Conversion Rate Optimization: Developing a model that facilitate its adoption in Small and Medium-sized Enterprises

Abstract

Retail through e-commerce has increased significantly throughout the last decades and now represents 14.6% of the global retail spending. E-commerce opens new ways of reaching customers that extend beyond the physical location of a company. The potential of increasing sales by expanding the existing customer base has pushed many Small and Medium-sized Enterprises (SMEs) to adopt ecommerce capabilities. However, only a low percentage of SMEs that invest in e-commerce capabilities experience actual growth benefits. One factor affecting the growth rate is the associated conversion rate experienced through e-commerce. To combat low conversion rates, companies can apply a process known as Conversion rate optimization (CRO). However, most of the examples provided centre around best practices and are primarily conducted by big e-commerce companies, which don’t necessarily fit with the context of SMEs. Inspired by this gap in literature and practice, this thesis investigates how SMEs can adopt CRO in their e-commerce strategy. To illustrate this, a single case study was conducted on a Danish SME named Kontra Coffee. Through participant observation, the problem explication revealed that Kontra Coffee was not data driven nor customer-centric and did not encompass a culture open to experimentation. These were the primary obstacles to adopt CRO. A subsequent requirement identification led to the final design of the Lean CRO Model, a structured and iterative model, which has the potential to help SMEs adopt CRO in their e-commerce strategies (Figure 16, p.39). The model consists of four steps: Explore, Empathise, Experiment, and Evaluate. During the Explore step, the main constraints were identified using descriptive statistics of Kontra Coffee’s website traffic. The findings were then used in the Empathise step, where five test subjects participated in a usability test to map out the main usability issues on the website. A filtering option and an easier overview of the different coffees on the catalogue page were identified as the main issues that degraded the user experience on the website. Hereafter, two problem statements and hypotheses were stated in the Experiment step resulting in two A/B tests. The preliminary results of the Evaluate step indicated a 96% and 89% probability of better performance by the variant versions, respectively. The findings conclude that the Lean CRO Model can enable CRO adoption in Kontra Coffee and increase conversion rates. Finally, the results of this study call for a further evaluation of the Lean CRO Model to test its generalizability in contexts beyond the case company.