Conversion Rate Optimization: Why Now is the Best Time to Get Started

by Neil Patel

Assume for a moment that your site’s doing well across many key performance indicators (KPIs). You have healthy traffic stats thanks to your SEO, paid search, and social media campaigns.

Things look to be on the up and up, except for one problem—sales remain stagnant.

What’s going on? Isn’t web traffic the Holy Grail of digital marketing?

In reality, it’s not so simple. While traffic is an important foundational metric, not all user visits are created the same. As such, it’s important to remember that while traffic is important, the real goal should be finding ways to correlate traffic metrics with conversions.

This is where conversion rate optimization comes in. As the name suggests, CRO is a process aimed towards optimizing different elements in and out of your website involved in the conversion funnel. This includes paid ads, landing pages, UX design, and onsite and offsite content among others.

By optimizing your conversion rate, you reduce your cost per acquisition (CPA), which in turn improves your ROI. Simply put, CRO is about making the conversion process more efficient, making the most out of what you already have.

But what reasons are there for investing in CRO?

1. There’s Always a Way to Improve Your Conversion Funnel

Even if you think you run a well-oiled machine, there’s always bound to be some way to improve your process of converting users to customers. In a previous post, I talked about a 3-step Conversion Funnel that both simplifies and maximizes your funnel’s efficiency.

It’s broken down into these simple stages:

  1. Create content.
  2. Optimize for users.
  3. Convert users.

content funnel

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Creating Content

Creating content is about using content marketing and SEO—though if you asked me they should be one and the same these days—to cast a wide net and attract the attention of your audience. But the key distinction here is to do it without actually selling them your product or services.

In other words, it’s about raising awareness and providing high-value information that puts your site in a favorable light.

Optimizing for Users

Users who have expressed interest in your brand will be at this stage, and your job will be to analyze user information and behavior to push them towards converting. Your analytics data will tell you:

  • How engaged users are in this stage
  • What types of content or messaging they interact with the most
  • And more importantly, how they interact with content assets (do they share, like, and take time to read through long-form content?)

Converting Users

And finally, this stage brings your users closest to the finish line. At this point, the job is about tailoring your message and making it compelling enough for users to make a desirable action (i.e. conversion).

Besides crafting an appropriate message, this stage entails a lot of testing to measure how elements such as content assets, calls-to-action (CTAs), and images among others resonate with your audience.

The Sponsored Ad Space is Getting More Expensive and Crowded

It’s no secret that Google has always wanted to differentiate its paid search platform against organic search, encouraging users to “pay to play” in order to increase conversions.

While AdWords definitely has the ability to produce significant results in terms of sales, throwing more money at your conversion problems isn’t necessarily the way to go all the time.

This is especially important to remember, as a recent study on Search Engine Land shows branded PPC ads are getting more expensive. The cost to maintain top position for a brand search keyword has increased by over 60 percent between February 7 to 16, and March 27 to April 5.

branded search comparison

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While I don’t see PPC going away as an essential element of CRO any time soon — in fact, Google is rolling out an AdWords redesign soon to make the platform more mobile accessible — it’s only truly effective when your conversion funnel does not have any critical flaws.

CRO Helps You Target the Right Customers

True conversion efficiency isn’t just about turning users into customers, but targeting the most relevant group of customers to your brand. These people will be the perfect fit for your product or service, and will love what you have to offer the most.

And the more relevant your customers, the more likely they’ll help your marketing efforts through good old word of mouth advertising.

The key to doing that with CRO is through user personas. It’s a complex topic that deserves its own post, but basically, it involves the following elements:

  • Research on user behavior on your site
  • Gauging user reaction to your messaging
  • Insights on their objectives as customers

Research can be done through:

  • Person-to-person interviews
  • Over-the-telephone market research
  • Online survey and feedback forms
  • Focus groups and more

The goal is to develop different personas (or customer archetypes). These will help you decide what kind of content to push, where to broadcast it, and when, based on each persona’s interests and habits.

CRO Helps You Keep Existing Customers

The customer’s journey shouldn’t have to end with a conversion. This means your outlined conversion goals should also take into consideration what happens after your users make a desired action. Remember, the cost of acquiring new customers is far more than the cost of retaining existing customers.

In other words, it costs more money to broadcast your marketing messages to people not familiar with your brand than those who already are. As such, it makes perfect sense to maximize the lifetime value of your customers, rather than just focus on the short term or one-time transactions.

This is where I see many brands and their marketers make mistakes. They tend to think conversions are a one-time deal, when in fact customers who have made purchases, or made desirable actions on your site, tend to be the most engaged and receptive to your company’s subsequent marketing efforts.

Post-conversion CRO lets you, among other things:

  • Amplify your brand’s visibility
  • Improve after sales customer relationships
  • Increase incremental sales in the future

One example of a post-conversion CRO technique can be found on Groupon’s purchase confirmation emails, as featured on Marketing Land.

groupon is ready

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The group-buying site opens the door to several different actions through their post-purchase messaging. It features a relatively simple visual design to encourage the customer to get the Groupon app, pushing other similar offers, and raise awareness of a refer-a-friend program for a Groupon value of $10.00.

And get this, transactional messages like these are known to have high open and clickthrough rates, as seen by an Experian Marketing Services report.

open and click rates transactional emails

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I would strongly suggest taking advantage of confirmation emails, using them for messages that include:

  • Product offers
  • Newsletter opt-ins
  • Social media CTAs
  • Related products

CRO is Cost-Effective (Sometimes Even Free)

Conversion rate optimization is focused on optimizing whatever traffic your site already has. In other words, you’re not spending money on acquiring new visitors, but trying to do a better job of turning the people who visit your site into paying customers.

As a result, CRO lets you maximize your current investments. Moreover, the process of converting a high percentage of existing visitors is more cost-effective than bringing in new visitors.

Kissmetrics has compiled a wealth of case studies poring over the results of CRO tweaks and techniques. While it’s true that some methods employed cost money to pull off, others could be done in just a few minutes.

For example, in one case study, pushing a call-to-action above the fold, thereby making it more visible, increased conversions by 591%! And that’s all due to a quick change of landing page code.

natureair

nature-air after

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The beauty of CRO lies in how the smallest of changes can have a huge impact. This isn’t to say, however, that CRO won’t require some kind of investment. In a previous post, I talked about how 30 percent of your marketing budget is the ideal sweet spot for a CRO investment, a point echoed by SEO company, Positronic Design.

CRO Lowers Customer Acquisition Costs (CAC)

If you need to reduce your company’s marketing budget without hurting revenues and profits, CRO is the way to go. It lets you reduce your customer acquisition costs (CAC) by redirecting your marketing efforts towards current customers.

CAC is a critical business metric revolving around acquiring customers for revenue, and telling you much how it cost to get more customers. To calculate your CAC, get the total of your sales and marketing costs within a specific timeframe. Next, divide it by the number new customers over the same period.

customer acquisition cost equation

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CRO comes in by raising conversion rates, which are inversely proportional to your CAC. In other words, the higher your conversion rates, the lower your CAC. CRO also lets you test content and mechanisms that have the best likelihood of converting casual visitors into paying customers. And it does this with hard, quantifiable data rather than hypothesis.

CRO Maximizes Sales

This may seem like a ‘duh?’ moment, but it’s still worth mentioning since it’s perhaps the best reason to invest in CRO. Higher conversion rates mean more people are making a desired action on your site—for now, let’s pretend that desired action is a purchase.

CRO is all about nurturing your user across different sales platforms (e.g. landing pages, emails, paid search ads) until they’re ready to convert to customers.

Of course, by now you know that encouraging leads to turn into customers is one way of increasing sales (again, duh?). But what you might not know is how even the smallest increase in your conversion rate can have a major impact on your sales and profits (total revenue minus total costs).

Consider the example below.

revenue vs. costs for conversion rate optimization

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Let’s assume you’re able to improve your homepage conversion rate by 50 percent. This could translate to an increase of 500 percent in profits. How? It’s because increases in an individual sales funnel step can have significant leveraging power across the entire funnel.

And even smaller CR increases of 5 percent to 10 percent can be the difference between making and losing money. That’s how sensitive profits are to your conversion rate.

CRO Maximizes the Value of Your SEO Campaigns

CRO presents a number of benefits for business relying on organic or paid traffic from search engines like Google and paid search platforms like Google AdWords or Bing Ads.

  • For starters, CRO lets you monetize your existing rankings. The higher your rankings on search engines, the better your chance of getting more users.
  • CRO’s focus on improving conversion rates through improving content, web design, web usability, and user interface among others dramatically increases your likeability. The better your image, the more likely your customers will be loyal.
  • Increase conversion rates improve your bottom line. This gives you more resources to invest in different advertising platforms, whether it’s offline marketing, PPC, or affiliate marketing. With a more stable business, you no longer have to depend exclusively on organic traffic. This also gives you some protection against search engine algorithm changes.
  • Increased audience appeal through CRO also means more sites are more likely to link to you. This in turn boosts your search rankings.

Conclusion

It’s important to remember that with CRO, conversions shouldn’t be the be-all and end-all of your optimization campaign. There are several critical steps to take after the purchase. For example, you need to ask questions on why customers bought your product or service.

  • Was it due to a successful advertisement? If so, stick to that ad.
  • Was it because of a particular blog post? If so, consider expounding or replicating that topic in another post.
  • Was it because of a spike of activity in one of your social media channels? If so, consider upping the ante on that front.

To cut the long story short, CRO is all about being smarter with data that’s just a tweak or implementation of a certain mechanism away. But as mentioned earlier, its key distinction is how it directly affects your profits.

Get the basics down, and watch your revenue rise.

What about you? How is CRO affecting your efforts to drive conversions? Has it been effective?

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Neil Patel

Neil Patel is the co-founder of Crazy Egg and Hello Bar. He helps companies like Amazon, NBC, GM, HP and Viacom grow their revenue.

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