What is Conversion Rate Optimization (CRO)?


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Estimated reading time: 7 minutes

Conversion Rate Optimization is an important component of inbound marketing
Are you wondering about all the hype around Conversion Rate Optimization (CRO)? This post covers CRO, where to start, and how it’s used!

What is CRO?

Ever heard of Conversion Rate Optimization (CRO)? In a nutshell, CRO is an approach used to increase website activity through actions (downloading an app, newsletter sign-ups, etc.)

Example

If you’ve been pondering how to optimize your site to boost traffic, you probably have a laundry list of to-dos. Or maybe you only focus on improving SEO to make your site more visible on search engines. No matter what, utilizing a Conversion Rate Optimization strategy is an excellent place to start, even more so if you already use a tool like Google Analytics!

If you have GA set up, you’re one step ahead already! In addition, you can access lots of measurable information (more on that later)!

Now, we’ve come up with a scenario to help paint a picture of how you can narrow down your focal point and ultimately find something worthwhile to improve upon (that’s measurable).


Conversion Rate Optimization Scenario:

Let’s say your “Avg. Session duration over time” has dropped, and you need to figure out why.

Side notes:

  • At first, remember that you’d be unsure which action to take because research hasn’t been completed. You’d only be aware of the issue.
  • Also, many people run into trouble immediately because they assume they know how to solve the problem even before they know what’s causing it!

Now let’s assume the person responsible for figuring out why the session duration dropped already “knows” why it happened (and skips research entirely).

The employee assumes that the decrease stems from the company recently reducing (how often) their company posts on social media.

So in response, the employee decides to increase social media posts to improve the chance of driving more traffic to the site. (They base their decision on previous experience during a similar situation, whereas doing this before had unexpectedly boosted Avg. Session duration.)

Now, let’s say that this person’s supervisor also looked into the issue BUT did the research.

While investigating, the supervisor discovered that the overall average sank because referral traffic from organic followers fell significantly during the previous 3-month period. However, traffic from social media had increased since they started posting less.

Then the supervisor did some more research and found that four pages had been taken down (for editing) three months earlier for editing and never republished. Out of those pages, three of the four pages had high amounts of organic follower referral traffic before they were taken down. So she published them again and started tracking the data for three more months.

At the same time, the employee decided to stick with their original plan of increasing social media posts but didn’t track the results because they were 110% sure it would work.

Fast forward three months:

  • Avg. Session duration had increased, but not to previous levels
  • The organic follower segment had risen dramatically (problem solved on the web pages!)
  • Referral traffic from social media had plummeted to an all-time low

Why? They had lost most of their audience due to their fans unfollowing them because of the unprecedented increase in social media posts!


See where I’m going with this?

If you were in that situation, what would’ve you done before implementing any changes? Where would you have started?

(This is where CRO comes into play.)

How CRO Can Help and Where to Begin

Before starting, you need a measurable goal. Then, after you decide on the target, take down some notes based on your analytics, let’s say, from the last 3-6 months. The analytics will show which pages or posts have been doing well, where some improvement needs to happen, and which ones need attention.

Next, jot down any trends you notice while reviewing the data and pay particular attention to significant dips or increases in page views, bounce rates, social traffic to your site, referral traffic sources, etc. Once you have the timeframes noted for the changes, figure out what changed during that period. For example, did you implement a new marketing campaign, run an advertisement, etc.?


Tip: Avoid basing CRO goals around what you want to happen, what you think others may “like,” or what you think will happen based on previous experience.


Conversion Rate Optimization is here to help us figure out what customers want. So when you notice spikes in activity, bring back whatever brought it on and then test more from there.

If you aren’t sure what contributed to a change, it’s time to switch things up and try something new. However, do not implement a new CRO plan that changes more than one or two things at a time.

Your new goal(s) must make complete sense, be measurable, and test-worthy. Keep things simple. A good rule of thumb (if you’re confused by your plan) is to rethink your strategy until it makes sense.

A/B Testing

Ultimately, Conversion Rate Optimization comes down to researching and testing what works best for your business and customers and what doesn’t. To figure that out, pay close attention to what your audience is doing and how they respond to certain things, and take note! The ultimate goal is to understand what makes your audience tick.

Ideas, Ideas, Ideas

Are you starting from scratch? Out of ideas? Not sure what your audience wants?

Send out a poll on Twitter or Facebook! OR begin by jotting down something you’re curious about (that is measurable – can’t stress that enough!) and start keeping track of conversions with a tool like Google Analytics. Then take those numbers and review them a few months later. Side note: Don’t worry yourself by analyzing data every day! It’s a colossal waste of time. Plus, it’s super discouraging because things fluctuate. Daily.


Quick tip: If you don’t already have analytics connected to your site, sign up for Google Analytics.


>> Fast Forward >>

How to calculate conversions

Next, calculate your conversion rate once you have some numbers to pull! Conversion Rates can be calculated by taking the number of sales and dividing it by the number of leads. Then you multiply by 100.

For example: say you have 30 sales over the last three months (that came in solely from 75 phone calls).

To determine your conversion rate, you must divide the total sales by how many phones calls you received.

30/75 * 100 = 40%. (you had a 40% conversion from phone calls!)

So how does that help? On its own…not too much. However, if you know the actual value of each lead…things start to change.

Finding the value of a lead

Let’s say you sell handmade wallets for $35 each, and out of those 75 phone calls, you sold 30 of them.

The leads would get valued at $1,050 for 75 (or $14 for ONE).

How did we figure that out?

Here’s the formula: $1,050/75 = $14.

Why are lead values significant?

When you know the amount, you can figure out how many leads are needed monthly to help you hit a financial goal!

Now, let’s say you set a financial goal of $8,000 and make a profit of $17.50 on each wallet. To hit your $8K goal, you would need to gain 1,143 leads.

To figure this out:

  • Calculate this first: $17.50 profit per wallet * 40% conversion rate = $7 is your average lead value
  • Then, use this formula once you have the average lead value: $8,000 to break even / $7 = 1,143 leads needed.

BAM!

Final words

If you want a better understanding of your audience, Conversion Rate Optimization is the way to go! It can take some time to figure out what works best, what (measurable) goal is most realistic for your business, and how to track (and calculate) your progress over time. Ultimately, the more you work on setting goals and conversion rate optimization techniques, the clearer it becomes!

In the meantime

So there you have a few ways to implement your conversion rate optimization plan to start tracking/meeting your goals!

Check out these posts if you’re looking for more tips to improve social media marketing or other online marketing campaigns!:

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