Conversion rate optimization or CRO is being uses by multi-billion dollar businesses like Sony and Netflix to optimize their sites and ultimately increase conversion rate to boost online sales and profits. So…
Bottom line: What can conversion rate optimization do for your online business? Well in theory, CRO can increase conversion rate on a site by up to 50% or more by eliminating the mistakes in the copywriting, website design, and web programming. But to actually get an idea as to specifically how much you can boost online sales, you need to know whether your conversion rate is good, bad, or just average. Therefore, you need to know two things:
1. What is your current average conversion rate?
Before you can increase conversion rate on the site, you first have to know it’s baseline. This is actually tougher to calculate than most realize. Ideally, you want historical data going back at least a calendar year to smooth out for holidays and natural peaks and valleys in your niche’s business cycle. If that isn’t available, then you at least need a 60-day running average. The average conversion rate should include:
- All Monetized Conversions
- All Non-Monetized Conversions
Basically, if a visitor provided their contact information, either as part of a purchase or for some lead gen product or service, it’s a conversion. Take this total number of “transactions” and divide by your total unique visitors for the time period being analyzed. This is your average conversion rate.
Please note: I know you can configure Google Analytics and similar platforms to track goals like visitors who view so many pages or stay on the site for so long, but for our purposes we are strictly talking about people who actually entered their contact info at the very least.
2. What is the benchmark or baseline conversion rate for your industry or niche?
Do you even need to increase conversion rate on your site or should you invest your time and money instead on generating traffic with SEO, social media, mobile marketing, etc.? Well, that is the million dollar question and to answer it, you need to know: What is a good, or bad, conversion rate?
Unfortunately, there is no universal answer. The average conversion rate between niches can vary from 1.5% all the way up to 6% and beyond. So, we need a benchmark for each niche and no company has more conversion data on the planet than Google. Yep, on a transaction by transaction basis, Google actually has more point-of-purchase data than Amazon.
Yep, Google Adwords sells millions of clicks each and every day giving them one of the biggest data piles on POP. Now if you like, visit Google Adwords Performance Grader to manually look up the average conversion rate for your niche. Or, just scan the table in the graphic above.
So, can CRO increase conversion rate enough to justify the expense and deliver a solid ROI? Well, that actually depends on a few factors, including:
- Website Traffic Levels
- Average Customer Transaction Amount
- Current Average Conversion Rate
- CMS and Website Configuration
I know, that’s a lot to take into account but here’s a good 3 question test to determine if CRO can increase conversion rate enough to significantly boost your online profits:
1. Is your site generating 5,000 or more unique visitors per month? If yes, proceed to question 2.
2. Is your current average conversion rate more than 20% below PPC benchmark for your industry? If yes, proceed to question 3.
3. Is your average customer transaction amount above $50?
If you answered “Yes” to all 3 questions, then CRO will likely increase conversion rate more than enough to justify the expense. However, if you answered “No” to one or more of the questions, then I strongly suggest you think twice before rushing out to hire a CRO firm to optimize your site. In fact, you may want to first speak with a CRO analyst so they can give you an accurate estimate of how much you can increase conversion rate on your site before you make a decision.