C.R.O. Magnon

Rickard Almer      Wednesday, February 28, 2018

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CRO, or conversion rate optimization is all the rage these days. But looking at the world through the eyes of a CRO can be very costly, and on top of that, give you slim returns.

 

Maybe you have hired a consultant who looks at a landing page and concludes that the button needs to stand out more to increase conversions. Maybe you have been presented with a funnel that shows you a majestic dropout on your checkout page, leading you to assume that you have to redesign your checkout funnel. Maybe you even redesigned the funnel. Maybe you were disappointed by the results.

 

Well, if you had a physical store, and had 100 persons coming through the door, but only 5 people actually handing something to the cashier, would you assume that the problem was with the cashier? Or the cash register?

 

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Could it not be that the problem lies elsewhere? For a physical store, location is not entirely unimportant. In the same way, the traffic to your site arrives with expectations. If these are not met, there will be a problem. Most likely, the product or service is to blame. Or the price. Very rarely, it is the fact that the checkout button is not orange.

 

Let me give you a very simple (and also real) example: You have 250.000 visitors to your site a month. Your conversion is 0.2%, which is not uncommon in your industry but not very impressive either. The 98% dropout on the checkout page causes you to write up a business case for a new checkout page.

 

Reading up on case studies you conclude that you can increase conversion with 0.1% (that’s a 50% increase!). Your average order value is $100, and if successful, the new checkout page will take the monthly turnover from $50,000 to $75,000. Your budget of $10,000 for the redesign gives you an almost immediate ROI and a profit of $15,000 the first month. Nice!

 

 

 

And this is how most of these decisions are made. Because going through all the data takes an insane amount of time, you never get granular enough to find out why the conversion rate is so bad in the first place. But let’s say you started looking at conversion rate based on traffic sources, and from out of nowhere, you find an obscure forum that delivers a 7% conversion in this sea of massive, expensive and low converting traffic.

 

What makes it weird is that it is just 0,3% of all traffic, but thanks to the conversion rate, it represents 10% of all conversions. Pretty good job for 714 visitors. So, what if we make a business case of this instead? The forum has 50,000 visitors each month, and since it’s a very small forum, they can’t really charge much, with the CPM around $0.4. Since our proposition is perfect for the forum visitors, we get a 10% click through on the ads, generating 5,000 monthly visitors with maintained conversion rate.

 

That increase alone leads to an increase of the overall conversion rate to 0.48%, increasing the monthly revenue with 70000 to 120000 in total, with cost of $20. Sounds to good to be true? Sorry to disappoint you. But go ahead and do that redesign.

 


Rickard Almér is Co-Founder and Director of Analytics. To learn more about Rickard, what he does, and read his recent articles, just click HERE.

 

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C.R.O. Magnon

Wednesday, February 28, 2018


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