personalized product recommendations is a win-win situation for both ecommerce businesses and online shoppers. The more opportunities you offer your customers to discover and buy products, the higher the sales. At the same time, personalized recommendations offer a great shopping experience by offering products that align with their interests and needs, increasing customer satisfaction. Here’s how:

1.  Monitor preferences, purchases, and browsing history to gain insights into consumer behavior and interests. By providing relevant suggestions, you can motivate them to make additional purchases and increase their spending.

Monitor preferences, purchases, and browsing history to gain insights into consumer behavior and interests.

2. Analyze customer preferences to cross-sell products by offering complementary products during customers' shopping journeys. You can also use upselling strategies to offer upgraded products with higher value or better features to increase [average order value](https://www.mailmodo.com/guides/increase-aov/).

3. Moreover, keeping up with [ecommerce personalization trends](https://www.experro.com/blog/ecommerce-personalization-trends/) helps your brand deliver product recommendations that feel timely, relevant, and tailored, leading to better customer engagement and higher conversion rates.


### 6. Run a referral program

According to Neilsen, [92% of customers](https://www.nielsen.com/insights/2012/consumer-trust-in-online-social-and-mobile-advertising-grows/) trust suggestions from people they know. The [referral program](https://www.mailmodo.com/guides/referral-program/) allows existing customers to share your products and services with their families and friends. When a customer purchases using referral links or codes, the referrer and referral get benefits or rewards.

Here’s how you can use referral programs to increase conversions, leading to a better bottom line:

1.  Reward the person who refereed and the referred person. These double-sided incentives increase the conversion rates of your referral program. If your product is a big-ticket item, consider offering cash or gift cards, and if your product is low-cost, offer store credit or discounts.
    

  

2.  Focus on attracting members who are interested in your products and services and are more likely to become your loyal customers. Track the long-term value of customers through referrals to determine if your referral programs are working effectively.
    

## Conclusion

Now that you’ve understood the above strategies, it is time to implement them. All of them play an important role in the growth of the ROI of your ecommerce business. Taking the right action can increase conversions, cut costs, build a loyal customer base, and drive sales to boost your ecommerce ROI.

## Frequently Asked Questions

### How often should you review your ecommerce ROI?

It is advised to review your ecommerce ROI regularly to evaluate the effectiveness of your marketing strategies. Measuring it monthly or quarterly clearly shows what is working and what isn’t. You can identify areas of improvement and fix them to minimize losses and tap new growth opportunities.

### What factors affect ecommerce ROI?

Some key factors that affect ecommerce ROI include shipping and delivery, customer experience, conversion rates, product pricing, customer service, average order value, website performance, customer acquisition costs, market trends, and competition.

### Can improving website speed increase ecommerce ROI?

Yes, improving website speed increases ecommerce ROI. Fast-loading websites offer a better user experience and boost the likelihood of conversion, thereby boosting your ecommerce ROI.

### What is a good ROI for an ecommerce business?

A good ROI depends on the industry, business model, size, and market conditions. There are no specific figures as benchmarks, thus businesses must set ROI targets depending on their goals and market conditions. For a good ROI, your profits must be higher than your investments.

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---

**Author: Mashkoor Alam**

Mashkoor has always been passionate about writing. He used to write short stories on his blog before he started writing for SaaS companies years back. He aspires to have a book under his name.

