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What is Conversion Rate Optimization?
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Conversion Rate Optimization (or CRO) is how digital marketers increase the proportion of potential customers who convert. The practice follows an iterative pattern, also described as a “Test and Learn” approach. Marketers make small adjustments to a website and track the resulting changes in performance.

what is conversion rate optimization

A “Conversion” is simply when a potential customer does what a marketer wants them to do. What counts as a “Conversion” depends on your website and your goals. For eCommerce sites, a Conversion is when one of your visitors makes a purchase.

For other businesses, Conversions are more difficult to define. For example, a company that has a very long “Funnel” (which tends to be the ones selling high-value services) might use “Conversions” to describe either completed transactions or someone entering the Sales Funnel.

Conversion Rate Optimization allows digital marketers to capitalise on traffic and leads. Through data analysis, user research and hypothesis testing, CRO practitioners make their “Conversion Funnels” more efficient and increase their revenues. 

Optimizing a website for conversions helps you to reduce your Customer Acquisition Costs (CAC). Rather than generating more traffic with expensive promotional campaigns (such as PPC, Facebook Ads or Native Advertising,) CRO allows you to enhance the value of the visitors you already have.

The high Return on Investment (ROI) provided by this sort of marketing has led some experts to describe it as Conversion Revenue Optimization

To calculate your conversion rate, you need to know the number of visitors and the number of Conversions you received over a particular timescale.

conversion rate formula

This will give your Conversion Rate in the form of a ratio, where 1 = 1/1 = 100% (every time you get a visitor they complete the action you want). Your Conversion Rate is the number of conversions you can expect for every visitor. Turning this into a percentage means finding the number of conversion you can expect for every 100 visitors.

conversion rate percentage

You can easily turn your Conversion Rate into a percentage (the percentage of visitors who complete the action you want) by multiplying it by 100.

 

Micro-Conversions

These usually involve a small interaction between a customer and your business. For example, when someone watches a video, follows you on social media, or provides some contact information.

True Conversions

These are the ones that matter, because they affect your revenue. Completing a purchase, buying a subscription or committing to an appointment, all count as true Conversions.

Conversion Rate Effects and Illusions

Because Conversion Rates are a relative term, they can be affected by changes in the size and type of traffic your website receives. They will also change according to the way you package your products. There are two misleading Conversion Rate effects you should watch out for. 

conversion rate optimisation marketing campaigns

  1. The Evangelism Paradox: Marketing campaigns that increase your traffic but change who is visiting your site might reduce your conversion rate. You will still be making more conversions, but the proportion of visitors who convert will be lower.
  2. The Bundling Problem: Similarly, changing the way you sell your products (for example, by turning a monthly purchase into an annual purchase) may reduce your Conversion Rate whilst still increasing your revenue. 

Most marketing teams focus on driving traffic to their websites in the hope that it will convert into sales. The “Spray and Pray” approach is simply to push as many visitors into the funnel as possible. In a market where traffic is an unlimited resource, this is a reasonable strategy. But which market can be described like this in 2018? 

Think about a country like Sweden, for example. It has a population shy of 10 million people. To succeed in this market, a businesses needs to make the most of all the traffic they receive. Instead of simply becoming more visible, they need to provide more value and better customer experiences.

As such, it’s not surprising that the majority of world renowned experts in conversion optimization and neuromarketing are from countries like Latvia (Peep Laja), the Netherlands (Bart Schutz, Ton Wesseling) or Sweden (John Ekman).

Of course, population size is not the only reason that businesses focus on conversions…

When Amazon launched in 1995, online competition was non-existent. Even so, it was one of the first online businesses to develop and promote CRO internally. Over the years, Amazon has become THE reference when it comes to Conversion Rate Optimization.

In a global environment where cost-per-click is always increasing, and where the competition for attention has reached a fierce pitch, it is important for online businesses to get as many sales as possible from their traffic.

If there’s one thing CRO marketers are great at, it’s telling their own success stories. Most of them end in a metric known as “Uplift,” which is simply an increase in Conversion Rate.

conversion uplift calculation

Here are three examples of successful interventions from optimization experts. 

1) The Highrise Landing Page

Designers working for the lead-management software “Highrise” began testing the most effective landing pages for generating new leads. Starting with a new “Long-form” design (spreading complex information across a long, scrollable page), the designers achieved an uplift of 37.5%. 

However, when they tried another alternative, a design which featured a smiling customer and far less information, they achieved an uplift of 102.5% on the original page. This uplift was not substantially increased or decreased by using a different customer as a model. 

cro case study landing page

Conducting CRO on a landing page is an effective way to increase the conversion rate of an advertising campaign. Landing pages should be consistent with the visual style, tone-of-voice and Value Proposition of the original advert.

2) The Performable CTA

Some online businesses have found that hiring a Conversion Rate Optimization agency unlocks hidden value in their website. When Hubspot performed a CRO audit on the web content offered by Performable, they conducted a number of simple tests to find any low-hanging gains. One of these tests was to change the colour of the CTA on Performable’s homepage from green (the site’s dominant colour) to red. 

cro case study cta button

Remarkably, this simple change produced an uplift of 21%. Changing the colour of a CTA button is unlikely to have such a large effect on every website, but this case study highlights the value of testing a range of ideas.

3) G-Shock Checkout Page 

Optimizing checkout pages is an essential part of eCommerce marketing. Adding trust signs and guarantees to your checkout page has been shown to reduce abandoned baskets and improve revenue. In 2018, the online watch distributor Moho (Netherlands) reworked the banner displayed above its product images. 

cro case study g-shock

The amended banner advertised the company’s 2-year guarantee.

cro case study optimised banner

As a result of this simple alteration, the company recorded an uplift of 41% from people who visited the G-Shock page. 

Optimization includes any activity that turns more of your website’s visitors into customers. This might be through a formal CRO strategy, hiring a dedicated agency, or simply engaging with your users to find pain-points and opportunities. Whichever route you decide to follow, there is a fantastic range of tools available to help you make the most of your traffic. 

Philippe Aimé

by Philippe Aimé

Philippe is the CEO of Convertize. He created his first website in 1998 and has spent the past 20 years finding ways to make digital marketing more persuasive. He now heads a team of CRO consultants.

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Philippe is the CEO of Convertize. He created his first website in 1998 and has spent the past 20 years finding ways to make digital marketing more persuasive. He now heads a team of CRO consultants.

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