Shopping experience

The business case for conversion rate optimization (CRO)

The process of conversion optimization research has immediate benefits for every website. It can provide immediate solutions to obvious issues, and that's also a quick route to improve a store’s conversion rate.

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When does conversion rate optimization CRO make sense?

There's a time and place to implement it in your ecommerce.

That time becomes obvious once you reach the limits of growth through other means. Congratulations! It means you have already solved the basic issue of product-market fit, ensured regular profits from your business, and reached a stable number of visitors.

Now is the ideal time to dedicate your efforts to optimize your conversion rate.

But wait! Before you start, ensure you have a significant number of customers and that you're able to conduct measurement, research, and testing with full confidence in the results.

‍Here, we're not considering product development and business process improvement since they fall outside of the scope of marketing techniques. We’ll assume you’ve managed to overcome those hurdles if you are considering CRO and traffic acquisition. 

Ready to start?

Costs and benefits of CRO

Conducting a conversion optimization process usually includes an up-front fee paid to a conversion optimization agency, regardless of the final result. However, the effects of a properly applied conversion optimization process are permanent, and additional investment can make the results even better.

‍Agency-led processes also need close cooperation with the ecommerce staff, and results in a knowledge base that can continue to optimize independently once the contract ends.

In truth, no ecommerce store can neglect conversion optimization and experimentation if it wants to grow.

And even if you test everything already, the CRO process can help you redesign your website to entirely new specifications (while avoiding costly missteps).

According to an Unbounce study, this is the best combination of SEO and CRO budget (source)

Here is a quote from the article the table is sourced from:

“Your own private sweet spot (?) will depend on how successful your CRO efforts are. Perhaps you’ll only achieve a 5% increase per $1,000 spent. The only difference is that you’ll have a different chart and a different sweet spot. The important thing to learn here is that there does exist a point where you optimize your expenditure based on optimization efforts.” Oli Gardner, founder of Unbounce

Meaning: the initial cost of the CRO process is unlikely to grow exponentially or significantly, even after a prolonged period. 

‍CRO Benefits in the Short and Long-Term

The process of conversion optimization research has immediate benefits for every website. It can provide immediate solutions to obvious issues, and that's also a quick route to improve a store’s conversion rate.

‍Even before experiments, some shops report a great increase in conversion rate in this short-term phase. Since obvious issues are fixed, your shop become more accessible, which helps recover prospects who dropped out of the funnel due to website problems.

If your ecommerce is more mature and you've already fixed those issues, the growth might be lower, but still steady nonetheless.

In the long-term, conversion optimization improves the overall content and design of your website.

By improving your content’s quality and relevance, learning about your customers, and increasing personalization (an aspect we’ll cover in more detail later), your store can experience exponential revenue growth and even attract more visitors.

Simply put, the CRO process makes your website and your entire approach to customers better and more effective. 

In fact, the prime benefit of CRO is its ongoing nature. That’s how all the big names in ecommerce (Amazon, etc) have found success.

When you start conversion optimization, you enter a self-perpetuating cycle.

Pros of conversion optimization

While the most important benefits have been covered above, that doesn't mean they are the only ones. More benefits include:

  • Starting the conversion optimization process yourself at a relatively low cost.
  • Learning more about your market and target audience.
  • More effective marketing by allowing you to target audiences more likely to correspond to your ideal customer.

Cons of conversion optimization

Could there really be a con when the advantages of conversion optimization are many?

The main disadvantage lies in the fact that the process requires effort. After the initial gains, there can be a period of decreased gains, which may disappoint you. However, this situation shouldn't last, and the gains will pick back up as the process runs its course.

Essentially, the only con is patience to complete the research since it takes a month or two.

And as attractive as conducting experiments may sound, keep in mind that experimentation is only relevant when you have enough traffic. To make sure your testing is cost-effective, remember to conduct enough research.

Yep, the time frame is intimidating: the process of structuring hypotheses and running tests can take six months to a year. 

However, keep your confidence because a properly conducted process of conversion optimization is the most cost-effective growth activity you can invest in.

As you can see, with an assumed conversion rate of 2%, 5000 daily visitors, a profit margin of 20%, and an increase in conversion rate of (a relatively moderate) 5%, an ecommerce store can return its entire CRO investment within 8 months. 

Even this minimal increase in conversion rate results in a quick return on investment!

You can do your own calculation, using our web based ROI calculator. Ready?

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