Want to calculate your conversion rate and see the impact of doubling it? Here’s a simple calculator:
Martech Zone has shared articles on conversion rate optimization (CRO) in the past, providing an overview of what the strategy is and the general steps in the process. This infographic from the team at Capsicum Mediaworks goes into further detail, providing Conversion Rate Optimization Checklist with an accompanying article that details the process.
What is Conversion Rate Optimization?
Conversion Rate Optimization is a methodical approach to making website visitors take a desired action, such as purchasing a product or signing up for a newsletter. The conversion rate optimization process includes an in-depth understanding of visitor behaviour. Businesses can gather insights and leverage such data to create a targeted CRO strategy.Nirav Dave, Capsicum Mediaworks
Our agency monitors and works to improve conversion rates for our clients as part of an overall digital marketing strategy... but we're surprised at how many agencies and companies don't include this critical step. Marketing departments, especially in difficult economic periods, are so busy executing marketing strategies that they don't often have the time to optimize those strategies. This is a huge blind spot, in my opinion, and ignores a strategy that has one of the highest returns on investment.
How to Calculate Conversion Rate
Let's look at an example:
- Company A doesn't do CRO. They publish weekly articles for organic search, deploy ad campaigns consistently, and publish a newsletter or insert their prospects into an automated customer journey. On a monthly basis, they get 1,000 prospects that turn into 100 qualified leads, and result in 10 closed contracts. This is a 1% conversion rate.
- Company B does CRO. Rather than publishing weekly articles for organic search, they optimize existing articles on their site... reducing efforts in half. They use those resources to optimize their ad campaigns, landing pages, calls-to-actions, and other journey steps. On a monthly basis, they get 800 prospects that turn into 90 qualified leads, and result in 12 closed contracts. This is a 1.5% conversion rate.
With each company, 75% of their customers renew or purchase additional products and services each year. The typical customer stays for a few years. The average sale is $500 and the average lifetime value (ALV) is $1500.
Now let's look at the return on investment (ROI).
- Company A (No CRO) - $5,000 in new business that adds 10 customers that add $1,500 each over their lifetime... so $15,000.
- Company B (CRO) - $6,000 in new business that adds 12 customers that add $1,500 each over their lifetime... so $18,000. That's a 20% increase in overall revenue.
Of course, this is an overly simplified example but it provides an understanding of why CRO is critical. Company B technically reached less of an audience of prospects but yielded greater revenue. I'd even argue that, by doing CRO, Company B is more likely to acquire customers of greater value than Company A. The goal of CRO is to increase the likelihood that prospects will advance to the next step in their buying journey at every stage. This increases the ROI of every campaign that you're executing.
What Are Typical Conversion Rates?
The average online shopping site had a 4.4% conversion rate for food & beverages, followed by Health & Beauty products with a 3.3% conversion rate. The best-performing websites have been measured with up to a 15% conversion rate.Statistica
This should paint a clearer picture for you as you decide whether or not to apply resources to increase your conversion rate. The fact that you could acquire almost 5 times the customers with an existing audience should motivate you to incorporate conversion rate optimization into your digital marketing strategy!
Conversion Rate Optimization Checklist
I'd encourage you to click through for the complete article that Capsicum Mediaworks wrote to accompany their infographic. The infographic details the following 10 topics to assist you with your conversion rate optimization:
- What is CRO?
- How to calculate your conversion rate
- Getting started with CRO'
- Understanding quantitative and qualitative data
- Conversion rate optimization strategies
- Conversion (A/B) Testing
- Strategies for optimizing a landing page for conversions
- Centric website design for increasing conversion rates
- Effective calls-to-action (CTAs) to increase conversion rates
- The importance of documenting your CRO efforts.
Examples of Strategies That Increase Conversion Rates
Here are some examples of strategies included in the article:
- Free shipping is a must for online stores. It is expected by the customers. Businesses can cover the shipping charges in the product prices. However, avoid pricing the product too much. Customers are always on the lookout for affordable alternatives.
- The shopping cart should always be visible. Otherwise, users will be unable to find it.
- Improve your conversion rates with shopping cart abandonment software. This software sends an email notification to customers who have abandoned items that are now just sitting in their shopping carts.
- Be available to answer your customers’ queries. Offer 24/7 assistance using chatbots or live chat software.
- Add proper and easy navigation to your website. Your customers shouldn’t struggle to perform simple activities.
- Include filters that allow users to sort through your products to easily find what they need.
- Nowadays, all websites want people to register, which can put people off, making them leave your website without making a purchase. Allow people to buy products without registration. Only collect names and email addresses.