MN7P13 Building Business Insights

Module Leader: Dr. Stephen Hills

Argos UK and Lower Online Conversion Rate Issue

Student Name:

ID:

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Contents
1. Details of the Business Problem..................................................................................................3

1.1 Company History & Background..........................................................................................3

1.2 Description of the Problem....................................................................................................3

1.3 Providing Evidence of Issues.................................................................................................3

1.4 Complication of the Situation................................................................................................4

1.5 Objective................................................................................................................................4

2. Disaggregation of Problem Structure and Component................................................................5

2.1 Problem Components Logic Tree..........................................................................................5

2.2 Solution Drivers and Hypothesis Logic Tree.........................................................................9

3. Prioritisation of Hypothesised Solutions...................................................................................14

4. Workplan of Analysis.................................................................................................................17

References......................................................................................................................................24

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1. Details of the Business Problem

1.1 Company History & Background

Argos, a UK retail giant, boasts a strong physical presence but faces challenges in online
conversion rates. Founded in 1973, Argos rose as a UK catalogue giant, later integrating online
sales (Argos , 2023). Today, it faces the challenge of boosting its online conversion rate (turning
website visits into sales) which currently sits below the industry average. This is crucial as online
retail thrives, and maximising website sales is essential for Argos's competitiveness in the digital
marketplace.

1.2 Description of the Problem

Argos, a well-established UK retailer with a strong online presence, is capturing fewer website
visitors as sales compared to its competitors. While the industry average sits around 4%, Argos
falls short at 2.5% (Grips, 2024). Founded in 1972, Argos thrived with its catalogue and stores.
However, translating that successfully online requires improvement to capture a larger share of
the £1 million monthly visitors who browse but don't convert.

1.3 Providing Evidence of Issues

Argos UK's online conversion rate (around 2.5% and above) is below the industry average
during the quarter 2021 to 2022 can be noticed in the picture below, leading to missed sales
opportunities. It reflects that competing firms in the industry if encounter 10,000,000 visitors
online thereby generating nearly 40,000 sales while Argos at the same time making only around
25,000 sales for the same visitors (Statista, 2023). This translates to 15,000 missed sales
opportunities per month due to the conversion rate gap.

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 Figure: Online Shopping conversion rate in UK; Source: (Statista, 2023)

In today's competitive online retail landscape, maximizing website sales is crucial. By closing
the conversion rate gap, Argos can significantly boost sales without requiring a vast increase in
website traffic (Pacer, 2019). This problem is not unique to Argos; many established retailers
face the challenge of adapting their online presence to capture a larger share of website visitors
who convert into paying customers.

1.4 Complication of the Situation

Argos struggles with a low online conversion rate despite industry benchmarks. This can stem
from a complex web of issues like confusing website flow, lack of urgency for purchases, or a
disconnect between their physical and online brand image (Conn and McLean, 2019).
Additionally, ineffective targeting or a mobile unfriendly experience could further hinder
conversions. Addressing these complications is crucial for Argos to turn website traffic into sales.

1.5 Objective
Increasing the online conversion rate of Argos UK to 5% within the next quarter, from June to
August 2024.

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2. Disaggregation of Problem Structure and Component

2.1 Problem Components Logic Tree

Confusing
Layout
1.1 Website
Navigation &
Design
Slow Loading
times
1. User
Experience Issue
Lenghty checkout
procedures
1.2 Checkout
Process
Unexpected
Shipping costs

Unclear data
security measures
2.1 Lack of
Security Signals
Vague return
policy
Lower Online Conversion 2. Customer
Rate compared to industry Journey Issues
average. (2.5% < 4%)
No flash sales
2.2 Absence of
Incentives
No rewards for
repeat customers

Lack of
personalization
3.1 Ineffective
Targeting
Misaligned
advert
demographics
3. Marketing &
Targeting Issues
Gap between in-
store and online
experience
3.2 Brand
Perception Gap
Lack of customer
testimonials

Figure: Problem disaggregated logic tree; Source: Self-developed

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2.1.1 User Experience Issue

Argos' low online conversion rate suggests a breakdown in the user experience (UX) journey.
Academic literature and industry trends highlight several critical factors within UX that can
significantly impact conversion rates. Confusing website layouts, slow loading times, and poor
mobile responsiveness are well-documented conversion killers. Nielsen Norman Group (NN/g),
a leading UX research firm, emphasizes the importance of intuitive navigation and clear
information architecture (Tankala, 2024). A recent study by MacCunn, (2024) demonstrates that
website speed directly impacts conversion rates, with slow loading times leading to visitor
frustration and cart abandonment. In today's mobile-first world, responsiveness is no longer a
luxury but a necessity. Ginorio, (2023) highlights the increasing dominance of mobile shopping.
If Argos' website isn't optimized for smaller screens with easy navigation and a streamlined
checkout process, they're missing out on a crucial segment of potential customers. Customers
rely on detailed product descriptions, high-quality images, and user reviews to make informed
purchase decisions. The absence of such information can lead to confusion and hesitation,
ultimately hindering conversions. The success of e-commerce businesses like Amazon in
attracting customers with good product presentation has served as a benchmark. Providing
comprehensive product characteristics, various photos from several angles and including some
content from users like reviews will build the experience of online shopping at Argos. As the UX
factors, in the initial layer, are seen, Argos can find out the areas that are weak. User testing, and
heat mapping tools is to help get behaviour patterns and points of difficulties in the website
navigation and product information. Moreover, it is essential that Argos maintains awareness of
the modern markets’ trends such the growing importance of mobile shopping and the impact of
customer reviews so that it can remain competitive generally. Getting rid of the mentioned
usability concerns will be the first thing on our agenda for winning the game motivated by
turning more site browsers into cash spenders.

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2.1.2 Customer Journey Issues

Although the good user experience is a major factor, the conversion also is dependent on the
understanding of the customer journey not confined in the first stage of using the website. The
building up of trust is the most important key to the online retail world. Hassan (2023) stresses
the fact that one need to implement clear return policies and make appropriate data security
measures to win customer’s confidence and trust. The unclear return policy will draw away the
reluctant buyers and unclear data protection procedures may turn some off from online
transactions. In the digital era of our time, the consumers are more privacy-prone. Research by
different organization sets the stage contemplating the increasing role of data security and
transparency in online shopping. The company can overcome such worries as clear return
policies, robust data encryption methods, and secure payment gateways, the most visible of
which, can alleviate customers' concerns and stimulate sales. Making one all in a hurry or simply
offering compelling features may immensely influence the purchase decision. The advent of the
e-trading giants who recharge competitive shipping options and loyalty benefits have become the
logical and customary thing to in the world of commerce. Numerous studies by Shehu, Papies
and Neslin, (2020) on this issue indicate that free shipping thresholds and loyalty programs are
efficient marketing tools to increase level of customer engagement and increase the customers'
purchase frequency. By researching competitors' strategies and applying similar ones like
promotional offers for a specified time, fast shipping, and loyalty program, Argos can attract
website visitors by motivating them to shop and browse again in the store. But, Argos could be
leaving behind several sales opportunities since it failed to employ the strategies mentioned.

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2.1.3 Marketing & Targeting Issues

The third sector of the logic tree reflects on marketing and targeting problems which make it
possible to say that Argos has a low online conversion rate. Personalization is a critical
constituent of online marketing that works in today's marketplace. According to (Kenton, 2019),
this highly targeted website content and advertising campaigns provide greater effectiveness by
segmenting the audience based on user behavior and demographics. Nevertheless, Generic
website experience and not focused advertising will not hit the exact point with potential
customers. Not choosing the correct audience in your online advertising is equivalent to wasting
your resources without the desired number of conversions. As IAB studies reveal, an accurate
audience targeting strategy leads to a high ROI of advertising (IAB, 2023). It is possible that
Argos would draw website visitors who are not interested in its product offerings because of a
poorly designed ad campaign. On the other hand, contemplating about the brand perception gap,
despite the fact that Argos has a well-established physical presence, this might not be able to
convert to the online environment as well. If the online experience lacks the same level of ease
and trust associated with Argos' physical stores, customers might be hesitant to convert.
Furthermore, the lack of customer testimonials or a weak online brand presence compared to
competitors can further erode trust. O’Shea, (2017) demonstrates the positive influence of user-
generated content (UGC) on online purchase decisions. The absence of such testimonials on
Argos' website creates a barrier for some customers who rely on social proof before making
online purchases.

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2.2 Solution Drivers and Hypothesis Logic Tree

User-based
Implementing A/B
customized
Testing
1.1 Improve navigation menus
website navigation
& design Optimizing similar
Conduct website
loading time across
speed test
different devices
1. How to enhance
cstomer
experience? Reducing number
Offer guest
of steps for
checkouts
checking out
1.2 Streamlinig
checkout process
Provide clear Integrate multiple
shipping and easy secure payment and
payment options shipping options

Display a clear Provide customer

customer-friendly to prefer between
retrn policy return options
2.1 Strengthening
security signals
Accessible data- Implement SSL
secutiry encryption for
information transactions
Increasing online 2. How to provide
conversion rate above the smooth customer Offer free returns
industry standard. journey? Limited time offers
with a limited trial
and falsh sales
2.2 Creating period
Incentives &
urgency Loyalty programs Offer discount
for repeat coupons and free
customers shipping

Product Leverage website

Recommendation analytics data
3.1 Personalization
strategies
Campaigns based
Offer dyanmic
on user-
3. How to contents
demographics
optimize marketing
& targeting
strategies? Leverage existing In-store pickup
store network options
3.2 Bridge brand
perception gap
Feature online
Showcase benefits
customer
of online shopping
testimonials

Figure: Solution drivers logic tree; Source: Self-made

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2.2.1 Strategy for Improving Website Navigation & Design

This solution moves away from a static navigation menu and explores the concept of
personalization. For example, A/B testing can allow Argos to test different navigation layouts
with real users. By comparing conversion rates, they can identify the most user-friendly design
(MacDonald, 2022). Based on past browsing behaviour or demographics, the website could
dynamically adjust the navigation menu. This caters to individual user needs, making it easier to
find desired products. Imagine a user who frequently shops for electronics seeing an
"Electronics" category prominently displayed, while another user interested in homeware might
see that category prioritized. Similarly, Fast loading times are sensitive for a positive user
experience, especially in today's mobile-centric world. Tools like Google PageSpeed Insights can
pinpoint areas for improvement. This data helps Argos prioritize website optimization efforts.
Focusing on similar loading times across devices ensures a seamless experience for all users
(Rajput, 2023). Mobile users are more likely to abandon a slow-loading website, leading to lost
sales opportunities. Moreover, faster loading times not only improve user experience but also
benefit Argos' search engine optimization (SEO). Search engines prioritize websites that load
quickly, potentially increasing Argos' visibility in search results.

2.2.2 Strategy for Streamlining Checkout Process

Streamlining the Argos checkout process is among the effective hypothesized solutions. By
minimizing unnecessary steps, offering a guest checkout option to bypass account creation, and
transparently presenting shipping costs and delivery times upfront, Argos can significantly
reduce cart abandonment (Chaffey and Smith, 2022). Additionally, providing multiple secure
payment options caters to diverse customer preferences, ensuring a seamless and convenient
checkout experience. Such optimizations not only enhance customer satisfaction but also
increase the likelihood of successful transactions, ultimately leading to higher conversion rates.
Removing friction from the buying journey by simplifying the checkout process creates a user-
friendly environment that encourages customers to complete their purchases swiftly and
effortlessly, driving overall business growth and fostering customer loyalty.

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2.2.3 Strengthening Security Signals

For Argos to maximize its conversion rate, it must first focus on re-building trust by adding
security signals and cues. Concise and customer-oriented return policies that have multiple return
options, and the policies are uncomplicated, help to solve the issues arising from buying things
online. The implementation of SSL encryption, teachings on data security practices and visible
information about data protection reassures customers of the security of their individual personal
information during transactions, boosting trust in Argos commitment regarding privacy
(Strzelecki & Rizun, 2022). These measures alleviate hinder customers from returning the goods
and the robust security measures build user confidence and thus boosting conversions. Argos is
able to achieve this through the provision of security measures and transparent policies, which in
turn contributes to the creation of a more trustworthy and secure e-commerce environment, in
which consumers’ confidence is maintained (Robson, 2016). This notion of constructing trust, of
course, lessens cart abandonment but also increases the chances of converting visitors from the
website into dedicated customers that keep your company in business and assure its success in
the competitive e-commerce market.

2.2.4 Creating Incentives and Urgencies

Introducing the multi-strategic incentive plan, comprising short term deals, free trials/grace
periods, and loyalty benefit, may As to attracting the price-conscious consumers and having the
shoppers experience a sense of urgency, the resulting transaction rate for Argos would increase.
Nevertheless, such undertakings answer hesitant purchase and let consumers buying again and
again, however there are some issues to work out, for such as profitability and customer habit
(Luo, Lu and Li, 2019). As for striking a balance between powerful incentives and steady profit
margins, the core mechanisms should be indulgent of the customers to build a long-term
relationship. Segmentation of offers to prospective groups of people, monitoring effectiveness
via data analytics, and also, providing a memorable experience are something else that should be
done in case the strategy should be impactful (Saunders, Lewis and Thornhill, 2019). Through a
complementary matching strategy of these measures, Argos has the potential to provide a higher
level of attractiveness to shoppers that will boost sales and customer retention in the highly
competitive online retail industry.

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2.2.5 Personalization Strategies

By suggesting a sophisticated method to power conversions, Argos has tried to utilize web
analytics and customer profiles to customize products and adjust the content, making it unique
and appropriate for every shopper. Taking the advantage of user behavior analysis, Argos can
tailor its product recommendations, leading to less time on search and higher satisfaction rate.
This strategy will also reduce cart abandonment because shoppers will see products that are most
loved by them through recommendation. Besides, data security issues and implementation
difficulties are some obstruction that should be taken into account. Ensuring safe data gathering
and open communication about data usage should be the main principle, as well as continued
investment in the technology and skilled data analysts (Anshari et al., 2019). In as much as there
are these difficulties, the benefits linked to personalization, such as better relevance, engagement,
and customer satisfaction, implies a tremendous capability to rise on higher conversion rates.
Continuous improvement of user reviews and A/B testing of different personalization
methodologies would be well-advised together with the use of ethical and responsible norms
(Macdonald, 2022). The personalization aspect is clearly Argos target goal as the strategy is
centered on drawing in and retaining customers by making the shopping experience more
engaging and converting this bigger market share into more purchases.

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2.2.6 Bridge Brand Perception Gap

Combining the physical and online manifests of the brand, we aspire to apply the solid base of
Argos physical stores to boost online conversions. Argos can cover for this disadvantage by
offering "click and collect" or in-store pickup services (Vyt et al., 2022). Therefore, shoppers
who use the internet but still want to shop in stores can experience the familiarity of a real-life
experience rather than online shopping. Highlighting these positives of online shopping,
including the possibility to get more products and round the clock availability, can draw
customers in if they don't understand the benefits of this shopping mode. Establishing brand
cohesion implies making customers' reviews online a part of the strategy to enhance trust and
assure that brand image reflects in all the brand touchpoints. This strategy proves to be essential
for Argos to develop interactions online, which may eventually lead to higher familiarity, faith,
and integrality between the web and brand (Chaffey and Smith, 2022). Nevertheless, hurdles
including supply chain management and keeping branding on point require framing solutions.
Permitting online marketing campaigns to be carried out and providing training for staff so that
the delivery process flows suitably will make a brand experience uniform. Therefore, conversion
rates online will increase, and customers will build loyalty.

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 3. Prioritisation of Hypothesised Solutions
A prioritising matrix is a decision-making tool that is applied to evaluate and rank potential
outcomes based on a number of different factors. By assigning suitable weights to each criterion
nd scoring the answers from high to low, teams are able to conduct a systematic analysis of a
large number of alternatives. When it comes to selecting the most advantageous course of action
or resolution, the matrix makes the process of obtaining objective criteria much easier. The figure
below illustrates the priority solutions to difficulties faced by Aros UK, as determined by this
matrix. It emphasises the most practical solutions to the highlighted issues, ensuring a well-
planned approach to increase online conversion rate.

Checkout processing streamline

Optimizing mobile Website navigation and design

Personalization
High

experience
strategies
Utilizing data driven marketing

Enhancing product information and reviews

Strengthening security signals

Medium

Creating incentives
and urgencies
Improving customer service and support

Bridge brand
Low

perception gap

Low Medium High

Implementation and Feasibility

Impact on Conversion Rate

Figure: Prioritisation Matrix; Source: Self-developed

Prioritising the approaches to tackle the lower conversion rate issue of Argos is essential as the
company is facing this problem for a long time. The matrix has been evaluated on two criteria

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which are impact on the conversion rate and the implementation and feasibility of those
approaches.

Streamlining checkout and enhancing product reviews create a high impact and high feasibility
in case of improving conversion for Argos because of a number of reasons. Redesigning the
checkout creates a huge impact at the stage which matters the most- the moment a customer is
purchasing products. A complicated checkout procedure can cause the abandonment of the cart,
where potential cutlers walk away without completing purchase (Sajeesh et al., 2021). By doing
this, consumers can avoid getting stuck at the moment of final sales. Many website management
systems (e.g., Linnworks, NetSuite) come with on board tools for streamlining the checkout
operation, for example- putting fewer steps and enabling guest checkout. Such adaptations can
be made easily without involving technological issues. Detailed and updated information of
products can enhance the purchasing possibility as this builds a confidence in potential
customers (Parry et al., 2022). This directly influences the conversion rate. Argos can regularly
update product descriptions, incorporate high-quality images and integrate positive reviews and
ratings to boost up sales.

Since website navigation and utilising data-driven marketing immediately improve user
experience and focus on marketing effort, they boost consumer engagement and conversion
rates. Despite their high design and testing requirements, these approaches are highly feasible for
Argos since the requisite tools and technologies are already available and can be integrated into
existing systems.

On the contrary, bridging the brand perception gap is considered the approach with lowest
impact and feasibility among all alternatives. Although it is essential for building a positive
brand equity and building customer loyalty, it is less likely to have an immediate effect on
conversion rates. It takes some time to create a positive value and image of the brand in
customers' minds as most customers prefer purchasing from familiar brands and companies
(ESRC, 2022). As a result, it can’t trigger a direct action from the potential customers.
Additionally, it involves a comprehensive strategic approach to change the perception gap and is
often resource-consuming and time-consuming.

Personalization strategies are essential because they change the buying experience based on the
choices and habits of individual customers. Argos can use this approach as this makes customers

15
satisfied and more interested in the company's products. It increases sales, boosts conversion
rates and makes customers loyal to the brand. Businesses can enhance effectiveness of their
marketing efforts and improve overall customer satisfaction by displaying products and
promotions that align with customers’ preferences (Guido, 2022). However, maintaining
personalization strategies comes with a low feasibility rate because of technical complexity,
resource intensive etc.

Both strengthening security signals and improving customer service have a moderate impact
because they build trust and loyalty, which are crucial for client retention and sales. However,
conversion rates won’t change immediately. The adoption of security measures and enhancing
customer service include the utilisation of existing techniques and technologies that can be
quickly adopted with modest investments (Keller, 2023). As a result, these approaches are
considered as highly feasible. Creating incentives is considered having moderate impact and
feasibility because it may increase sales for a time but it is a temporary approach. Applying it to
different customer segments and combining them in sales come as a challenge in implementing
this measure.

To summarise, the prioritisation matrix suggests that Argos UK should prioritise simplifying the
checkout process, improving website navigation and increasing products data and reviews. These
areas are primary means by which the online conversion rate can be increased. As a result, they
are very realistic possibilities for quick adoption and testing in order to accelerate sales
expansion.

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4. Workplan of Analysis
Leaf Research Hypothesis Analysis Sources
Questions

Checkout How does Utilise website Argos can use  Web

Processing streamlining analytics data: funnel analysis in analytics
Streamline the checkout Argos UK should the checkout  Survey tools
process affect use website process to point (google
cart analytics to out exactly where forms)
abandonment smoothen the the carts are  Industry
and checkout process being abandoned reports
conversion of the customers. by customers. (eMarketer)
rates at Argos Additionally, the Organisations
UK? software that will employ funnel
be used should analysis to ensure
also track how user progression
many users on their website
checkout before and monitor the
purchasing a number of visits
product. It will that reach each
give Argos the segment. It is a
idea to put more trending
emphasis on technique that
particular website renowned brands
feature use to retain
improvement. customers (Sterne
and Harbord,
2022). After
Collect customer getting the
feedback: Argos customer
can use customer

17
 feedback after the feedback from
checkout session surveys, Argos
using ratings or should analyse
questions. The the answers and
survey questions improve the
should include failures. A/B
suggestions from testing can also
the customers on help Argos to
where the site contrast the
should be effectiveness of
improved or the designs.
where should
Argos put specific
focus on.

Website How does the Evaluate existing Argos can use  Heatmap
Navigation redesign of website traffic: heatmap analysis  Session
and Design website Argos should use in this case as it recording
navigation web analytics helps users to tools (Hotjar)
impact user tools to analyse visualise how
engagement the current issues customers are
and sales on the website. navigating on the
conversion These tools will website. A/B
rates? help Argos to testing can be
know various also used in this
metrics such as case to contrast
page views, the conversion
number of visitors rates and user
and duration of behaviours
the session. between the
Besides this, existing features

18
 setting up periodic and the preferred
goals to monitor features. Using
key actions can A/b testing lets an
aid understanding organisation try
how well the out different
features are methods to
turning into improve the
required design and give
outcomes. customers the
best experience
Conduct testing
possible (Jenner,
sessions: Argos
2023).
can collect user
suggestions of
current website
design and what
areas need
improvement. The
company should
also ensure that
the surveys are
easily accessible
to the customers.

Utilising How does Focusing on CRM Argos can use  Customer

Data Driven data-driven systems: segmentation Relationship
Marketing marketing Customer analysis, ROI Management
influence relationship analysis and (CRM)
customer management can predictive systems
retention help Argos to analysis in this (Salesforce)
rates? comprehend case. Customer  Marketing

19
purchasing history segmentation automation
and purchasing means dividing tools
preference of the the customers in (HubSpot)
customers. It different bases
should include such as
behaviour data of demographic
the customers so behaviour and
that Argos can specific
boost up preferences.
conversion rates Customer
by shaping up the segmentation
data according to provides an
customer organisation to
preferences. grasp the
customer
Collecting data
interactions and
from marketing
how they behave
campaigns: Argos
to a particular
should track the
information or
responses of
product
marketing
(Camilleri, 2020).
campaigns in
emails, social To obtain
medias- Facebook, personalised
Instagram, and marketing
online ads. It campaigns,
should include predictive
pointing out analysis can help
specific gather certain
interactions and perceptions to
conversions. predict customer

20
 Obtaining third- behaviour. ROI
party market analysis can aid
research: To get Argos to focus on
latest updates of conversion
customer trends rates.
and industry
standards, Argos
should get access
to competitors'
market research
on the same
industry.

Enhancing How do Putting Argos should  E-commerce

Product enhanced information in invest more in platforms
Information product front and centre: enhancing (Amazon)
and Reviews information Argos should product  Customer
and make sure their information as Review
integrating website contains customers easily databases
customer product get frustrated  Sales data
reviews information in the when they get
impact the centre of the little to no
online customers information on a
conversion perspective so that product and make
rate on Argos’ it attracts them leave their
website? customers' eyes carts on websites.
quickly and they Using analytical
can make a tools such as
purchase easily. Amplitude can
aid Argos to
Maintaining
design the

21
information information in a
quality: Accuracy, way that can
completeness, retain
timeliness and customers.
consistency are
the four
information
criteria that a
product needs to
fulfil. Argos
should obtain
necessary steps so
that the
information
provided with the
product on the
websites meet the
desired qualities.

Reward customers
who give positive
reviews: Argos
can provide
special discounts
to customers who
leave a positive
review on the
company profile.
It will boost
conversion rates
as potential

22
customers will be
induced and
interested to
purchase a product
and provide a
review.

23
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