10 Benefits of Conversion Rate Optimization for Online Retailers
How can your online store benefit from performing simple conversion rate optimization? In this post, I will share with you 10 benefits for CRO and hopefully convince you get started today!
In my last post, I shared with you a list of the top CRO experts in the industry anyone in the ecommerce should be following.
Let's assume for a moment that you have a physical store.
You would likely be very concerned if individuals continuously came into your shop, look around and then leave. You would be doing just about anything to find out why they're leaving without even making a purchase. Right?
As an online retailer myself, I used to simply measure basic traffic or monitor the wrong data to decide whether or not a page on my site was successful, when in reality, I should have been focusing more on things I can improve that will lead visitors closer to making a purchase.
Conversion rate is the ratio of total site visitors to the number of visitors that take the action that your website is intended to make them take—if the case of online retailers, making a purchase. Optimizing this rate should improve this ratio, so that more people who visit the site, make a purchase. The benefits of conversion rate optimization for online retailers cannot be overstated.
The Biggest Benefits of CRO
1. Helps You Understand Your Customers Better
As an online retailer, understanding your customer is vitally important. You have to know who they are and what they want in order to be able to stock the products that they want or need, but also to market to them effectively.
This is where CRO can improve your entire ecommerce business. Much of the research that goes into CRO has to do with who your customer is and testing is a big part of making sure your store is effective and helps you get to know exactly who you’re dealing with and what they prefer.If you're about to start some CRO initiatives within your company, CRO experts recommend you start with some conversion research in order to understand how visitors are interacting with your online store and what type of friction is causing bottlenecks within your sales funnel. I've done this research myself on a client's website and I must say, I was surprised of the type of data we gathered. You tend to learn more about who you customers are and their challenges.When you understand your customers, conversion optimization allows you to develop buyer personas for your online store which helps you understand who you're marketing to. I will be blogging about that topic later on in the coming weeks.
2. Gets You More Customers (my favorite!)
You are probably already trying to reduce your cost per acquisition —conversion rate optimization (CRO) can help you do that in eCommerce.When you continuously optimize your online store, you tend to understand your customers better which leads to an improved overall shopping experience. The better the user experience for visitors, the more customers you acquire from the same amount of traffic you're already receiving—meaning you don’t just save money, but you actually make more of it since it's costing you less to acquire each additional one.
Your goal is to understand how to ensure that your store is engaging or streamlined enough to capture shopper's attention and hold it long enough that you can turn them into a customer. Some of the most major advantages of conversion optimization include combating the stunted attention span of today’s consumer by allowing them to find exactly what they are looking for, much more quickly than on webpages that are not doing CRO.
3. Increases Your Website Profits
This is one of the most major advantages of conversion optimization. Even just a slight improvement in your conversion rate can lead to a massive improvement in your profits. Why? Because unlike advertising efforts, CRO provides immediate and tangible profits that go straight into your pocket, not into paying your advertisers.
For example, let's say you get 100 visitors come to your product page and only 5% (5) purchase it at $10 and your cost of product is $5 .
Gross sales: $50Cost: $25Profit: $25
Now let's say you increase that conversion rate from 5% to 10%, what happens to your profits?
Gross Sales: $100Cost: $50Profit: $50
As you can see, you end up doubling your profit by simply improving your conversion rate optimization.
4. It Becomes Your Secret Weapon
The truth is that many of your competitors are probably already doing conversion rate optimization or maybe not. If they haven’t started yet, they will start soon. Competitors can easily analyze your store to figure out what you're doing for search engine optimization or social media marketing. But when it comes to CRO, it's a whole different story.
When you optimize your site, you're not simply doing one thing. It's a mix of all sorts of initiatives that play a role in this process. It's not as if a competitor can run a tool on your site and figure out how you're optimizing your product pages.For example, let's assume that your in the process of optimizing a specific product page.A competitor might see that you're implementing some A/B testing but doesn't know exactly what it is that you're testing for or how you got about knowing what to test for.CRO becomes your secret weapon since you're working with data related to your specific environment. What works for you might not work for others.
5. Leverages Your Current Website Traffic
One of the biggest benefits of conversion rate optimization is that it works with the current traffic that you already get to your online store. While there is the initial monetary and time investment in getting a page optimized, once it starts working, you really start making the most of the traffic your webpage already receives through SEO and other marketing efforts such as social or email.CRO isn’t about driving more traffic , but about making sure those visitors convert into customers. I wrote about what is cro to help you understand it.
6. Lowers Your Customer Acquisition Costs
If you are in desperate need of some funds for a social media marketing campaigns or PPC, upping your conversion rate first is a great way to free up some money for that. When you optimize your site, all traffic coming from other campaigns will surely improve as well. This creates a cycle of money making that you’re sure to appreciate.Your customer acquisition costs will be lower as well since you're more focused on improving conversions and converting those visitors to customers.
For example: Let's assume you spend $1000 to drive 10 000 visitors to your product page & 1000 bought your product.
Ad Spend: $1000Total Visitors: 10 000Purchased a product (became a customer): 1000Conversion Rate: 10%Customer Acquisition Cost: $1
Now let's say you increase that conversion rate by 5% to 15%, what happens to your profits?
Ad Spend: $1000Total Visitors: 10 000Purchased a product (became a customer): 1500Conversion Rate: 15%Customer Acquisition Cost: $0.66 ---> LOWER!
7. Allows You to Beat Your Competition
When you actively do CRO, your online store is going to have an edge over the competition. Sometimes, that’s all it takes to win a customer—you just have to be a little bit more efficient, a little bit faster, and you’ll win every time. Think of it like a neck-in-neck horserace: the horse and jockey that actually win, even if it’s just by a nose, takes everything home—the money, the trophy—while the horse that comes in second, even just by a hair, gets nothing,
8. Improves Your Brand Perception
A large part of conversion rate optimization is making sure your website looks legitimate. Why? Because online shoppers are very concerned, especially with recent security breaches at major retailers, about the safety of their information.
Your website will look as legitimate as your business really is, which helps to build trust and encourage those who visit your store to go ahead and make a purchase. Reducing friction starts with a professional brand.
9. Google Will Love Your Webstore
Google loves sending traffic to your online store if you can truly deliver what they're searchers are looking for. It's not a good sign if lots of visitors leave your site without making a purchase. There is something causing them to head back to Google and search again. This scenario can potentially affect your SEO rankings.
10. Increases Your Customer Lifetime Value
Most marketing efforts for online retailers are centered on getting someone to click through a link, visit a page and purchase an item. If you offer specials and discounts through promotions, that’s a good way to encourage someone to actually make a purchase, but the reality is that even the most effective marketing campaigns will essentially be nullified by a website that is not optimized. One of the most major advantages of CRO is its ability to funnel site visitors, physically and psychologically, towards making that purchase. If it does this correctly, it makes all of your marketing more effective and it will make customers keep coming back resulting in higher customer lifetime values.
Final Words
The benefits of conversion rate optimization continue on past these ten advantages we’ve mentioned. The roll of conversion rate optimization is to ensure that your digital presence, not just on your website, but across the entirety of the web is as effective as it can be. It sounds daunting, and that’s because it can be. Working with a skilled conversion rate optimizer is usually the best way to get this process done correctly and in the shortest amount of time—so you can start improving your website profits.
And unlike some other efforts to improve your webpage, the tenants of CRO are not going to change over the coming years. Consumers will still want to trust the retailer they're purchasing from. They will still want to be able to find what they’re looking for quickly. It’s one of the only parts of digital retail that is evergreen.