In our previous post, CRO Testing is Expensive, but Worth It, we covered the different ways to implement Conversion Rate Optimization (CRO) into your webstore and the results it has produced for several of our clients. We know from experience that CRO is one of the absolute best ways to increase your ecommerce revenue. Focusing on generating more traffic without practicing any kind of conversion optimization is analogous to having an open house without cleaning or picking up the dirty laundry. Let’s discuss the statistics behind CRO and the benefits you can expect to see.
Why is CRO Beneficial?
CRO focuses on converting your existing visitors while increasing customer lifetime value, over investing in driving more site traffic that will convert at the same rate. Instead of investing money to get more visitors to convert at your existing rate of 2%, you’re improving the conversion rate of the visitors you’re already getting (or even paying for) while improving metrics like Average Order Value (AOV) and Revenue Per Visitor (RPV).
The basic formula is:
Number of Visitors x Conversion Rate = Number of Conversions
As an example, let’s pretend that Website A has 50,000 visitors a month, and a conversion rate of 2%:
50,000 x .02 =1,000
As we all learned in elementary school, increasing either one of first the two variables in the initial formula will increase the product. Therefore, by increasing either the number of visitors or the conversion rate, we can increase the total number of conversions.
But which one is more effective?
First let’s talk about increasing the number of visitors. Putting money into paid search is a very standard tactic for increasing the number of visitors. According to HubSpot, the average cost per click on a search engine ad is $2.32. So, using that average CPC, let’s say we spend $3,000 on 1,294 visits.
51,294 x .02 = 1,206
Nice! By increasing the number of visitors to the website, we’ve increased the total number of conversions by 26.
But what if instead of increasing the number of visitors we increased the conversion rate? Let’s pretend Website A ran A/B tests and improved the site’s conversion rate. InteractOne’s personal average track record with improving sitewide conversion rate is 30% over a 6 month period. A 30% increase on 2% is 0.6%:
50,000 x .026 = 1,300
Wow! Now we’re talking. The same investment into improving the conversion rate yielded nearly six times as many additional conversions each month! That’s an ongoing lesson you can continue to capitalize on as you increase traffic over time.
Unexpected Benefits of Conversion Rate Optimization.
If you’re reading this and rolling your eyes because OF COURSE increasing conversions is a benefit of Conversion Rate Optimization, then stay tuned because there are also some unexpected benefits of conversion rate optimization.
1) Know Your Customers Better
- Data provided in a CRO campaign is unparalleled. A creative campaign manager can research, mine and use that data to drive more iterative tests and further improve site engagement.
- In addition, CRO data and feedback is unbiased: by testing, you are literally asking customers what they prefer on your site.
- Even a losing A/B test teaches you what not to do or what customers prefer.
- Experimenting with product sort orders and merchandising can help you expand or target your product offering to what customers are engaging with the most.
2) Improved Customer Acquisition Costs
- This is an easy one – A/B help convert more of the same amount of traffic at a higher average order value.
- A/B testing helps to drive increased organic rankings and PPC quality scores through improving your site engagement.
- Bounce rate, pages/session, time on site and even conversation rate are known to impact both quality score and SEO.
3) Learn More About Your Website
- Technical and UX issues are uncovered in A/B testing more efficiently, than via any other form of troubleshooting. Oftentimes clients resort to a CRO utility to help diagnose a reported problem that’s difficult to reproduce.
Refine the customer experience on specific devices individually. Sometimes successful tests on desktop don’t scale well on mobile.
Improving your website on a per-device basis teaches you how customers are engaging on each type of device.
- You’ll find yourself viewing and using your site more through a visitor’s perspective than the normal biased site owner approach that often occurs.
Investing in Conversion Rate Optimization has long-term payoffs compared to any other traffic building campaign. Just like with home improvements and remodels, you’re building small upgrades into your site to make it more efficient and customer friendly.
If you’re interested in working some CRO magic on your webstore, there’s no better time than the present. Contact us today and let’s discuss your needs in greater detail.