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What is Conversion Rate Optimization?

What is CRO?

Conversion rate optimization is the systematic process of maximizing a website’s conversion rate. You’ll often hear the terms “split testing” and “AB Testing” – these are the methods of conversion rate optimization, but not to be confused with conversion rate optimization itself.

CRO is extremely important to website owners because small changes in a website’s conversion rate can have massive, massive impacts on both sales and marketing expenses. Changing a conversion rate from 3% to 4% means that you’ve effectively increased your sales by 33%. Not only that, but because you are converting more of your website traffic into paying customers, you are effectively reducing the amount of money you need to spend to acquire a single customer.

Real Life Example – Upspring Baby

Let’s say that you are the owner of Upspring Baby (one of our past clients). Upspring Baby sells products to help mothers lose weight after pregnancy, a great niche! They brought us on board to split test their homepage and increase conversions.

Here’s the original homepage:

Upspringbaby-desktop-before

Here’s the new homepage that we designed:

upspring-new-homepage

To optimize the site for conversion, we performed an AB Test, dividing the traffic 50% to the original homepage, and 50% to the new homepage. The new homepage showed a 28% improvement in conversion and revenue compared to the original homepage!

You can check the results in VWO here.

VWO_Report_Upspring

The Revenue Impact of CRO

The reason why so many website owners obsess over their conversion rate is that conversion rate optimization has a real, tangible impact on revenue and net profit. One of the most cited examples is how Obama raised closed to $60M by leveraging AB tests on his online donation pages. AB testing is big business, especially for large campaigns.

The second largest reason that conversion rate optimization is important is that your conversion rate directly affects your marketing expenses. Here’s a simple example:

Original Website

  • 1,000 clicks at $1 CPC = $1000 total spent
  • 1% conversion rate * 1,000 clicks = 10 customers
  • $1000 spent / 10 customers = $100 CPA

Optimized Website

  • 1,000 clicks at $1 CPC = $1000 total spent
  • 2% conversion rate * 1,000 clicks = 20 customers
  • $1000 spent / 20 customers = $50 CPA

Do you see that? Doubling your conversion rate not only got you double the amount of customers, but it cut your marketing expenses in half. For businesses spending lots in online advertising, conversion rate optimization is a big deal.

Common Mistakes

While CRO has great promise, experts and practitioners see amateurs making the same mistakes over and over again:

  1. Testing without Hypothesis: You cannot simply test at random. You must test hypothesis in order to maximize conversion rate. There needs to be a process in place to get the most return from your time investment.
  2. Improper Test Set Up: Most tests are going to require at least two weeks of data to determine they are significant, and preferably longer. Reaching statistical significance alone does not mean that your tests are a winner, as time can play a significant factor.
  3. Wrong Expectations: In practice, your conversion rate is not going to change from 3% to 4% after implementing a winning test. The gain that you get from conversion rate optimization is a relative, and not an absolute, lift. This means that even after you implement a winning design, you should still expect your conversion rate to move up and down.

How to Get Started

The easiest way to get started with CRO is to run 1-2 basic tests on your website using Optimizely or VWO. This will get your feet wet. After this, I recommend reading as much as you can from all of the excellent free resources out there. Both the VWO and Optimizely blogs are excellent places to begin, as well as our own Uplift Blog.