Would you like to increase your website sales by 10% in a matter of a few days or maybe even hours? If your website is receiving substantial web traffic but it doesn’t convert into leads or customers then there is a problem.
It’s time to talk about conversion rate optimization and how it impacts your bottom line.
What is Conversion Rate Optimization (CRO)?
In online marketing, CRO – conversion rate optimization (or optimisation in British English) refers to the process of tracking and optimizing web pages to achieve greater conversions in the form of increased sales, more subscribers, or other defined actions.
Focusing on your website’s conversion rate optimization can change the way you look at your entire online business. Here is why:
- In order to optimize your website’s conversions, you will first need to define the main goal of your website, ie. online membership sales, product sales, more subscribers, etc.
- In the course of the optimization process, you will learn more about your online customers and their decision-making process
- Successful optimization can make a huge difference in online earnings
Surprisingly, most online businesses don’t pay any attention to their website’s conversion rate optimization. They build a nice website and never think about its conversion rates.
This of course is a big mistake because it could turn out that the website that is presented is completely wrong for its target audience.
Most online businesses focus on website development (functionality), design, search engine optimization (SEO), or PPC (Adwords, Facebook Ads, etc.), but they leave out the most crucial aspect – sales or lead conversions.
Conversion rate calculation formula
This very simple formula calculates the conversion rate of any website/webpage. Conversion rate simply calculates the percentage of your website visitors who complete a predefined goal. Here is the complete formula (also used by Google Analytics).
Example: Let’s assume that you receive 1000 visitors to your e-commerce webpage. Out of those 1000 visitors, 7 of them bought your product (completed a goal). The conversion rate for your webpage in this scenario would be 0.7%
The calculation is as follows: 7 / 1000 x 100 = 0.7%
When you start looking at the conversion rates of your online business, you will quickly understand where you are and how your website performs.
Industry-standard conversion rates
At this point, you might be asking yourself what your conversion rate should be, or what is the standard conversion rate for e-commerce websites.
Unfortunately, the answer is slightly more complicated than just a number. Conversion rates can vary dramatically depending on factors such as:
- type of business/product
- seasonal demand
- optimized sales funnels
A study on the subject of web conversions revealed that the average conversion rate of the 500 biggest online retailers was about 3.3%.
Let’s take our example above with 1000 visitors and see how many more sales would your business get with a 3.3% conversion rate.
1000 x 3.3% = 33 sales (33 – 7 = 26 more sales)
Now let’s put this into practical terms.
Imagine that each sale is equal to $250. With 7 sales out of 1000 visitors, your profit is $1750 (7 x $250). However, with an optimized conversion rate of 3.3%, your website generated 33 sales out of 1000 visitors, earning you $8250 in total!
That’s a difference of $6500 ($8250 – $1750). That is a lot more money that your business can use to expand.
So as you can see, increasing your conversion rates from 0.7% to 3.3% can really change your entire business and make a big impact on your bottom line.
Imagine how much more money you would earn with even higher conversions. For example 10% or even 20%. A web manager can help you increase conversions through CRO.
Amazon has mastered online retail and they are the leading retailer when it comes to high conversion rates. On average, their conversions reach 13% for non-Prime customers. Their Prime customers, however, convert at nearly 74%. Talk about a winning product!
An interesting fact!
In the Netflix documentary about Jeff Bezos (founder of Amazon), I learned that introducing the Prime membership offer was a very risky gamble for Amazon company. They were initially losing money with the Prime offer and it was a huge logistical problem.
Yet in the end, it paid off very well with customer loyalty and brought Amazon into the new era of the biggest and most innovative online retailer in the world.