What is Conversion Rate Optimization? Why it is Important?

Conversion rate optimization (CRO) in online marketing

When you want to harness the most from your online marketing efforts, the benefits of incorporating conversion rate optimization (CRO) can never be overlooked. Whether it’s about sales, subscriptions, leads, or higher returns on investments, CRO is the ultimate path to follow.

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But, what exactly is this method of optimization and how does it improve the marketing funnel?

To put it simply, CRO is an efficient practice of optimizing a website to capture the visitor’s attention and encourage them to perform a specific action. Thus, CRO involves UX, visual design, psychology, copywriting, customer behavioral analysis, and testing to convince visitors to act at various funnel stages.

What is Conversion Rate and How to Calculate it?

Having a clear idea about your conversion rate is the first and perhaps the most important step towards CRO. Based on the objective of your company, a conversion can be any form of action profitable for your business, such as:

  • Filling out a contact us form
  • Downloading free e-book
  • Signing up for the newsletter
  • Buying a product
  • Answering a feedback survey
  • Hiring a service

So, visitors are converted when they take the action which the page or website has directed them to, and that is what CRO is all about. A simple formula is used to calculate the average conversion rate, which is:

Conversion rate (CR) = (Conversions/Visitors) X 100%

For example, if your website acquired 10,000 visitors out of around 2,000 visitors were converted, the conversion rate would be 5%. One of the most amazing things about conversions is that you can be as broad or as specific with the rate according to your business’s goals.

Say, if you have an e-commerce store, your page’s goal is to get the visitors to click on the “add to cart” button and then, of course, to place an order (i.e., getting them converted as customers).

Here, there are two different goals of conversion:

1. Micro Conversion:

This is meant for the product pages and measures the number of visitors who use the “add to cart” button out of the total number of visitors who did not use the button.

2. Macro Conversion:

This indicates the overall number of visitors who have placed an order by the total number who have visited but did not get converted.

From the above example, you have a conversion rate of 5%, with 10,000 visitors, and only 2,000 visitors make it to the product page; of these 2,000, about 1,000 visitors use the add to cart button. This leaves you with a conversion rate that looks like this:

Product Page Micro Conversion = 10,000/2,000 = 5%

Product Page Macro Conversion = 2,000/1000 = 2%

The Role of Conversion Rate Optimization

As explained earlier, conversion rate optimization is focused on persuading visitors to get converted. It apparently ensures that you grab the most out of the traffic already present on the website. Without improving the web traffic, you can increase the conversion rate to about 2-3% or even double the existing conversions!

Many people often believe that conversion rate optimization is a complex process that can be daunting to execute; however, the reality is far from that. Your CRO approach can be simplified when you make use of the seven simple practices mentioned below:

  • Determine which KPIs you want to track and improve
  • Collect data value for growth and development using smart analytical tools
  • Analyze the acquired data and focus on the various patterns that they indicate
  • Develop a well-structured hypothesis and then rank them according to the difficulty of implementation and cost
  • From the data and hypothesis comes formal wireframes based on sketches, copywriting, and the visual design
  • A/B Testing backed by scientific methods should be carried out until the desired statistical significance is achieved
  • You’ll always gain new ideas and learn from the test, developing and iterating the same on the CRO hypothesis.

Conversion rate optimization is an ongoing cyclic process. One cycle would easily take 4 weeks to months, depending on the site, the average volume of traffic you receive, and how much data you are dealing with.

In addition to CRO, your website will rely on PPC, SEO, email campaigns, and social media to drive new visitors- CRO would measure, analyze, and optimize this traffic. From this, it can be understood that this method is:

  • A guaranteed method to increase conversion rates and that too in a short span of time
  • The data-driven process that is focused on profitable results
  • A unique way of discovering the interests of customers and visitors
  • A long-term commitment that needs minimal effort and resources.

What Makes Conversion Rate Optimization The Need of The Hour?

CRO is of utmost importance because it reduces the costs of customer acquisition by enjoying more value from the users and visitors you already have. With conversion rate optimization, you can effortlessly improve the revenue per visitor, expand your business, and acquire more potential customers.

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If you have worked with conversion rate optimization before and could not witness any dramatic results, then a good practice is to figure out why exactly it went wrong and what should have been done differently. Because at the end of the day, CRO demands a strong plan with a commitment towards the process, and if you’re in, then humongous rewards are on your way.

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