What Is Conversion Rate Optimisation?

Does CRO Say What It Does On The Tin?

When people ask me what I do for a living and I mention website or conversion rate optimisation (CRO). I often find they think I’m talking about another area of digital marketing. Many people think CRO is related to Search Engine Marketing, PPC or SEO. This should not be a surprise because CRO is a somewhat misleading term for website optimisation. It gives the impression that it is all about a single metric, which it is not.

For a start any fool can optimise a website’s conversion rate by slashing prices, offering people free trials or giving free money away on a gaming site. But the site would soon go out of business as this wouldn’t do much for overall profitability. No, CRO is not about optimising the conversion rate as it would be dangerous to use a single metric for a measure of success.

Why conversion rate is a poor metric?

The conversion rate is actually a poor metric to focus on because not all visitors are able or willing to convert. Furthermore, by making your site more engaging and increasing the frequency of visitors returning to your site. You may well increase sales, but your conversion rate could well fall as a result. This is because returning visitors may not buy on every visit, but overall they could be buying more merchandise.

The conversion rate also tends to vary significantly according to different channels and visitor types. So if your traffic mix changes your conversion rate could fall due to the source of traffic and not because of anything you have done. Increasing overall traffic to your site could again increase sales but it’s quite common for this to reduce your conversion rate as the traffic mix may change or because visitor intent is lower.

Common misconceptions about CRO:

The lack of understanding of website optimisation is partly caused by the term CRO which has led to some of the following misconceptions about it:

• CRO only relates to customer acquisition.
• CRO is A/B and multivariate testing.
• CRO is a tactical tool for resolving short-term problems with sales or revenues.
• You need to have a lot of traffic for CRO.
• CRO is expensive and not for small companies.
• Landing page optimisation is the same as CRO.
• CRO is about improving the customer experience.

Well, what is conversion rate optimisation?

CRO is a strategic approach to digital marketing that seeks to optimise the value obtained from visitors to your site in a sustainable and customer centric way. It aims to be a driver of business growth by persuading customers to take action by allowing them to achieve their goals so that you can also meet your business goals. CRO requires a scientific or evidence based approach to decision making regarding changes to the digital customer experience.

So let’s break this definition down into some of its individual components to fully understand what CRO means.

Strategy rather than a tactic:

As a strategy rather than a tactic CRO is much more powerful because it requires a customer centric culture from the C-suite down. Only when CRO is embedded into the culture of a business can we expect it to reach its full potential. CRO should not be a silo in marketing or some other part of the business that is infrequently discussed by the board. It needs to be the responsibility of everyone in the business to consider how changes to the user experience may impact the customer and overall profitability.

Customer goals:

For you to meet your business goals the customer must first achieve their goals. This means communicating a compelling value proposition and using conversion centric design to make the user journey as frictionless as possible.

Acquisition and retention:

CRO principles can and should be applied to both acquisition and existing customer journeys. It is normally a lot cheaper to retain customers than acquire new customers and so it is more efficient to allocate resources to customer retention than to focus just on attracting new users.

Persuasion:

To get more visitors to convert it is necessary to use persuasive techniques to nudge customers towards their goal. This means that a good understanding of the application of behavioural sciences such as behavioural economics, psychology and neuroscience are essential qualities for optimisers.

Scientific approach:

A culture of evidence-based decision making is important to encourage a scientific approach to digital optimisation. Online experiments using A/B and multivariate testing solutions should support this strategy by validating changes and allowing a evolutionary approach to website improvement. This approach largely removes the need for site-redesigns because it leads to a more evolutionary way of enhancing the customer experience.

Source: Sentient Ascend

People of course dislike whole site re-designs as they have to instantly deal with multiple changes on a site that looks very different from what they had become accustomed to. Facebook have learnt this lesson the hard way and now ensure change is gradual and controlled to avoid annoying users. LinkedIn on the other hand don’t seem to have understood the pitfalls of site-redesigns and received huge criticism following a new site launch in early 2017.

Structured process:

To develop a CRO strategy it is important to have a structured process to guide your program. Having a process like the steps outlined below helps give you credibility within your business as it demonstrates your professional integrity. Further, it encourages a consistent approach to CRO throughout your organisation.

Invest in people:

Website optimisation requires a number of specialist skills to perform well in the role. Consequentially it is important to invest in training and personal development to improve the skill set of your optimisation team.

Measurement:

Because CRO is more complex than simply optimising your conversion rate it is necessary to carefully define your most important metrics to evaluate what success looks like. For example e-commerce retailers need to ensure they don’t increase sales at the expense of more returns as this can lead to them losing money.

Ecommerce sites should seek to combine results from their test with metrics from the data warehouse (DWH) to measure revenues after returns. This is one reason why you shouldn’t rely on a single source of data as this can lead to errors and may undermine the reliability of your test results. Web analytics, DWH and data from your testing tool should be used together to provide a more comprehensive picture of user behaviour.

Segmentation:

Averages lie, there is no such thing as an average customer. It is important to segment your conversion rate because it is likely to vary significantly according to visitor type and channel. Some users will have different intent and a different relationship with the retailer according to their traffic source or user needs. New visitors and returning visitors often have very different conversion rates.

Amazon Prime customers for instance convert around 74% of the time compared to 13% for non-Prime visitors. This compares to just 3.1% for the average e-commerce site. You should also analyse your conversion rate by acquisition channels as for example non-brand terms PPC will usually convert at a significantly lower rate than your site average. Trying to improve your conversion rate for an individual channel is much more likely to be a success than if you treat all visitors the same.

At the same time be careful not to create too many different segments. You need to have a sufficiently large sample size for each segment to avoid a high sampling error and unreliable results. Bear in mind that the probability of error rises exponentially the more segments you compare against each other.

Change management:

In many ways CRO is a form of change management because it can be a powerful driver of innovation in an organisation. However, people naturally resist change and this can create blockages for a successful CRO program. Use change management techniquest to engage and inform people about your CRO strategy to prevent objections being raised further down the line.

Conclusion:

CRO is about improving the profitability of your site by persuading more of your visitors to convert. This does require a cultural shift in how website design changes are decided. It seeks to replace the use of subjective opinions to make decisions with a scientific evidence-based approach to digital optimisation.

As Brian Massey at Conversion Sciences puts it:

“We optimise revenue, growth, pricing, value proposition, images, navigation and more. Perhaps we’re the Online Business Optimisation industry, OBO. That’s taken, unfortunately.” Brian Massey – Conversion Scientist at Conversion Sciences – From The Growth Strategy That’s Being Ignored.

CRO does of course create a lot of challenges, but the benefits are well worth it as you can use CRO as a driver of sustainable business growth. As companies such as Amazon, Skyscanner and Netflix continue to develop their CRO strategy it will become increasingly difficult to compete against such organisations unless you also adopt a CRO strategy based upon evidence rather than gut instinct.

Related Posts:

CRO Strategy – 10 strategies for successful conversion rate optimisation.

CRO process – 8 steps guaranteed to boost your conversion rate.

Prioritisation – How should you prioritise your A/B test ideas?