Every company wants to become a market leader by reaching every potential customer on the market and turning them into actual paying customers. It is a utopian dream but one that makes brands spend more and more money on their marketing in hopes to saturate the market just enough to bite the biggest piece of the total market.
With competition becoming more and more fierce and the costs of advertising rising, investing larger budgets into marketing makes sense on paper. Except the issue becomes that there always be an already-established brand with even larger budgets that no one can compete with on scale alone.
This is where conversion rate optimization (CRO) comes into play.
CRO includes all the activities that help improve the effectiveness of your marketing funnel. CRO is often discussed in the context of digital advertising since it has the ability to significantly lower your CPAs and maximize the potential of your budget. However, CRO also spans across all your digital channels, including website and email.
Conversion Rate Optimization (CRO) is the art and science of improving the rate of people who convert at every stage of the funnel. It is definitely a science because marketers have an incredible amount of data available to them to analyze and make decisions. It is also an art because it employs a lot of behavioral psychology and branding.
Think of every step your potential customers or clients need to take in order to convert. Think of all the touchpoints they have with your brand along the way. You have the ability to improve each interaction with your brand and, as a result, convert more people into customers.
In this post, we walk you through what CRO is, why it is important, and how to properly do it.
Importance of CRO as a Growth Lever
There are often multiple goals and KPIs in every business. However, there is usually one, main goal that defines all activities within the business that support reaching it.
More often than not, it is increasing the revenue. But how do you increase it? Do you need more people making purchases on your website? Do you need more people submitting a form to get in touch with the sales team?
All steps along the digital customer journey should be built around — and encourage — that one target action. But to improve the conversion rate, you’ll need to deconstruct your whole funnel and improve the conversion rate at every step. You need to analyze the behavior and its driving forces at every interaction.
For example, if your main objective is to drive purchases on your website, you might want to take a look at the following steps:
- How do people find out about your proposition? What channel is the most appropriate to target them at? Where can you get the relevant traffic at the cheapest rate?
- Where do they land on your website? What kind of information is presented to them at the first touchpoint?
- Is the page effective at “selling” them the product on their first interaction? Are they clear on the benefits?
- Is this hypothetical page effective at driving them to the shop page?
- How many product options do they have? Are you giving your prospective customers too many choices and overwhelming them? Do give them so few choices that do not address their core need?
- If they add the product to the cart, what’s the rate at which they complete the checkout process? In other words, what’s the cart abandonment rate?
- Is the checkout process too lengthy or complicated?
- Does having a coupon code banner encourage more people to place an order?
- How does free shipping affect their purchasing decision?
- How quickly do you guarantee the delivery?
Each one of these actions is a potential tripping point or bottleneck for overall sales. And increasing mini-conversions (add to cart, payment information submission, etc.) at every step by just a few percentages can dramatically improve your overall purchase conversion rate. Just imagine what improving the conversion rate by just 2% could do for your business. And if your primary goal is not direct sales, but rather signing up clients for your service, the logic still holds.
Yet, it is not always about increasing the volume of traffic that comes to your website. It is definitely one way to increase the number of sales or leads, but with continuously rising costs of advertising and increasing competition for our short attention span, increasing budgets while your conversion rates are low is a road to nowhere.
It is also a well-known fact that it is more cost-effective to retain an existing customer than to acquire a new one. So, if you can maximize the conversions with the traffic you are already getting, CRO tactics continue to have positive trickle effects not only on your primary conversion goal, but also tend to decrease the cost of acquisition, increase return on ad spend, and increase the lifetime value of the customer.
How to Approach CRO Strategy
Just like with most other marketing activities, conversion rate optimization is not a “set and forget” deal. It is a continuous process of improvement. This is due to the fact that there is no limit to the number of improvements that can be made in any business. There are also many outside factors as well, such as competitive landscape, behavioral influences, and messaging adjustments.
For example, Amazon’s free 2-day delivery was groundbreaking at its time. This move from Amazon has changed the whole eCommerce landscape. Consumers these days expect free shipping, free returns, and speedy shipping. Any online retailer that is still charging for standard shipping is losing points in the eyes of potential consumers.
Another example is offering interest-free payment installments. Before Klarna, it was absolutely standard practice to place a large purchase on the credit card and deal with high interests rates if you haven’t your payments in full. Offering an interest-free installment plan is becoming a best practice for eCommerce brands because it increases the conversion rate at the checkout.
As you may see, there are a lot of outside forces that affect consumer behavior on your website. So, it is not only about the internal factors that you may control, such as polishing your messaging or improving usability. It is also about being keenly aware of what’s happening in the market and which trends are affecting behaviors. It may seem like a hefty undertaking, and it definitely is. However, investing in CRO will continue to pay dividends in terms of increased customer base, decreased advertising costs, and higher returns.
When Does It Make Sense to Do CRO?
The short answer is that you should always be working on CRO. Yes, that may sound broad and pretentious, but let’s break it down. Independently of which stage your business is in, it can benefit from higher conversion rates.
For early-stage businesses and startups, CRO activities help you grow faster.
Investors are interested in how quickly they will see a return on their investment; and even if they’re in it for the long run, proving the viability of the product definitely puts them at ease and gives them the confidence they need to continue to invest.
It is typical that startups have to bootstrap themselves or work with a very limited budget that doesn’t allow them to break into the industry quickly and at scale. Having CRO as their internal framework will help startups achieve great results cheaper and faster.
For startups, CRO as a framework will help:
- Decrease the budget needed for digital advertising;
- Increase the ROAS of every dollar spent online;
- Build and expand user base faster;
- Gather a lot of qualitative and quantitive data fast;
- Create a competitive advantage against bigger companies who are not employing effective marketing strategies;
- Prove the business concept with strong KPIs.
For mid-sized businesses, CRO will help you expand and get to the next level.
At this stage, every company is focused on getting to the next level and becoming the biggest or the best player in the field.
At this stage, businesses typically have larger advertising budgets and a more established positioning in the industry. Larger budgets enable these organizations to test extensively and every failed trial is actually an opportunity to learn and grow without creating irreversible damage.
Because these companies have had some success, they are looking to make it big. Since they are competing with other bigger companies who also have access to large funding, a competition based purely on the size of the budget will prove costly and damaging. So, it is important to not only have a large budget but also understand how to best employ these resources.
For mid-sized companies, CRO as a framework will help:
- Improve efficiencies of large budgets;
- Create new opportunities that can be teste dons ambler-scale before assigning larger chunks of the budget;
- Create an even faster growth;
- Invest into advertising and branding more effectively;
- Higher ROAS create even larger budgets;
- Rinse and repeat until you get to the top.
For established market leaders, CRO will help you stay in the leader position.
Oftentimes, we assume that the largest player in the market is too large and too slow to see the change coming. Also, every small and medium player in the market is trying to poke holes in their approach and show the market how they are better than the leader.
To become a leader, and stay a leader, the companies cannot rest on their laurels. They have to continually improve and innovate not only their offerings but also their marketing strategies. Besides, having very large advertising budgets and a recognized leadership position in the market all play to their advantage.
For market leaders, CRO as a framework will help:
- Create a competitive advantage over smaller players;
- Secure sustainable, predictable growth that can be replicated again and again and again;
- Prevent competition “sneaking up on them” by consistently growing their market share;
- Ensure that the human, time, financial, technological resources are utilized effectively;
- Ensure that they stay on top of the market by continuously improving their marketing efforts.
The framework I like to use and refer to is one by our friends at Moz. It goes something like this.
Step 1: Data Gathering
Take a look at and evaluate 3 main areas: the company and its unique selling propositions (USPs), the customers and their most common objections and behavior drivers, and the website and its usability across all touchpoints.
The first area will help you understand your main goals and aspirations, as well as uncover your unique competitive advantage. It is also important to look at the internal and external processes and how they help (or hurt) your main business objectives.
The second area will help you understand your target audience. What is it that drives their behaviors? What solutions are they looking for and does your offering satisfies their needs? What are the common reasons people say “no” to your offering and how can you address those effectively?
Finally, analyzing your website is where we get very technical. Is it intuitive? Is it effective at converting people into leads or customers? Does it do a good job at explaining the benefits and reducing the friction? Does it build trust with your audience? Does it often break or glitch, preventing your potential clients and customers from converting?
We can gather a lot of information about users’ behavior on the website from analytical tools. Analyzing how engaged they are on the website, which pages they visit, what they’re searching for, and what devices they use all give us a greater understanding not only of the website usability, or messaging effectiveness, but they also provide a wealth of information on our potential customers. Besides, understanding where the most conversions are happening on the website and which channels bring in the most qualified traffic can also inform our advertising strategy.
Step 2: List hypotheses
Now that we have all this raw data and information on our business, we need to transition from learning into doing. But before we do anything, we need to understand what to do, why do it, and most importantly, what do we expect to gain from it.
This is where the science part of CRO comes in. We need to develop hypotheses and how we will test them. We need to be very deliberate in prioritizing tests, collecting data, and making the right conclusions based on the results. Understand what you are testing, why you are testing it, how you’re collecting data points, and what you’re trying to achieve.
If we do not develop hypotheses, then what are we testing? If we are testing without setting a clear expectation on the goal, how do we know if we were successful? If we test too many variables at the same time, can we make clear conclusions? If we are stretching ourselves too thin and do not analyze test results, then why spend all this time if we are not learning anything? This is why it is important to approach CRO methodically and not rush into it just because it is a trendy thing to do.
Step 3: Wireframe test designs
This is the only step that may be skipped depending on your specific company processes. However, we still recommend going through this step just as a checkpoint for your hypothesis. Make sure that whatever experiment you’re developing is still in line with your overall goals, company positioning, etc.
Going through the process of designing the test may uncover questions you haven’t yet asked or uncover any inconsistencies in your approach. Plus, it will allow other people in the company to visualize your plans and get on board! It always to helps to be aligned across multiple departments.
At this step, you may also want to consider if you have all the necessary tools and resources to make your tests a success.
Step 4: Implement design
Clearly, the more complex your test or the changes you’re planning on making the more checkpoint you’d want to incorporate into the launch. It also helps to have multiple eyes on the design process to ensure you’re not missing any important details just because you’ve gotten so close to the project.
At this stage, it is also important to troubleshoot any other pages or website capabilities that may be affected by your test. If you’re testing how to increase your conversion rate at this step in the funnel by breaking other pieces of the funnel, that is not a productive test to run!
Plus, ensure the experience consistency across different devices, platforms, etc. To run a clean test, you’d want to make sure that everyone in your test brackets has comparable experience independently of the referrer source or devices they are on.
As mentioned above, the more complex your design, the more work you may need to put the design live. It is really important at this point to make sure you’re testing the design across different browsers before putting live. Visual elements can change quite dramatically and the last thing you want to do is skew your results by a certain browser not rendering the design properly.
Once the test is live, you want to continue to troubleshoot and keep a close eye on the results. While it is too early to make decisions, the performance of the first few days will help you ensure that the test is running normally.
Step 5: Obtaining results and creating new tests
Once your tests have been running for a period of time, you want to ensure that you have collected enough data to reach statistical significance. Do you have enough data points from a big enough sample size to be representative of the overalls audience? If you’ve collected data from 10 website sessions, you cannot confidently say that these 10 sessions represent your entire audience or market. The good news is that many testing tools actually tell you when your tests have reached statistical significance, so you don’t have to guess or calculate it yourself.
Now, we get to the best part – analyzing your results and getting your answer! Now, you will finally find out if your hypothesis was correct. If it was correct, kudos to you! If not, do not stop testing. Create more hypotheses and continue to learn more about your audience, your website, and your company’s branding. There are no failed tests, just learnings to be uncovered.
Either way, like I already said, CRO is a continuous process, so after running a few tests, do not just stop. Develop new hypotheses based on the results of your previous tests.
If a red button works better on the checkout than a green button, create a new test and test the red button versus the yellow button, and so on. If reducing the number of clicks it takes to submit a form, improves your form conversion rates, see if you can simplify and shorten the form even further. If USP A is performing better than USP B, test against USPs C, D, and E to find out what your customers really care about. You get the drift.
It is also key to document all the tests that have been run, what the results were, and what the next hypothesis based on these results would be. Documenting your processes and learnings is as important as testing itself. Ensure that these learnings are shared with as many internal stakeholders as possible, so that continuous testing, learning, and improvement is at the core of your organization. It also ensures that all this time and money have not been wasted without learning something important and that you do not create extra work by running duplicate tests over and over.
What You Need to Have: Best CRO Tools
Here is what we at NoGood use to implement CRO on our own website as well as for clients.
Google Analytics or Adobe Analytics
This is the most fundamental tool that you are probably using already. While being free and available for the longest time, not a single marketer can afford not to utilize GA.
We use it for everything from source tracking to keeping a pulse on the overall health of our website. We also gain valuable data about the users who come to our website: what devices they use, what affinity groups they belong to, how long they spend on the website, and where they click to next. We also track various goal completions from page view to form submit, add to cart clicks, and purchases. Never underestimate the power of Google Analytics in your marketing tech stack.
Adobe Analytics is a bit more sophisticated platform that tracks omnichannel marketing activities and gives you an even deeper insight into behavior, however, it comes at a cost.
Google Tag Manager (GTM)
GTM offers robust tracking for data that GA wouldn’t be able to track otherwise. The beauty of GTM is that you can track every single click of every button as a separate event, understand your bounce rate better, and communicate this data with other marketing tools and platforms out there.
Google Optimize or VWO Testing
This is a valuable tool for A/B testing as well as running multivariate tests. Google Optimize allows you to test every detail of your website, A/B test pages against each other, and what’s even cooler, allows you to segment the audience that is participating in the test based on the platform they’ve come from or a URL they land on.
If for whatever reason you’re looking for an Optimize alternative, VWO Testing is a good option.
This tool helps you with the design part of CRO tests. This tool comes pre-packed with a variety of useful features, such as surveys and click tests, so you can learn precisely what your users find appealing and intuitive.
HotJar or FullStory
Heatmapping is an essential tool for CRO. Not only does it allow you to see the actual behavior on the website beyond clicks and bounce rates, but it also allows you to develop better hypotheses about certain behavior.
For example, a simple heatmap installed on the landing page can dramatically improve your understanding of a low on-page conversion rate. Maybe the main CTA button is not in the intuitive place and thus doesn’t receive many clicks, maybe it is too low on the page, or other elements are too distracting for your users. Analyzing heatmaps allows you to create more intuitive experiences and more effective landing pages.
Google Surveys or SurveyMonkey
What’s a better way to learn more about your customers than to ask them directly? Surveying your existing and prospective customers can be a great starting point for CRO. It will allow you to gain insight into their preferences, their objections, and their needs.
You may also want to test different USPs and messaging ideas to get direct input from them. Surveying your customers may also serve as a springboard for new offerings, product line expansions, and other business development undertakings.
Gong records your sales team’s interactions with potential clients. You can listen to actual sales calls as well as read through the scripts to uncover valuable insights. This tool is very helpful to identify commonly asked questions as well as sales objections, so you can address them head-on in sales calls as well as your copy on the website.
Klaviyo allows a great deal of personalization and behavior-based email tracks that it makes testing a very fun process. It has very robust capabilities for testing your subject lines, send times, list segmentation, as well as segmentation based on behavior. They also have a very intuitive UX design that makes them a great tool to use.
TestLodge can help your team to stay on top of all the active and potential tests. This is a great tool to organize your hypothesis and tests, as well as get in-depth reporting and analytics so that everyone on your team knows exactly what’s being tested right now and what steps to take next.
Conversion Rate Optimization is an absolutely necessary part of your overall marketing efforts. CRO activities allow you to maximize your limited resources, including advertising budgets, to optimize every stage of the funnel.
CRO has the potential to turn more of your website visitors into email subscribers and purchasers, email subscribers into paying customers, and retargeting to convert the more hesitant crowds effectively.
While a lot of CRO efforts begin with a hypothesis about certain behaviors or a well-educated marketing hunch, it is also deeply rooted in data and analysis. Modern technologies allow us to track every step of the way and every action a potential customer or client is taking along the way. Leverage the many tools available to you.
Allow the data to show you the way to higher conversion rates and lower advertising costs. Follow all the steps along the way and resist the urge to skip any steps. Come up with a well-defined hypothesis, ensure that whatever you’re testing will make a difference in performance, and try to develop a deep understanding of consumer behavior. Document as much as possible for future use, educate new marketing staff, and avoid duplicating the efforts.
Finally, remember that there are no failed experiments. If you’ve learned that your hypothesis was wrong, you’ve just uncovered one way that won’t work, so that is valuable learning as well. The few experiments that will work and will improve your conversion rates will definitely be worth all this trouble. Approach CRO as a never-ending process of getting more educated on what your customers want and don’t want, getting better organized in your marketing processes, and improving your bottom line. Are you ready to implement a strategy for your business in 2022? Our conversion rate optimization experts can support you.