What is Conversion Rate Optimization (CRO)?

Conversion rate optimization is the process of improving the rate at which users perform a desired action.

This "action" could be increasing the number of website visitors who click a link, submit a form, or make a purchase. Essentially, any user action that is specific and measurable.

The CRO process usually involves analyzing your website and user data, to see what's stopping them from completing your goals. Then analyzing where your users are getting "stuck" in the conversion funnel and finally optimizing the user's flow to improve conversions.

The goal of conversion optimization is to consistently produce high quality targeted traffic that can be converted into more sales or leads.

Read on to learn all about CRO and how you can improve your conversion rates too.

What is a Conversion?

To understand the conversion rate optimization process, we need to first understand what the conversion is. The definition of a conversion is a user completing a site's goal. For instance, a lead, sale or other valuable action you want your visitor to take on your website.

Goals can come in many different flavors.

Micro-conversions are the smaller conversions that may happen before a user completes a macro-conversion, such as signing up to receive emails.

Examples of Conversions

Macro-conversions: these are the primary goal of the website, for example:

• Purchasing a product from an ecommerce store
• Subscribing to a monthly service

Micro-conversions: these are smaller actions a user performs before the macro-conversions.

• Free trial signups
• Signing up to an email newsletter
• Downloading a free app
• Registration of a new account

What is a Conversion Rate?

The definition of a conversion rate is the percentage of visitors who perform a specific action or goal. It’s a measure of how well your website converts its visitors into paying customers. For example, if your site has 1,000 visitors per month and you have 100 conversions, then your conversion rate is 10%. If this number goes up by 2% using conversion optimization, then it means that you have 2 more conversions with 1,000 new visitors per month.

Examples of Conversion Rates

Examples of conversion rates are:

• Conversion rate for an ecommerce site - If a website has thousands of visitors and only 100 conversions, then the conversion rate is 10%.
• Conversion rate for a search engine site - If a website has 100 visits per month and only 1 conversion or signup, then the conversion rate is 1%.
• Conversion rate for an affiliate marketing site - If a website has thousands of visitors and only 1 sale, then the conversion rate is 0.1%.

How to Calculate Conversion Rate

Conversion rate is calculated by dividing the number of conversions (or transactions) by the total number of sessions (or site visits).

Conversion Rate = (Total transactions / Total site visits) x 100

For example, if 1,000 people visited your website, and 100 people bought a product, then the conversion rate would be 10% (100 / 1000) x 100.

What is a Conversion Funnel?

In today's online world, acquiring website's traffic that's consistent is crucial. If you can't get visitors to enter your conversion funnel on the first attempt, the chances of them returning to perform your desired action are zero to none.

The conversion funnel is a process that occurs when a user visits your site and moves through the different goal steps.

The conversion funnel can be broken down into 3 main stages:

1. Lead

A visitor converts into a "lead." (This can be signing up for a newsletter, filling up a form or any other action on your site that signifies that the lead is interested in your offer).

2. Nurturing

The lead gets nurtured with follow-ups and other targeted content until they know, like and trust you and finally decide to purchase. For instance, by using an email sequence with "How to" links to nurture the prospect.

3. Purchase

The lead completes the purchase. The person has decided the pricing is right and they're going to buy the product now. Either after browsing some more on your site (and hopefully engaging with your blog content), or because of an offer like a limited offer, discount, or rebate.

The customer becomes a loyal customer, and then can refer other people.

The customer is referred to other businesses, who also purchase your product or service.

Your goal is to increase the number of users who move from stage 1 to stage 2, then from stage 2 to stage 3, and so on - until you have a fully optimized funnel.

Who Would Benefit from CRO?

To fully understand the conversion rate optimization methodology, we need to understand who the users are.

B2B Businesses

Businesses who want to increase their sales by acquiring more customers from their existing audience. This is done by analyzing their target customers and finding out what makes them convert into customers.

CRO can help improve lead generation conversions, by engaging the interest of website visitors, then driving them to take a specific action, like submitting a form, taking a survey, or completing a purchase, etc.

eCommerce Companies

Research by the Baymard Institute, shows nearly 70% of all eCommerce visitors abandon their shopping carts.

Shopping cart abandonment is still one of the biggest challenges for eCommerce stores, resulting in $18 billion (about $55 per person in the US) lost in annual sales revenue.

Visitors may leave a site for many reasons, including distracting pop-ups or forms, overly complex checkout, extra costs like shipping fees.

A CRO campaign will identify any website bottlenecks, improve the online conversion rate and of course, the revenue.

Agencies

Digital marketing agencies who offer multiple services to their clients, like PPC, SEO, social media promotion, web content development, etc. can also pitch CRO services.

Their marketing teams may provide a CRO service to clients who are either unable or unwilling to perform conversion optimization on their own. This is an ongoing process that requires technical savviness and internet marketing expertise, and it is not one that every business can do by themselves.

Marketers

Marketers who use conversion rate optimization tools as part of their digital marketing strategy. They focus on quality over quantity when they create a campaign, and they need to find the right balance between online marketing and conversion rate optimization strategies. This allows them to better manage the budget and reach specific customers with more tailored messages.

Publishers

Publishing houses or media agencies run digital publications, including online newspapers, magazines and blogs. They also run pay-per-click (PPC) advertising platforms.

So, reaching a larger audience and keeping them engaged is important for their growth. CRO can help test site elements like blog content, social sharing, email sign-ups, etc. and later increase user engagement.

Top 3 Benefits of Conversion Rate Optimization

1. Increased ROI

An improved conversion rate means more conversions, better margins and more profit.

A 1% improvement in conversion rate can double your customers. For example, say you had a website with 100,000 visitors per month which generated 1000 leads. These leads convert into 100 customers each month, so the visitor-to-lead conversion rate would be 1%.

But what if you wanted to generate 200 customers each month?

One way would be to increase your traffic to 200,000 visitors and hope you have the same high-quality traffic. But that would mean an extra cost for you - whether that's through SEO, social media or paid traffic.

The less risky alternative is increasing your leads from your existing traffic by optimizing your conversion rate. For example, increasing your conversion rate from 1% to 2%, you'd double your leads and your customers. So. 100,000 visitors per month would convert into 1000 leads and 200 customers each month.

This increase in conversions can also mean an increase in margin (margin = sales revenue – cost of goods sold) and gross profit (gross profit = sales revenue – cost of goods sold). If you sell online, you can look at some of the key metrics that will give you insight into your conversion rate.

2. Increased Customer Trust and Loyalty

The more a customer trusts your website and brand, the better your sales engagement and retention rates will be.

Studies have shown that more engaged customers are more likely to return to shop on your site again. When a customer engages with your product on multiple occasions (referrals, reviews, positive remarks), they are more likely to buy from you again as they have become invested in the brand.

When your website is not optimized for the right user, this can translate into lower satisfaction and a higher bounce rate.

CRO can be used to discover what works on your site. Then taking what works and giving a better user experience. And empowered customers tend to stick around longer - this means low bounce rates, and more chance they'll return to your site again - increasing the Average Order Value (AOV), which means more sales per customer.

3. Gain Valuable Insights to Enhance the User Experience

CRO helps you gain actionable insights into your business by understanding your audience better. You can collect data on the language people are using when they visit your site and what type of content interests them the most. This can help you create messaging that best resonates to your customers' needs and desires - and clearly shows your expertise and authority to them.

By looking at the bounce rate of the pages you can understand how your audience is engaging with relevant content. You can also use analytics data that has mapped the user's journey through your site, to create a conversion funnel for new leads, so they are more likely to turn into customers.

The 3 Step Process to Boost Your Conversion Rates

What's the biggest problem with conversion rate optimization?

It may look easy.

But actually - it's not!

You see, a website may have several problems from a lack of trust, no customer reviews to poor communication of unique selling points.

But how on earth will you know for sure what the issue is - and how to fix it?

We don't.

The only way to find out is to test things out.

Anything less is merely based on (false) assumptions.

You'll need to run conversion rate tests based on real data from your target audience.

The good news is you can just follow the full conversion optimization process below:

1. Research Phase

a) Data Gathering Methods

There are two ways to measure conversion data: qualitative and quantitative.

Quantitative data provides a good insight into a business’s performance but doesn’t paint the full picture. Therefore, you need to gather qualitative feedback. as it offers better insights on customers' perception of your brand, why they aren’t buying a specific product/service, etc.

1. Qualitative data analysis method

This uses hard figures to show how people behave on your website. By using a solid analytics tool, like Google Analytics can provide valuable insights like which page people enter on, what pages they engage (or spend most time) on, which channel they arrive at your site from (website, social media, PPC, etc.) and how they leave your site.

Other user testing tools include heat map software, which produces a report showing hot areas on a page where people click the most. They can also produce user recordings to show the users journey through your site. This can show where people get stuck and where they really want to go. Both methods indicate ideas where you can improve conversions.

This method of finding how users engage with your site is useful for large sites, as you can make data driven decisions on exactly what areas to first focus your efforts on. For example, CTA text on a pricing page.

The next stage is looking into why they behave in this way.

2. Quantitative data analysis

Quantitative analysis is a people focused method to optimize for your ideal user, someone who is most likely to become a customer. This data can be obtained by using website feedback tools like: surveys, usability tests and user satisfaction polls.

By combining quantitative analysis with your analytics data, you gain a better understanding of which pages on your site are the best opportunities to optimize for your target audience, in their language.

b) Data Gathering

The Company

Why does the company exist, unique USPs, the culture and it's DNA - effectively what makes people buy its products or services?

Company Goals

What are the company's goals? For instance, micro-conversions like email newsletter signups that may lead to a bigger goal like becoming repeat customers.

Audience Research

Customer Objections

Survey the sales and customer support teams to ask them about typical problems or objections. They're usually the first to spot any trends in customer feedback or product/service improvements.

The Website

Review the sales process from start to finish, including any funnels.

Look at the current analytics data for a breakdown of traffic by for example: demographics, technology (e.g., browser, device).

Find any issue areas such as:

• What can we do to improve communication with customers?
• What changes should be made to our landing page?

Find any back end or offline data, like refund or cancellation rates.

Set up conversion goals in (if they've not already been done) a suitable platform, e.g., Google Analytics or an eCommerce one like Shopify Analytics.

The Customers

What are the customers biggest objections - specifically what is stopping them from buying? You can do this in number of ways:

Customer surveys can reveal the actual psychology of your users, including their thought process, why they buy a product, what drove them away from a site, etc. A quick survey or poll can yield a lot of responses if you ask the right questions. Don’t ask boring questions. Ask questions that directly address the customers and are insightful.

Interviews help gather more insights on your landing pages and target audience. You can gain a deeper understanding of what is working right for your users and identify friction points that may be hampering the user experience.

By watching how customers interact with a website in real-time can reveal insights on areas they are having most problems. For instance, finding the right info., completing a form, etc.

Interviews can provide details about a site, corresponding pages, and intended readership. This qualitative feedback data can lead to clarifying which hypothesis to test.

As mentioned above, they are graphical representations of visitor data on a page that help you identify valuable behavior. This is based on user engagement levels, with areas of high activity (i.e., "hot" areas where users click) marked in a brighter red color while areas of less clicks are shaded in blue. You typically run heatmap analysis on the most important pages on your site, like landing pages and product pages.

Once you have enough user recording data, you will be able to make data-driven user interface decisions. For instance, changing the button colors, Call To Action text or sequence of elements on a page - optimizing each element for maximum conversions.

Analysis tools like heat maps, session recordings, user interviews and analytics, etc. can reveal how different elements on a page may affect visitor behavior. For example, placing a Call To Action button higher on your landing page results in more conversions. This can help you focus more on features that convert better and remove ones that don't.

Audit Your Conversion Funnel

Knowing where your site visitors are dropping off in the sales funnel is a must during any CRO process. This will act as a benchmark to measure the success (or failure) of future tests.

Having a high-level overview of the exact journey visitors make as they move through your sales process, lets you find areas of opportunity. This will help you decide what to test, so that you can make changes that boost your conversion rates.

Doing this gives you valuable insights into how prospective customers are interacting with your most important and prominent content: The things they should be paying attention to most before making a purchase decision.

You can do this by having an audit of each stage of your sales funnel to reveal the current online conversion rates and finding out where your conversion process is broken (or not). For instance, the cost per acquisition of a lead, for each of the current traffic sources.

c) List your Hypotheses

Form a Testing Hypothesis:

This involves the following:

1. What are you Testing?

Here you will figure out what to test based on the data gathered in step 1, about the company, website and customers. Are there any common trends, like customer objections that keep cropping up?

For example, if customer feedback was that online security was a safe way to make payments, you could hypothesize: "I believe adding trust badges (in the form security logos) on the main landing page will result in 10% more checkouts because it gives more confidence to buyers."

2. Who are you Testing?

For reliable test results, it's important to categorize your website visitors by demographic, user intent (are they just browsing, ready to buy or have they purchased already?), are they new or returning customers? Putting different categories of customers into the same test could cause inaccurate results, as each will have their own, distinct mindsets and set of behaviors.

For instance, repeat customers already like and trust your brand, they are familiar with your checkout process, and are more likely to convert into a customer in comparison to a completely new customer.

Knowing your target audience will provide insight for the messaging on your site. This will help you tailor your message and optimize for their needs.

Analytics data quality is never 100% correct, so you'll never be able to perfectly segment users. Just make sure to use best practice and have tracking set up correctly.

You can use a testing platform like Visual Website Optimizer or Optimizely to drive traffic segments to your test pages based on various attributes. For instance, if a page doesn't load correctly in Google Chrome, you could exclude Google Chrome users from the test. Obviously, a final roll-out will need to be cross-browser compatible.

3. Where are you Testing?

You need to identify which landing page (or set of pages) you'll be testing.

For example, are you testing one product page or similar product pages together?

Note

• If you're testing multiple pages at the same time, you need to be aware of buyer intent. For example, if you run a single test where one product page is for a $10 shampoo, while another page is selling a $200 hairdryer, then your test results will likely be way off.
• CRO is not limited to websites; it can also be applied to sales funnels, apps, advertising campaigns, landing pages and other performance-driven marketing efforts.

You can use Chris Goward's P.I.E. framework to prioritize pages (or any other elements) for optimization tests, which involves looking at the cost, impact and ease of optimizing.

• Find your worst performing pages, which have the greatest room for improvement.
• Find these by using your customer data, analytics data, and analysis of user scenarios.

• Find pages with the most valuable traffic.
• Find those pages with the highest volume and the costliest traffic.
• Note that poorly performing pages, with high volume, costly traffic, should not be a testing priority.

• Find pages that are easy to run a test on
• For instance, a page with easy technical implementation, less stakeholders and low organizational barriers will use less time and resources for the same return.

For example, a home page may have many stakeholders, while an eCommerce product page may be technically complicated.

4. How are you Testing?

Once you've identified optimization opportunities, then you can create a test strategy by planning and prioritizing which elements to test. The two main ways to run a CRO test are:

• Change one or more on-page elements: Once you have identified one or more problems on a page, based on user data, find the best variation, then run either an A/B test or a multivariate split test. A multivariate split test means you will be testing more than one element at the same time, so will need to run for a longer time.
• Test completely different pages: Find specific pages that would convert better, based on data. Then use this as a benchmark for fine-tuning.

User feedback tools like Lucky Orange, Hot Jar or Crazy Egg can provide useful data for this stage.

Make sure you are tracking your success metrics so that you can measure the success of your campaigns and compare them to earlier campaigns or earlier tests.

A well-constructed hypothesis will have enough quantitative and qualitative data to support your test(s). It will also allow for further optimization, even if it fails.

Research Phase Checklist:

• Data gathered from customers, website, and company.
• Hypothesis based on this data (what to test)
• Create a test strategy, including who you're targeting and what pages this test applies to
• Tracking code is set up correctly on test pages.

2. Testing Phase

What Is Statistical Significance?

Statistical significance is the measure of likelihood that a result is not due to chance (i.e., you've uncovered what's really driving your conversions).

Say you run a test on the first 100 visitors on your site. Your analytics data shows the original page had a conversion rate of 10%, while the new variation had 20% conversions.

Assuming you had 100,000 visitors a day, this data would not have statistical significance.

You'll need to run tests for enough time. To calculate how much data (and how long to run tests for) you could use a calculator.

Decide on which test to use.

There are three main ways to run a test:

• A/B Testing: Typically used in cases without complex design changes.
• Split Testing: Used when design requires big modifications, back-end changes are needed, or to test pages already existing on different URLs.
• Multivariate Testing: Used when multiple changes are needed for a page, and you want to test each combination separately.

Choose the testing method that suits your business's needs.

Testing Phase Checklist:

• Test(s) have been signed off by company stakeholders (if needed)
• Check traffic allocation and customer segments are correct.
• Test variations are live and getting traffic.
• Check specific testing is complete.

3. Review Phase

Analyse test results.

In this stage you will analyze the test results once statistical significance has been reached. There are two main outcomes that need to be addressed:

a) Hypothesis was Correct

If the testing hypothesis was correct, and your variation has won the test, ask yourself if the expected increase in revenue justifies the actual cost (design, engineering, technology, etc.) to implement it?

If the answer is "Yes", well done!

Now you can scale that test out:

• Talk to your team (design, engineering, etc.) to get the change implemented.
• Analyze the test data to look for further opportunities for optimization.
• Prepare for further optimization efforts, using what you have learned.

b) Hypothesis was Incorrect

If the hypothesis is incorrect (i.e., your variation has lost the test), what did you learn?

There are always important learnings you can take away from failed tests. Use these to iterate on feed into future tests. Here's how:

• Keeping track of all data from failed tests, so you can refer to them in the future.
• Look for loopholes in your research, hypothesis, etc. (check the test data and conversion metrics, or if anything is missing).
• Analyse the test results. Segment the data further to gain deeper insights.
• Read any relevant case studies to help identify any new perspectives you previously missed.
• Take a note of the new information for future optimization and testing, so you can continually improve and optimize performance.
• Create a new hypothesis using new insights you previously missed.
• Repeat the test.

Review Phase Checklist:

• If your hypothesis was correct, roll it out.
• If your hypothesis wasn't correct, what did you learn?
• Prepare for the next test - (Remember) it's an ongoing process.

Conclusion

By using conversion rate optimization, you can boost your website conversion rates.

Yes, it takes some work.

But the more quality data you have, the more you can optimize those visitors to convert.

And the extra sales and leads will make all that effort worthwhile.

It's important to remember that your conversion rate optimization efforts are an ongoing process.

There are always small improvements you can make to dramatically increase your conversion rates, turning your current traffic into more leads and sales.

Start by following the CRO process outlined above, and you'll make a significant impact on your bottom line.