In digital marketing statements are regularly made on what key topic or technology will characterise the new year. Is the year of the CRO here? We talked about it with Alessandro Martin, Head of CRO at Pro Web Consulting.
“In the past there has been the year of mobile technology, the year of videos, the year of programmatic advertising, the year of cryptocurrencies, etc. I don’t know whether 2018 – or 2019 – will be the year of Conversion Rate Optimization, but of course there is a growing interest in this discipline that until a few years ago was almost unknown in Italy. I think there are two reasons for this growth: on the one hand, the turnover of e-commerce in Italy is growing, which in 2017 was worth 23.6 billion (up 17% YOY); on the other hand, some companies such as Booking.com, Skyscanner, Spotify are setting a trend, demonstrating that a systematic approach to improving conversion rates and in particular the massive use of A/B testing as a tool for optimization can give a real competitive edge. Just think that on the different digital properties of Booking.com a thousand tests are active every day and that this has allowed the company to become the undisputed leader in an extremely competitive market and to obtain conversion rates that are on average two to three times the market average.
What is Conversion Rate Optimization?
Let us start with an example. If you were to leave tomorrow morning for a trip and find out that your car’s tank is full of holes, what would you do? If you think about it, there are two options: the first is to pump more fuel into the tank hoping that it can balance the fuel coming out of the holes. The second is to repair the tank to stop or at least reduce fuel waste.
What is the best solution? It depends on who you ask. If you ask the petrol station, it will certainly suggest the first option and perhaps even a more modern type of fuel, with a high technological content, a little more expensive but certainly with better performance. If you ask the mechanic, he will tell you that before spending more money on petrol, it is better to repair the tank, thus improving the efficiency of your car. This way you will travel more kilometres with the same amount of fuel. A good mechanic will also notice that your car may have other big or small problems that slow it down due to design defects or the use you make of it. With an accurate diagnosis he will identify and solve them, making your car more reliable and able to make the most of the fuel.
In the last ten years I have seen so many, too many, companies listen only to the gas station and burn tens of thousands of euros in advertising campaigns that have brought users to websites full of holes: slow, difficult to navigate on desktops and mobile, lacking information that is really useful to the purchase process or simply irrelevant. Personally, I’ve never liked waste and that’s why I have become passionate about Conversion Rate Optimization.
If you want to give a stricter definition of CRO, you can say:
“Conversion Rate Optimization (CRO) is a structured, multidisciplinary process that aims to increase the profit generated by a website or app by improving the efficiency with which users are transformed into customers, thanks to an approach based on continuous improvement and experimental verification.”
Let’s have a closer look at some aspects of this definition.
- Contrary to what you may think, the ultimate goal of conversion optimization is not to increase the conversion rate. I could easily increase the conversion rates of an e-commerce website by cutting all prices by 90%. My conversion rates would skyrocket, but I would probably have to close after a few weeks. In fact, the goal of CRO is to increase turnover and profit. To achieve this, I can’t just think about shifting conversion rates; I also need to take into account the overall picture that links business objectives to all existing (digital) marketing activities;
- With the explosion of mobile applications, websites are only a small portion of the scope of CRO. CRO goes to work where it can maximize the impact on revenue and profit and estimates tell us that in 2020 apps will generate USD 118.9 billion. That’s why in the future apps will be increasingly the playing field of CRO;
- One of the factors that differentiates CRO from other digital marketing activities is the great importance given to experimental testing. Doing CRO seriously and rigorously means starting from the assumption that there is no solution that suits everyone. Putting a big orange button like call to action won’t necessarily increase your conversion rates. It may work for others, but not necessarily for the users of your website. For this reason, when it is possible, it is necessary to proceed by testing each new solution in order to have a statistical certainty that this will generate an improvement.
The benefits of optimising the conversion process
The main benefit of CRO is to cut acquisition costs. Returning to the metaphor of the car, however efficient and technologically advanced fuel may be, its price is always rising. Similarly, the cost of advertising is increasing as competition for qualified audiences increases. Improving the conversion rate allows you to get more with the same money and thus to multiply the value of your budget.
Reducing acquisition costs can be leveraged in two ways. We can maintain or even increase the budget on the channels already used to make the most of the renewed efficiency, or we can choose to dedicate a part of the money saved thanks to the increased conversion rate to test other sources making our business sounder and less dependent on a single source. Let’s take an example. If I normally invest €100,000 in AdWords advertising a year, by bringing the conversion rate from 2 to 4% I might decide to disinvest 50% of my previous investment in AdWords to test a channel like Facebook and be less dependent on any changes in Google’s advertising platform.
Among marketers, users and online advertising platforms (Google, Facebook, Outbrain, etc.), there is a sort of ménage-à-trois that can become a very complicated relationship, especially when a marketer’s interests end up contrasting with those of platforms. Online advertising platforms are great tools for getting qualified traffic, contacts or sales. However, we must always remember that our control over these platforms is limited and that changes in the algorithms that regulate them can occur at any time and also have dramatic repercussions on the stability of our business. Facebook in 2016 has released over a dozen significant updates to the algorithm that regulates the news feed as Google has done for organic or paid results. CRO has the advantage of eliminating an actor in this ménage-à-trois by focusing on users and finding the best way to push them to convert regardless of what the source of traffic is with which they have arrived at the website.
CRO activities generate another benefit which is less evident and immediate than the increase in profit but which should not be underestimated. Every CRO activity, and specifically all testing activities, generate validated learning, or allow us to gain a better understanding of our users in relation to our product, a more solid knowledge because it is empirically verified.
For example, if we are optimising the lead collection page for an ERP software dedicated to large companies, we could think of increasing conversions by adding a time-limited discount. Even if the test shows that our new version has a conversion rate worse than the original, we will still have learned something about our target, which is that it is not sensitive to this type of incentive. All websites and all users are different and there is no solution that suits everyone. That’s why we are not afraid to carry out tests that fail, that is, that do not generate the expected improvement. On the contrary, we embrace every failure and the lessons we can learn from it as a key tool to deliver results to our customers.
SEO and CRO: related and synergistic activities
The affinity between SEO and CRO goes beyond the fact that they are two three-letter acronyms.
In both cases the focus of the activity is to improve the efficiency of a digital property, but if on the one hand the goal is to maximize the capacity of attracting organic traffic from search engines, on the other hand the goal is to transform that traffic and the traffic from other sources into conversions, eliminating obstacles and improving the website’s ability to persuade users. For this reason, SEO and CRO are potentially among the digital marketing activities with the best return on investment: everything I have earned with these activities becomes a legacy to build on over time and on which to build new successes.