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Conversion Rates are crucial to any e-commerce business. It refers to the percentage of visitors to your website who complete a desired action, such as making a purchase or filling out a form. Having high conversion rates means that your website is performing well and is effectively communicating your value proposition to your customers. On the other hand, a low conversion rate may indicate that your website is not engaging enough or that there are obstacles preventing customers from making a purchase. Therefore, it is essential to continually measure and improve your conversion rates to optimize your website's performance and increase your revenue. By analyzing and optimizing your conversion rates, you can stay ahead of the competition and ultimately grow your e-commerce business.
In this article, I’m going to explain why your conversion rate is absolutely your most important KPI if you’re an eCommerce business, and what factors going into improving it. I’ll also be discussing other metrics that can hint at a conversion rate problem, and how to tell if there is room for improvement.
Firstly, it is important to define and prioritize your KPIs so that you have a clear understanding of what you need to measure and what goals you are trying to achieve. Businesses should be setting SMART goals (specific, measurable, achievable, relevant, and time-bound) and aligning their KPIs with these goals.
Prioritization plays a key role, especially when it comes to data analysis. You will want to focus on the KPIs that are most relevant to your business's goals and objectives, and this should be your primary focus when analyzing your data.
In eCommerce, the most popular KPIs tend to be Return on Ad Spend (ROAS), Average Order Value (AOV), Customer Lifetime Value (CLTV), Add to Cart Rate and Conversion Rate. Most eCommerce platforms provide analytics for these metrics and will calculate conversion rates and give you an average conversion rate over time so you don’t have to worry about the math.
One of the most important e-commerce KPIs is the conversion rate. It is an indication of how well your website is performing and how effectively you are converting your visitors into customers. Tracking this metric provides you with valuable insights into the effectiveness of your sales funnel and can help identify areas for improvement.
But, knowing your conversion rate isn’t nearly enough. Take a look and compare it to your industry’s average to see how you measure up. Next, decide on your conversion goal, and figure out a plan for exactly how you're going to increase your conversion rate. Conversion rates are tied directly to user experience. If you have a conversion rate problem, chances are likely you have a user experience problem somewhere on your site. This is where other analytics tools and CRO tools can be utilized to help you focus on the issue, instead of making a huge mistake like redesigning your site to fix the issue.
Let’s take a look at some of the other metrics to help us diagnose where a problem is occurring on your landing page or site.
Another important e-commerce KPI is Customer Lifetime Value (CLTV). It is the amount of revenue a customer will bring to your business over their lifetime. CLTV is a great metric to monitor as it provides insights into how much you should be spending to acquire new customers, the type of customers you should be attracting, and how to better retain your existing customers.
This can vary dramatically depending on your business model. Do you offer a subscription service in addition to products? Are people signing up for loyalty programs and taking advantage of them? Does your business model only require a one-time purchase (i.e. wedding dresses, maternity)? How long should one purchase technically last your customers? CLTV is also a measure of how long people are sticking with your business, and there can be more than one way to measure this. You need to establish a goal for your CLTV, and establish and action plan for increasing it.
Sure fire ways to do this include personalization for repeat site visitors, remarketing/re-engagement campaigns via email and sms, or loyalty programs that offer VALUE to customers for their loyalty (i.e. not just run of the mill discounts).
Cart abandonment is when a customer adds items to their cart but leaves the website before completing the purchase. This can be a major problem for e-commerce businesses, as it means that potential revenue is being lost. Monitoring your cart abandonment rate is crucial in identifying problematic areas in the sales funnel and taking corrective action to rectify them.
Your cart abandonment can some sometimes feel like a war of attrition. Your cart abandonment may be on par with industry averages, but take a look at what percentage of visitors are viewing your product pages. We’ll often see that PDP views are extremely high, while add-to-cart is average. For reference, eCommerce industry averages for sessions with a page view are about 43%, while sessions with an add-to-cart are around 14%. This is where the war on attrition comes into play. If your PDP views are 60%, and your add-to-cart is 5%, then you’ve just diagnosed a PDP issue.
Google Analytics is a helpful tool for tracking conversion funnel drop-off, and helping diagnose if you have a Cart Abandonment problem, or a PDP problem. Cart abandonment in a vacuum can usually be handled by personalized remarketing campaigns to customers to encourage them to checkout. However, take the time to analyze your checkout process to make sure the user experience is on par with customer expectations. Check out our article on Cart Abandonment to learn more about a conversion optimized checkout experience.
To make informed decisions in your business, we highly recommend that you analyze your website traffic sources. Traffic from different sources can have a variety of conversion rates, customer lifetime value, and even return rates, hence its significance. Tracking your traffic sources and the data that follows will give you insight as to where the majority of your sales are coming from and which sales channels might need to be optimized.
Make sure your marketing messages are consistent across all channels. You don’t want to confuse potential customers who see an ad on Facebook with one message, and a completely different message on YouTube. That’s a big no-no.
If you really want to go above and beyond, try personalized messaging for visitors from specific traffic sources based on their existing behavior on site. Visitors from social media vs. direct traffic may have completely different behavior and interests, so tailor your messaging specific to where they are coming from. This requires a lot of work and audience intelligence, but the up side is well worth it.
By analyzing this metric, you'll be able to identify trends and make informed decisions about pricing strategies, promotions, and product offerings. A higher AOV means you're effectively getting more value out of each transaction, which can lead to increased profits.
If your AOV is considerably lower than the average cost of your products, then it’s probably time to think about revamping your upselling and cross selling strategies. A lot of times these are placed in horrible positions on the PDP, and are rendered ineffective. Test different placements, strategies, and bundles to entice visitors or let them know that they experience could be enhanced for a marginal increase in spend.
Bounce rates are black sheep of eCommerce KPIs, but often times it’s where we start. Bounce rates can give you a holistic view of your site’s user experience issues, and let you know where you stand against the competition. A poor bounce rate is typically indicative of poorly performing copy, confusing navigation, or busyness bordering on chaos, or all of the above. This metric is easy to gain access to for your competitors, which is why we recommend it as a starting point for evaluating your performance within your industry and niche.
All of these issues we’ve listed above can be resolved by getting in-depth intelligence about your target audience and site visitors. We’ve found the best companies don’t sit back and passively collect information about their visitors. The best companies are actively engaging with their audience to create insights that lead to focused strategic decisions that are verified through A/B testing.
Understanding your audience, especially the ones visiting your site, means understanding what they want and need when they arrive, and speaking to the emotions they experience before and after a purchase is made. It means understanding and alleviating the pain points they encounter during their user experience, and using that information to make better decisions in your marketing, customer service, operations, and supply chain.
Key Performance Indicators are critical performance measures that should be monitored, analyzed and reported regularly. By understanding and utilizing the metrics we have touched on in this post such as conversion rates, customer lifetime value, cart abandonment, traffic sources and prioritization of your ecommerce KPIs, your business is on the right track to achieving a data-driven approach that will allow you to make informed decisions and steer your e-commerce business downstream to success.
Conversion rate optimization (CRO) is a crucial part of digital marketing. It’s an effective way to maximize the number of visitors that convert into customers. With the right CRO strategies, you can boost your website’s performance and increase your ROI and advertising efficiency. Let’s take a look at some of the different types of CRO strategies that you can use to optimize your site.
A/B testing is one of the most popular types of conversion rate optimization methods. It involves creating two versions of a page or element on your website and then testing them out on different audiences to see which performs better. This allows you to determine which version resonates more with users and which one drives more conversions. You can also use A/B testing for email campaigns or other marketing materials.
The greatest benefit of A/B testing is it removes the guesswork from your strategy. You may have an idea of what your audience needs and wants, but A/B testing allows you to test that hypothesis on a limited number of your visitors and prove your hypothesis correct before committing to any changes.
You can even segment the results of your test by traffic sources and see which audience segments respond to certain changes more positively than others. This provides a wealth of knowledge about the little differences in your audience segments that can generate HUGE results.
Testing different variations of your products or services pages is something ALL eCommerce sites should be doing on a regular basis.
Personalization is another type of conversion rate optimization strategy that can help you increase conversions by providing tailored experiences for each user. By understanding user behavior, you can create personalized content that speaks directly to their needs and interests, making it easier for them to find what they’re looking for and more likely to complete a purchase or sign up for a service.
The entire theory behind Conversion Rate Optimization is better understanding your audience and customers to determine what information they find most valuable, and what experience makes them most likely to convert. Personalization allows you to speak more directly to different parts of your audience at the same time while providing both of them with the information they each find more useful. It shouldn’t come as a big surprise that this is an extremely effective strategy for increasing your number of conversions.
With mobile usage continuing to grow every year, optimizing for mobile devices is becoming increasingly crucial for businesses looking to increase their reach and sales volume. A key component of this is Conversion Rate Optimization (CRO), which ensures that the correct offerings are displayed to users during their mobile visits and the checkout process is highly optimized for a hassle-free experience. After all, no one likes dealing with long forms or slow-loading images on their phones! Through the strategic use of CRO, companies are able to boost user engagement, nudge potential customers toward a purchase, and make sure they come back time and again. The bottom line: If you’re not prioritizing mobile optimization and CRO, you’re likely missing out on an essential piece of your success puzzle.
An important part of mobile optimization is making sure the user experience is consistent across all devices. Users are extremely turned off when they find a brand on their mobile device and decide to continue their search on their desktop only to find a completely different experience. Consistency is essential for creating seamless transitions between devices. Mobile and desktop web should not be in competition, but your approach should ensure they work in tandem to deliver a full journey experience.
Mobile traffic was a higher percentage of traffic vs. desktops across all industries this past year (58% vs. 42%) but desktop still has a higher conversion rate on average (3% vs. 1.6%) and an average higher order value (91% higher on desktop vs. mobile). Having a multi-device strategy will ensure you capitalize on opportunities across all devices and acquire and retain your customers.
User testing websites is a great way for companies to get feedback on their products and website experience. It allows developers to see how people interact with their web pages and receive honest observations. This information is invaluable as it allows companies to make improvements that customers actually need and want. User testing websites offer a range of services from simple surveys and polls to detailed feedback interviews. They can also help identify problem areas, compatibility issues, and usability bugs. With the help of these services, companies can ensure their websites are optimized for the best user experience, making customers more likely to stay on the site longer and return in the future.
The most effective user tests involve identifying the main conversion goal on your site and asking testers to go through all the steps required to perform that action. You create a scenario that acts like an actual purchase on your site and see where a user experiences difficulty or enjoys a particular part of the experience.
A famous adage in CRO is “don’t make me think” made famous by CRO expert Steve Krug. The idea behind it is that any interaction with your website where the user has to “think” or guess what to do next has the potential to make them bounce. User tests allow you to identify all the areas in your conversion funnel that might cause a user to “think” for an extra millisecond, and remove them before they start to add up and prevent visitors from taking that desired action.
Heat, Click, and Scroll maps are essential tools to understand your consumer behavior. Heat maps provide a visual representation of how people interact with online content, such as which sections they spend the most time on and which links they tend to ignore. They are a vital tool used to measure how well different elements of a website entice customers to purchase or take action. These analytical tactics can be incredibly useful for monitoring user engagement and developing marketing strategies by providing insight into what works best across all platforms.
Best practices involve using heat maps to show the most popular elements on a landing page, then using that data for creating your A/B test to fine-tune conversions. When and where your users take action can help you optimize your campaigns for the best results.
Onsite surveys are an effective method to conversion rate optimization. They allow businesses to measure customer satisfaction and gather feedback on website design or product performance. Additionally, they can provide customer insights that help to improve a company's services and products. By offering onsite surveys, companies can understand customer behavior and uncover areas for improvement that increase conversion rates. With the help of onsite surveys, conversion rate optimization is easier than ever!
Conversion rate optimization is an important part of any digital marketing strategy, as it helps maximize the number of visitors who convert into customers. There are many different types of conversion rate optimization strategies, from A/B testing and personalization to usability testing, that can help improve your website’s performance and ultimately drive more sales and profits. With the right CRO strategies in place, you can ensure that your website is providing an optimal user experience while also boosting conversions across all channels.
There are a number of ways to improve your conversion rates, but conversion rate optimization in its simplest form is understanding exactly what your audience and visitors are looking for and providing it. There are a number of boxes to check along the way, and I haven’t done CRO justice by summarizing it in one sentence. If you want to learn more about how to boost your conversion rates, check out this article.
Conversion Rate Optimization as it applies to eCommerce is the process of getting more visitors to your website to buy something. For example, if you sell stuffed animals on your website, and 2 out of every 100 visitors make a purchase. Then, your conversion rate is 2%. Simple. CRO aims to lift that number to something that would be considered STRONG for the industry that you are in, say 4 to 5 out of every 100 website visitors.
CRO is vitally important, regardless of your business model, because you’re getting the most out of a precious asset (i.e. your website). The goal is to make your most publicly accessible asset part of your marketing funnel and turn it into an efficient lead generation and sales tool. If people are visiting your website and leaving without filling out a form, placing a call, or buying something, then you have a problem with your CRO (conversion rate optimization) that you need to address immediately.
CRO tools typically include but are not limited to the list below.
Not technically, however, CRO is extremely valuable for SEO. CRO aims to improve the usability of your website and create a positive user experience. Google takes into account what people do when they get to your site. Improving your interaction rate, time on site, pages visited, links clicked, bounce rate, etc. are all benefits of CRO and positively impact SEO.
Conversion rate optimization (CRO) is a great way to maximize the potential of website traffic. Put simply, it refers to the process of increasing the number of visitors that become customers on your website. By applying strategies such as user experience testing, A/B testing and tweaks to design and layout elements, you can increase conversions and make your website more effective at generating leads. This can be beneficial in reducing costs associated with traditional marketing efforts or paid advertising channels, providing a better return on investment for those services. Additionally, it opens up new opportunities for growing customer bases and achieving higher ROI from online activities. Overall, conversion rate optimization is an essential element for any successful online business and should not be overlooked in strategic planning for increased success.
Landing pages are typically a single webpage or a standalone site page linked directly to a marketing campaign with the goal of lead conversion. Landing pages can be your most profitable weapon in an ad campaign. Increase your ROI (Return on Investment) and ROAS (Return on Ad Spend) without increasing ad spend by driving users to a specific page with one action in mind.
Landing page optimization is a must-have if you want to increase conversions. The average landing page conversion rate across all industries is just below 10%, yet landing pages remain the least popular type of sign-up form. In addition, only half of the companies that utilize a landing page have optimized it for conversions. Keep in mind, companies that utilize conversion rate optimization tools on their landing page see an average increase of 30% in their conversion rate.
A landing page is an essential part of any website. It serves as a hub for your visitors, allowing them to easily access the information they need and guiding them through the process of becoming a customer, subscriber, or donor. To make sure your landing page does its job effectively, you'll want to pay attention to five key elements: design, message, content, call-to-action (CTA), and optimization. Let's take a look at each of these in more detail.
Design is one of the most critical aspects of your landing page. It should be visually appealing and easy to navigate, while still adhering to your overall brand identity. If you're working with a web designer or agency on this project, make sure to provide them with detailed feedback and style guidelines. That way you can ensure that the design meets your expectations and accurately reflects your brand.
The message of your landing page should be clear and concise; there should be no confusion about why people are visiting this page or what action you want them to take after reading it. When crafting your message, ask yourself: What makes my product/service different? Why should someone visit this page instead of another? What value do I offer? Answering these questions will help you focus on the essential elements of your message and get visitors excited about what you have to offer.
Once you've got the design and message nailed down, it's time to start adding content! Content is crucial for engaging visitors and getting them interested in what you have to offer. Make sure that all the content on your landing page is relevant, informative, and easy-to-read—no one likes slogging through long-winded paragraphs! You'll also want to include visuals such as photos or videos if possible; these can be great ways to draw people in and show off what makes your product/service unique.
Every good landing page needs a strong call-to-action (CTA). This could be anything from signing asking for contact information, a phone number, or an email address or buying something from an online store; whatever action it is that you want visitors to take after reading your page should be clearly stated at the end! Your CTA should also link directly back to where users can complete their desired action—for example, if they're signing up for emails then there should be an email signup form on the same page so they don't have to click away from it first.
Last but not least comes optimization—making sure that all the above elements are working together in harmony! This includes optimizing things like title tags, meta descriptions, URLs, loading times (the faster the better!), image file sizes (make sure they're small enough!), etc., so that everything looks good both on desktop and mobile devices. This step is often overlooked but it can make all the difference between a successful landing page and one that falls flat!
Tools that can show which copy users are engaging with the most (i.e. heat mapping) can be valuable for improving not only your copy but your layout as well. If your most important copy is being overlooked then heatmaps can help show you where the user's attention is drawn to the most. A/B testing is another must have tool to help optimize your landing page. Creating variations with minor or major changes can give you key insights into what your target audience is really looking for.
A well-crafted landing page can mean more leads for businesses large and small alike. When designing yours remember these five keys—designing with purposeful aesthetics; crafting an effective message; producing thoughtfully selected content; creating persuasive calls-to-action; optimizing every element—and success will surely follow! With just a bit of effort & attention paid towards making sure each element works together perfectly, businesses will see results reflected in their bottom line soon enough!
There are a number of ways to improve your conversion rates, but conversion rate optimization in its simplest form is understanding exactly what your audience and visitors are looking for and providing it. There are a number of boxes to check along the way, and I haven’t done CRO justice by summarizing it in one sentence. If you want to learn more about how to boost your conversion rates, check out this article.
Conversion Rate Optimization as it applies to eCommerce is the process of getting more visitors to your website to buy something. For example, if you sell stuffed animals on your website, and 2 out of every 100 visitors make a purchase. Then, your conversion rate is 2%. Simple. CRO aims to lift that number to something that would be considered STRONG for the industry that you are in, say 4 to 5 out of every 100 website visitors.
CRO is vitally important, regardless of your business model, because you’re getting the most out of a precious asset (i.e. your website). The goal is to make your most publicly accessible asset part of your marketing funnel and turn it into an efficient lead generation and sales tool. If people are visiting your website and leaving without filling out a form, placing a call, or buying something, then you have a problem with your CRO (conversion rate optimization) that you need to address immediately.
CRO tools typically include but are not limited to the list below. For more details about each item visit our Website Optimization page.
Not technically, however, CRO is extremely valuable for SEO. CRO aims to improve the usability of your website and create a positive user experience. Google takes into account what people do when they get to your site. Improving your interaction rate, time on site, pages visited, links clicked, bounce rate, etc. are all benefits of CRO and positively impact SEO.
Check out our CRO Blog here for more tips and tricks to improve your conversion rates.
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When running a business, it's essential to pay attention to your website conversion rate and the total number of conversions—the number of website visitors who take the desired action on your website. After all, that’s how you turn visitors into customers and keep them coming back for more. But what is conversion rate optimization (CRO) and why is it so important? Let’s take a look.
Conversion rate optimization is the process of increasing the number of people who complete an action (such as buying a product or signing up for an email list) on a web page or website. This can be done in various ways, such as by optimizing website design, making sure there are clear calls to action, improving user experience, and more. Ultimately, CRO is about understanding user behavior and how they interact with your site—and then using that data to make changes that will encourage them to take action.
Simply put, without conversion rate optimization your business won't get very far. You can have all the website traffic in the world but if none of those visitors convert into customers you won't see any real returns on your investment. On the other hand, when you focus on improving conversions you can drive more sales and generate more leads in less time than ever before. That's why CRO is so important—it helps ensure that each visitor has an enjoyable experience on your website and takes the action you want them to take!
The importance of CRO goes way beyond converting a visitor one time after an enjoyable experience. Customers are picker than ever, and will gladly leave your site for the competition at the first sign, hint, or whiff of a bad experience.
CRO aims to create a user experience that’s so intuitive and enjoyable, that the experience itself creates loyalty. CRO is a strategy for sustainable long-term success. Yes, it helps convert more visitors on their first visit to your site, but it also helps increase Average Order Value, Customer Lifetime Value, and loyalty.
There are many different strategies you can use to implement effective conversion rate optimization tactics. The key is to start small and build from there; don't try to tackle everything at once! Start by analyzing your current traffic data with Google Analytics and then use A/B testing to try out different versions of web pages or website features until you find one that works best for your business. Once you've figured out which version performs best, then roll it out across all pages or features! Additionally, make sure you're taking advantage of tools like heatmaps and user recordings so that you can better understand how users are interacting with your pages.
The goal is to end up with a well-thought-out conversion funnel that addresses a specific need for each step in the customer's journey. Identify the information necessary or missing on your product pages, and figure out the bottlenecks in your shopping cart. The goal of heat maps and session records is to gather hard data about your web traffic to understand how they interact with your site. Then, when implementing changes, you’re eliminating any guesswork and testing their success with A/B testing before committing to any permanent changes.
By now it should be clear why conversion rate optimization is so important for businesses—it helps turn visitors into customers! If you want to maximize ROI from your online efforts, then investing in CRO is essential. Start by analyzing traffic data and conducting A/B tests so that you can identify opportunities for improvement; this will help ensure that each visitor has an enjoyable experience on your website and takes the action you want them to take! And remember—start small and build from there; don't try tackling everything at once! With some time and effort devoted towards optimizing conversions, soon enough you'll start seeing results!
There are a number of ways to improve your conversion rates, but conversion rate optimization in its simplest form is understanding exactly what your audience and visitors are looking for and providing it. There are a number of boxes to check along the way, and I haven’t done CRO justice by summarizing it in one sentence. If you want to learn more about how to boost your conversion rates, check out this article.
Conversion Rate Optimization as it applies to eCommerce is the process of getting more visitors to your website to buy something. For example, if you sell stuffed animals on your website, and 2 out of every 100 visitors make a purchase. Then, your conversion rate is 2%. Simple. CRO aims to lift that number to something that would be considered STRONG for the industry that you are in, say 4 to 5 out of every 100 website visitors.
CRO is vitally important, regardless of your business model, because you’re getting the most out of a precious asset (i.e. your website). The goal is to make your most publicly accessible asset part of your marketing funnel and turn it into an efficient lead generation and sales tool. If people are visiting your website and leaving without filling out a form, placing a call, or buying something, then you have a problem with your CRO (conversion rate optimization) that you need to address immediately.
CRO tools typically include but are not limited to the list below. For more details about each item visit our Website Optimization page.
Not technically, however, CRO is extremely valuable for SEO. CRO aims to improve the usability of your website and create a positive user experience. Google takes into account what people do when they get to your site. Improving your interaction rate, time on site, pages visited, links clicked, bounce rate, etc. are all benefits of CRO and positively impact SEO.
Check out our CRO Blog here for more tips and tricks to improve your conversion rates.
A/B testing, also known as split testing, is a method of comparing two versions of a web page to see which one performs better. By testing different versions of your web page, you can determine which design elements, copy, and call-to-actions convert visitors into leads or customers.
If you’re hesitant about starting A/B testing or refocusing on improving customer experience before advertising, think about this one statistic. According to Forbes, Jeff Bezos invested 100x more into customer experience than advertising during the first year of Amazon. Considering Amazon is referenced in practically every article about superior customer experience, it becomes impossible to argue with his strategy.
Regardless of your industry, your business exists to create value for your customers whether it be in the form of a product, service, or content. Every customer interaction with your brand creates a measurable amount of data. But what are you doing with that data? Are you just sitting back and passively collecting it? The best companies aren’t storing their data for later analysis, they actively generate valuable data and customer insights through experimentation. If you want to grow in your industry, then implementing efficient and consistent A/B testing is essential.
The obvious benefit of A/B testing is to improve your company’s value and increase revenue, but there are other benefits to creating an experimentation culture. When you have the ability to quickly run an effective A/B test, your company has more flexibility to test out new ideas and no longer needs to rely on anyone’s “gut instinct”. Remove all of the guesswork from your strategic decisions, and get actionable insights into what does, and doesn’t, work.
In this blog post, we'll share eight keys to successful A/B testing. By following these best practices, you can maximize your chances of achieving significant results from your tests.
Before you begin designing your test, it's important to have a clear understanding of what you're trying to achieve. What is the primary goal of the page you're testing? Do you want to increase conversion rates, click-through rates, or time on-site? Once you've defined your objective, you can design your test around that goal.
A key performance indicator (KPI) is a metric that helps you measure progress toward your goal. When choosing a KPI for your test, be sure to select a metric that's directly related to your objective. For example, if you're trying to increase conversion rates, then your KPI should be conversion rate rather than time on site.
It's important to only test one element at a time; otherwise, you won't be able to isolate the factor that caused any changes in your KPI. For example, if you're testing two different headlines, then keep everything else on the page the same. That way, if there's a change in your KPI, you'll know it was caused by the headline and not by some other element on the page.
Make sure your testing doesn’t involve the use of trivial changes for the sake of testing. You want to focus on making the smallest changes with the biggest impact. If that’s not an option, then sometimes you have to go big and bold.
This one is pretty self-explanatory. Sometimes seasonality can play a big part in the success of a test for a variety of reasons. Save your old tests and re-run them at different times. The results will often surprise you.
When testing changes, make sure that you’ve identified the specific reason why you think it’s affecting your KPI, and craft your hypothesis as to why this change should improve it. Make sure your addressing your customers' objections for why your goals aren’t being reached, and provide the counter-objections in your test. The last thing you want is to run a test and have no clue why it was successful.
Before running your test, take some time to create a hypothesis about what you think will happen. This will help you interpret your results after the fact and determine whether or not your test was successful.
Once you've designed your test and created a hypothesis, it's time to set up the actual test using an A/B testing tool like Crazy Egg or VWO (Google Optimize is being sunset, but probably for the best in my professional opinion). Be sure to select a tool that integrates with your website platform so that setting up the test is as easy as possible.
In order for your results to be statistically significant, you need to run your test for at least two weeks. However, if you have a high volume of traffic, you may be able to get results more quickly.
Once your test has been running for at least two weeks, it's time to analyze the results. Compare the performance of the two versions of your web page using the KPIs you selected earlier. If there's a significant difference between the two versions, then congrats - - you've found a winning combination! If not, then try tweaking your design and running another test. Remember, it's all about experimentation. The more tests you run, the more likely you are to find a winning combination.
Once you've found a winning combination, it's time to implement those results on your live site. Doing so will help ensure that more visitors take the desired action when they land on your page. And that's ultimately what A / B testing is all about!
The results from every user who encountered the test may not tell you the whole story. Make sure you’re segmenting your results based on customer demographic and behavior to see who responded positively and who didn’t. It may be that certain age groups or geographic areas responded differently which opens up the opportunity for more personalization with your audience.
Not every idea and test is going to be a guaranteed winner. Your intended outcome may not have been achieved, but there may be other metrics that experienced a positive impact. Make sure understand what your losing tests are telling you about what your customers need.
A / B testing is an essential part of any digital marketing strategy. By following these best practices, businesses can maximize their chances of achieving significant results from their tests.
In my humble opinion, I think VWO is the best all-around enterprise-level A/B testing and CRO tool around. It has everything you could possibly need and allows you to do advanced testing on sites that I would not recommend for beginners. If you’re looking to get started with A/B testing then CrazyEgg definitely has the most bang for the buck. You don’t have the ability to set up advanced tests, but its full suite of tools (heatmaps, session records, etc.) more than makes up for that.
Statistical significance is the point when the test has enough Power (i.e. traffic) to determine a final conclusion of the test with enough confidence (usually 95%) that if the test was repeated under the exact same conditions then the same result would occur (95 out of 100 times). For example, VWO says in order for a test to reach statistical significance in 2 weeks, they recommend each variation has at least 1500 visitors and 25 conversions each over that time period. If you have less traffic than that, then the test won’t have enough Power to confidently determine a winner. Hopefully, I haven’t confused anyone further. If I have, dig up your old statistics book from college or call me and I’ll apologize.
I’d say you can still run the test, but it may take much longer, and the results may not be as reliable. Instead, I would recommend starting with heatmaps, session recordings, and user testing to make improvements and test variations of your site. Apply the best feedback from those results, and start testing once your traffic has increased.
Never, to stop is to die. Not really, but I think companies should breed a culture of experimentation. You shouldn’t simply be testing just to test, but it can certainly help end disputes on creative and strategic direction. For example, marketing wants to test an edgy and provocative headline, but operations think it will alienate or offend key customers. No one wants to give an inch, so test it. Let the people decide.
Conversion rate optimization (CRO) is a process that uses data-driven methods to increase the percentage of website visitors who take a desired action (i.e. increase the number of conversions). It’s an invaluable tool for any business that wants to remain competitive in today’s digital marketplace. Let's explore some of the key Conversion rate optimization benefits and how they can help your business thrive.
One of the most obvious CRO benefits is increased revenue. By using techniques such as A/B testing, you can figure out which elements on your website actually increase conversions and ensure they’re optimized for maximum success. As your conversion rate increases, so does your bottom line. If you combine things like digital advertising, you can use conversion optimization to reduce those expenses while simultaneously increasing profit. It’s a magical combination when done correctly.
Conversion rate optimization can be used to increase revenue from new customers and maximize revenue generated from existing customers. By evaluating performance data and customer behavior on your website, you can identify areas where changes will improve user experience and increase sales. A/B testing, for example, is used to compare different versions of a webpage (your control vs. your optimized page) to see which performs better. Then you can continue to adjust layouts and showcase important features more prominently, eliminate unnecessary components that take up valuable page real estate, etc. Ultimately, when implemented well, conversion rate optimization can help businesses realize their full profitability potential by converting visitors into paying customers.
It’s important to remember that CRO isn’t just about increasing sales; it’s also about improving customer experiences. By focusing on creating better user experiences through well-crafted website designs, comprehensive content strategies, and easy navigation tools, you ensure that customers have a positive experience when interacting with your brand online. It leads to higher conversion rates, improved loyalty, customer lifetime value, and satisfaction over time.
E-commerce sites are losing an average of $29 on new customers’ first purchases. Having a strategy that ensures your website, visitors come back for repeat purchases is essential in any economic climate.
If your website isn’t intuitive, easy to use, and building loyalty, then you don’t have a sustainable strategy for longevity. The customer’s journey from start to finish needs gives them exactly what they are looking for while meeting all their expectations. CRO is the perfect strategy for ensuring you deliver all of this to your customers. And I want to make one last important comment here before I move to #3. One of the biggest mistakes we see is an overconfident business owner, marketing exec, web designer, UX designer, etc., who thinks they know what the customer wants and how that translates into an online process. They spend a lot of time and research putting together personas, wireframes, designs, etc., which is all incredibly valuable and extremely important. Still, it simply does not translate into the purchasing process. And not just the “purchasing process,” the unique process for your business and your product or service.
Another benefit of CRO is improved SEO rankings. Google rewards websites for providing users with a great online experience by boosting them in search engine results and page (SERPs). CRO tactics like targeted content strategies improve both the quality and quantity of traffic coming from organic search results. This can lead to higher rankings in SERPs over time. This benefit ties back to #2, which is improved customer experience. Improved customer experience means more time on site and more site interaction which Google LOVES, and rewards handsomely with SEO results.
Conversion rate optimization (CRO) is an incredibly important component of a successful SEO strategy. By utilizing detailed analytics and user feedback, CRO can help to identify weak spots in your website's design that impede users from achieving the desired outcome. By addressing these issues, you encourage visitors to complete a transaction or perform an action such as signing up for a newsletter. This, in turn, results in improved keyword rankings due to increased engagement signals sent to search engines. Additionally, focusing on user experience through CRO also improves the number of organic links pointing to your website—which further contributes towards better rankings. Put simply, conversion rate optimization is essential if you wish to optimize your SEO and achieve better online visibility.
With rising customer acquisition costs, companies must find a way to make their marketing dollars go further. The beauty of CRO is that optimizing your website to convert a higher percentage of visitors means your customer acquisition costs also go down. If your conversion rate doubles, then so does your return on ad spend. CRO is a great way for companies to save money on advertising during tough times in particular or improve their marketing efficiency and exceed the growth of their competitors to capture more market share.
In conclusion, I’ve covered the four main benefits of Conversion Rate Optimization. Still, honestly, there are numerous benefits associated with implementing a successful CRO strategy and improving conversion rates for your website. From increased revenue and improved customer experiences to better SEO rankings, and more efficient marketing campaigns, investing in conversion rate optimization is an important step toward ensuring long-term success in today's competitive digital marketplace.
There are a number of ways to improve your conversion rates, but conversion rate optimization in its simplest form is understanding exactly what your audience and visitors are looking for and providing it. There are a number of boxes to check along the way, and I haven’t done CRO justice by summarizing it in one sentence. If you want to learn more about how to boost your conversion rates, check out this article.
Conversion Rate Optimization as it applies to eCommerce is the process of getting more visitors to your website to buy something. For example, if you sell stuffed animals on your website, and 2 out of every 100 visitors make a purchase. Then, your conversion rate is 2%. Simple. CRO aims to lift that number to something that would be considered STRONG for the industry that you are in, say 4 to 5 out of every 100 website visitors.
CRO is vitally important, regardless of your business model, because you’re getting the most out of a precious asset (i.e. your website). The goal is to make your most publicly accessible asset part of your marketing funnel and turn it into an efficient lead generation and sales tool. If people are visiting your website and leaving without filling out a form, placing a call, or buying something, then you have a problem with your CRO (conversion rate optimization) that you need to address immediately.
CRO tools typically include but are not limited to the list below. For more details about each item visit our Website Optimization page.
Not technically, however, CRO is extremely valuable for SEO. CRO aims to improve the usability of your website and create a positive user experience. Google takes into account what people do when they get to your site. Improving your interaction rate, time on site, pages visited, links clicked, bounce rate, etc. are all benefits of CRO and positively impact SEO.
Check out our CRO Blog here for more tips and tricks to improve your conversion rates.
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In Part 1 we discussed our findings from McKinsey and covered how we can apply lessons from past recessions to help thrive in times of economic uncertainty. If you missed it, you can access it here.
Budget cuts and performance marketing are on every CFO and CMOs mind right now. The most difficult part of navigating tough times is doing more with less. Companies face more pressure than ever to justify their spending, find ways to save money, and prove they’re providing value. Our goal is to help every department get what they want and need while still delivering results.
While the focus of this article is for our CMOs out there, we’re confident the strategy discussed will keep our CFO friends happy as well.
This is always a challenge, but crucial during a recession. There isn’t much budget allocated to awareness campaigns, so retaining customers and creating relationships is more important than ever. Digital marketing is an overcrowded and segmented space. It’s becoming easier for users to ignore messaging and send your brand into the gray. In order for companies to succeed they need to focus on the following:
For the majority of companies, this doesn’t have to be a difficult procedure. Oftentimes it can be as simple as asking or interviewing your best, or worst, customers to see what you got right, and where you fell short. Utilizing your sales and customer service teams can be a great resource for getting in tune with your customer's wants and needs.
Gone are the ways of building 50 pay-per-click campaigns all targeting different and “identical” match keywords throughout the funnel. Big data, algorithms, and artificial intelligence can out-think and perform our marketing instincts.
Utilize the power of big data to target your audience, and focus your efforts on creating meaningful content that speaks directly to your audience. Let the machines help you deliver.
However, it’s important to remember that AI and algorithms are learning “robots”. They are only as good as the data we give them. Garbage in, garbage out. It’s imperative you’re setting up your marketing campaigns with a feedback loop to identify what information and behavior is the most valuable to achieve your goals.
Finding and retaining a talented and trustworthy team can be challenging. A marketing team that can adapt, change direction, and mobilizes at the drop of the hat can be your greatest asset in tough times. If you're struggling to put this team together, then outsourcing skills to an agency can be a way to save time and money, while keeping essential functions in-house.
This method can still yield positive results while gaining access to agencies with specialized knowledge and still taking credit for the success in-house. Additionally, this strategy enables your team to focus on more important tasks vital to success like managing your data and analyzing ROI and ROAS to get the best use of your budget.
CMOs are constantly asked to show the value they add to the bottom line. With budget cuts, it’s vital for CMOs to stay away from strategies that are hard to measure.
Strategies that win and keep CFOs happy focus on improving the customer experience and promoting customer LTV (lifetime value) and satisfaction. Focus on converting repeat customers first and acquiring new customers second.
Measuring conversion lift is a way to tie marketing efforts directly to revenue, while boosting profit margins, and improving financial liquidity.
Now may not be the best time to experiment with new ideas unless you're confident in the outcome and the risks are minimal and/or can be managed. Now is the time to double down on your brand identity, ensure your marketing goals are aligned with your business goals and reassure your customers that they’re making smart purchases.
You can’t control macroeconomic conditions, but you can control your customer experience. Optimizing for usability and increasing LTV and brand loyalty is a strategy that will bring success in any climate, but especially during economic uncertainty.
Forbes: What Challenges Will CMOs Deal With Most Often In 2022?
WSJ: Edgy Campaigns Are Out, TikTok Won’t Stop and Other 2023 Predictions for Marketers
WSJ: Marketers Must Be Flexible, Without Losing Identity, in Uncertain Times
WSJ: How CMOs Are Marketing Through a Turbulent Economy
Stay tuned for Part 3 where we’ll tie everything from Parts 1 & 2 together and help you create your strategy for success.
The on-site survey can be a mixed bag, sometimes. When done right you can get a lot of extremely valuable conversion optimization information from customers , but it’s not all gold. As we all know, sometimes surveys can be bothersome or poorly timed. When putting a survey on your site, it’s important to go into it with your expectations aligned.
Most survey tools will assist with the timing and placement of your survey. However, you want to be sure it’s not covering any important content on the page. Typically, the survey should go in the left or right corner so it’s not obstructing anything, and just visible enough so it can’t be entirely ignored by the people who want to engage with a brand they love.
As for the timing, please don’t just show it to everyone who lands on your site. That is the best way to guarantee poor results. First, you need to figure out what information you are looking for, and what people are best suited to give you that information.
The exit survey is ideal for improving your user experience and shows your survey to people about to leave the site without clicking or engaging with anything. You’re identifying and showing this survey to people who are leaving your site because they likely haven’t found what they’re looking for. If you have what they’re looking for, but people can’t find it, then it’s obviously important to know this information.
Typical exit survey questions include:
My favorite, and one of the most overlooked surveys is the post-conversion survey. It's important because you’re gathering information from people who have been through your entire sales funnel and actually bought from you. They also encountered and overcame any barriers, but certainly weren’t oblivious to them. This survey is where we can gather useful information on what emotions led to a purchase, and why people choose your company over the competition. You want to use this type of survey to identify the pains that a customer is experiencing leading up to the purchase, and how your product or service resolves them.
Great questions for your post-conversion survey include:
Start with what information you’re looking to gather from your survey. Then, identify which visitors are most qualified to give you that information. Make sure your survey is showing up at the right time and isn’t too obstructive but not completely invisible. Lastly, make sure you understand the nature of the survey game. Not every answer will be gold, but there will be nuggets if you do it correctly.
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In Part 1 and Part 2 we covered lessons from previous recessions and how to make sure you hit the mark with your current strategy during economic uncertainty. By now you should have at least a few valuable insights or confirmed your current strategies or trains of thought. Our last objective is to tie the whole series together and give companies some actionable items instead of just data to ponder.
Stick to tried and true strategies that deliver the highest return on your investment and are the cheapest to launch. Email marketing continues to bring home the ROI trophy each year. If you need help maximizing return on your email marketing campaigns, then check our page on email marketing.
It’s imperative that your messaging speaks directly to your audience's pain points, provides value, and drives them to a page designed to convert. You can’t just email prospects and hope they know what to do once they read your content.
If you're utilizing other digital marketing platforms, identify which ones are driving the highest conversion rates and allocate more budget to those while pulling back on others. If you’re on the display network, make sure you’re measuring customer interactions to create powerful remarketing campaigns. If you’re not sure what to do next, bring in outside help. Now is not the time to stop your marketing efforts. Now is the time to create a lean and efficient marketing machine that measures and delivers on your organization's goals.
Budgets will be cut, and heads may roll. Providing value and measurable results are a must.
Companies need marketing teams to respond on a dime to whatever is thrown their way. They’ll need a broad skill set, and can operate without a playbook, but have the agility and speed to operate in the gray to drive results.
That means you know your team’s strengths and weaknesses. Double down on your strengths, and outsource your weaknesses. Going back to Part 1, speed of response was a huge factor in boosting performance during the last recession. For example, if your team needs two weeks to figure out how to launch a campaign in a new venue, then you need outside support.
Get outside help to fill in the gaps until you can hire and train the right people. The purpose of speed and agility is to be able to quickly capitalize on opportunities during economic times when your competitors may be slower to respond. In past recessions, first movers were rewarded significantly more than their competitors compared to periods of economic boom.
We’re all overly familiar with the old marketing adage that it costs 5x more to acquire a new customer versus keeping an existing customer. Focusing on customer experience, and retention is key to thriving in an economic downturn.
First of all, it’s more cost-efficient. Second, customer experience expectations are higher every year and continue to rise. We’ve seen average bounce rates increase from 47% to 50% in 2021 while average page views during sessions with a conversion increased by 328%. The data is telling us that our users are happy to spend time researching to find the right product or deal, and happy (and likely) to bounce if they don’t get what they’re expecting. Focusing on customer retention means optimizing your user experience. If you’re not improving your customer experience strategy then you’re falling behind.
If you need help optimizing your customer experience, then utilizing tools like on-site surveys, heat/click/scroll maps, user testing, live chat, customer service, sales team interviews, and a/b testing have the highest return on investment. If you need more information about how they can help, then check out our page on conversion rate optimization.
Conversion rate optimization and its tools can be your best weapon against economic uncertainty. It addresses profit margins while increasing lifetime customer value and retention. Paired with a strong email marketing campaign will put you in a position to gain ground on your competitors while they try to figure out how to stop the hemorrhaging.
Forbes: What Challenges Will CMOs Deal With Most Often In 2022?
WSJ: Edgy Campaigns Are Out, TikTok Won’t Stop and Other 2023 Predictions for Marketers
WSJ: Marketers Must Be Flexible, Without Losing Identity, in Uncertain Times
WSJ: How CMOs Are Marketing Through a Turbulent Economy
There is hope for companies worried about the state of the economy and how they are going to survive. While easier said than done, it’s possible to come out of the next few years in a position of strength. If you’re curious about learning more about recession-proofing your business, reach out to the Media Contour team for some free insights.
There are a couple of easy ways to tell if your website isn’t converting an appropriate amount of your traffic. We’ll start with the easiest and broadest methods, and then go a bit more granular if you want to dig deeper into your traffic.
This is going to be a really obvious one, but I want to speak about it anyways. You should definitely benchmark your conversion rates with industry averages, and make sure to segment your by traffic source. Not all traffic sources are created equally, and the conversion rates will vary depending on where they’re coming from.
Your website's conversion rate average provides good insight into your user experience, and whether or not people can find what they’re looking for. In order to act on this information, it needs to be MECE. MECE is a term used in consulting circles and stands for Mutually Exclusive, and Collectively Exhaustive.
If your average site conversion rate is below the industry average, then break down your traffic sources until they are mutually exclusive (i.e. there is no overlap between segments) and collectively exhausted (there is no traffic that is unaccounted for).
If your traffic sources account for why conversion rates are low (i.e. 90% of traffic is paid traffic and accounts for slightly lower performance) then addressing user experience issues may not be your first concern. If there isn’t any other logical explanation for why conversion rates are low, then it's likely you have a user experience issue.
Average Conversion Rate by Industry
Bounce rate is another great way to tell if you have user experience issues, as it’s a metric that is a strict measure of whether your traffic finds your site useful enough to stay and interact with it. As with conversion rate benchmarking, you need to take into account bounce rates for your various traffic sources.
Average Bounce Rates by Industry:
Average Bounce Rates by Traffic Source:
Bounce rates continue to rise year over year, while average page views during sessions with a conversion have increased by over 300%.
Poor content is the number one contributing factor we see with poor bounce rates. Consumers expectations are higher than ever, and if your content doesn’t capture their attention they'll leave for something that does (i.e. your competition).
Other bounce rate factors to consider are page speed, mobile friendliness, and confusing/overwhelming navigation. User testing and heat maps are quick and easy ways to see if and how people are engaging with your content.
Though it can be more challenging, optimizing your page speed with Google's Page SpeedInsights is a great way to compare your performance. Run a speed test on a few of your pages, then do the same for several of your competitors similar pages and see how you measure up. Faster is obviously better, but certain industries will be slower than others based on multiple factors, so it’s important to directly compare with your competition.
The last “quick” way to tell if your site sucks is to identify leaks in your conversion funnel. This is the most in-depth measure of success that we will talk about in this article, and will require you to have Google Analytics setup and be able to utilize your shopping cart behavior or user behavior flow.
This is typically easiest to do for eCommerce, because industry benchmark data is more readily available. However, understanding your conversion funnel is essential for improving your conversion rates.
For example, what if both your conversion rate and your bounce rate are low? How do you identify your problems? The answer is a conversion funnel analysis which will help you identify where people lose interest.
We call this the war on attrition, because on average, about 96% of people are going to leave your site without converting. If we can get 50% of visitors to view a product or service page, and 15% of them to add-to-cart, then we can typically get about a 3% conversion rate.
However, if 70% of our visitors view a product or service page, but only 5% of them add to their cart, then we’ve identified our leak. We’re losing the war of attrition on our product pages.
This method, or a conversion funnel analysis, allows us to pinpoint problem areas in our site's conversion funnel. It provides us with the information we need to focus our efforts on improving the user experience where it is needed most.
Your average conversion rate, bounce rate, and a conversion funnel analysis are all very useful tools that will give you insights into your user experience before you begin a complete overhaul of your website design and copywriting. They can also help you identify if a smaller project will have a greater impact. However, make sure you dig into your preliminary results to make sure you’re getting the entire story of what these numbers are telling you.
At the risk of giving away valuable trade secrets, I want to share what we’ve found to have the biggest impact on improving conversion rates at the most basic level. The theory behind conversion rates, if you will.
Your business either offers a product or service, and there’s a good reason why people are using it. It fulfills a fundamental need. In order to improve conversion rates, we first need to understand what need is being fulfilled (way beyond its physical utility) and define the emotions that are driving the decision to fulfill it with your company.
We need to take a deep dive into understanding your customer and what life experiences, behaviors, and emotions are going on around the time of purchase.
To get started, we need to follow your existing customers through the buying journey. A simple and straightforward way to understand what led to a purchase is to ask your customers after they convert. We want to know the pain the customer feels before finding a solution, the emotional triggers that drive their decision-making, if they have any hesitation or concerns, and how they feel after finding your solution.
There are an array of questions you can ask your customers to get the insights needed. You can find a more detailed list of ideal surveys and survey questions here.
So what do we do with this information once we have it? The answers to these questions help guide your copywriting to ensure you’re addressing AND highlighting the most important pain points and emotions involved in the purchase decision. Your copy and pages should be focused on what your customers are telling you matters the most to them.
Beyond understanding your customer's emotions, your secondary goal should be to identify what value proposition is most important to your customers (i.e. customer service, price, quality, ease of use, eco-friendly, the CEO is cute, etc.). You may already have an idea, but getting the answer directly from the customer removes the guesswork.
There’s an agreement that happens when your customers choose your company that goes beyond the exchange of money for goods and services. It’s the unwritten rule of doing business, and goes, “I’ll choose your company, and in return, you won’t screw me.”
If your customers are new to you, establishing as much trust as possible and relieving any hesitance before the purchase will help make the decision infinitely easier for your prospects.
Proven strategies for establishing trust on the internet, where the default behavior for users is to trust no one, is to provide social proof. No one trusts you if you tell them you’re trustworthy without proof. The opposite will happen. However, people will believe others if they say you’re trustworthy. We do this in the form of testimonials, case studies, videos, or user-generated content. Showing who we’ve helped, and providing proof needs to occur before the purchase.
We can take this a step further with a guarantee or warranty. This is why we see so many banners with things like “free shipping”, “30-day money-back guarantee”, or “lifetime warranty”. It gives our customers peace of mind knowing there is a fail-safe if they’re not 100% satisfied with their purchase.
The purpose of the guarantee is to remove the burden of financial responsibility from the customer and put it back on you. You can transfer that burden by providing a warranty, or a guarantee to establish confidence with your customers. They want the feeling that they are purchasing from a respected company and not taking a massive risk with their hard-earned money.
We understand the need are business fulfills, we’ve identified our customer's pain points, and established trust while removing any reluctance. Our copywriting speaks directly to these issues and we’ve got consistent traffic to our website. Mr. President, I believe our work is done. Not even close.
User experience is the final piece of the puzzle, and if you disagree, here’s a statistic I love to overuse: Amazon spent 100x more on customer experience than advertising in its first year of business. Now that I’ve won that argument, let’s move on to why it’s important.
The internet contains your company, but it also has all of your competitors, and they’re all one click away. Slow site speed, errors, confusing navigation, distracting graphics, cluttered content, or an unprofessional site can easily create that split second of hesitation needed for a customer to lose interest. Most of the time it’s occurring in the subconscious, and can be hard for companies to spot on their own site. Unfortunately, it’s that easy to lose a sale.
The second half of conversion rate optimization is designed to remove the pain points from your user experience, and continuously improve upon it.
A/B testing, Heat/Click/Scroll Maps, and User Testing are the warhorses of this effort.
Getting direct feedback and watching someone use your site allows you to identify where those “micro-hesitations” are occurring and fix them. This alone makes user testing an essential tool for gathering first-party feedback on your user experience.
Heat/Click/Scroll maps give you qualitative feedback on how people are interacting with the killer copy we just wrote. We can identify how engaged our customers are by it, and get a clearer picture of what’s working and what’s being ignored. Customers may be breezing over vital information needed for a purchase. Knowing this information is crucial if you want to boost your conversion rates.
Lastly, A/B testing is the Holy Grail of conversion rate optimization. If you’re not familiar, it allows you to show different variations of your site, or certain pages, to different groups of visitors with a conversion goal in mind. Once a winner is established, you can show that version to every visitor. A/B tests allow you to remove any guesswork in understanding what will improve your user experience. This can lead to continuous improvement of your copy and user experience so you never stop improving your conversion rates.
It can be difficult to do all of these things extremely well, but there is a methodology for making sure you learn and improve upon your process. If you’re not sure where to start, start engaging with your customers where you can. Find out why they're choosing you over your competitors. Then, keep asking them why until you understand the emotions driving that decision.
The Great Recession and the COVID-19 pandemic have taught us valuable lessons that are important for companies to take to heart. Recessions aren’t unique and are all typically characterized by capital restraints, and tough labor markets.
While I’m not a master of macroeconomics like our friends at McKinsey, I do understand that my skill sets are aligned with their findings in what successful companies did to thrive in past recessions.
Part 1 and Part 2 will deal with findings from our research, while Part 3 is dedicated to actionable insights that companies can take to help navigate and thrive in uncertain economic times.
Improving profit margin beats improving revenue. Analysis of the past recession shows that companies that focused on improving their profit margins grew faster than their peers who focused on growth.
What McKinsey calls “optionality in the balance sheet” can be simplified to capital liquidity. Essentially, it stems from the first finding. A combination of increasing your margins, building your working capital, and decreasing your debt allows companies to be more flexible and respond faster to opportunities.
Being able to focus on growth and profit margins has an exponential effect. Increasing our margins and working capital gives us the flexibility to increase growth by exercising our options faster than the competition with our improved liquidity.
Companies that improved their margins AND were able to grow revenues experienced a “1+1=3” effect. This isn’t terribly hard to wrap our heads around, as this strategy tends to be successful no matter the economic climate. However, in tough times, it boosted companies ahead of their peers even more.
This McKinsey graph illustrates the point extremely well. Companies that improved margins outperformed companies that just focused on growth. But, companies that were able to capture market share while improving efficiency got an even greater boost to performance.
It would be nice if every company could afford to hire McKinsey, Bain, or BCG to come in and help us navigate the storm, but we don’t have time to kid ourselves. However, we can use their free resources and hire the support we can afford to set ourselves up for success and capitalize on opportunities before our competitors.
We have the data, but the big question is what do we do next? All three takeaways of increasing margins, capital liquidity, and exercising our liquidity to capitalize on growth opportunities can be accomplished in a variety of ways. How you go about it will depend on how big you can build your war chest and the nature of your industry.
Improving margins for eCommerce retailers can involve more efficient inventory management and converting more traffic. Manufacturers can improve their payment terms, and tech companies can investigate ways to license and monetize intellectual property.
The importance and main takeaway of improving margins in tough economic times is strengthening your balance sheet to withstand strong economic headwinds, and building capital to allow for decisive action when opportunities arise. The studies showed that companies who acted before their peers experienced higher returns than those who waited or weren’t able to move as fast.
Forbes: What Challenges Will CMOs Deal With Most Often In 2022?
WSJ: Edgy Campaigns Are Out, TikTok Won’t Stop and Other 2023 Predictions for Marketers
WSJ: Marketers Must Be Flexible, Without Losing Identity, in Uncertain Times
WSJ: How CMOs Are Marketing Through a Turbulent Economy
Stay tuned for Part 2 where we’ll discuss specific recommendations for staying on the ball with your audience and making sure you're providing measurable results.
