Conversion Rate Optimization
Put simply, conversion rate optimization (CRO) is the process of making changes to a website or app to increase the number of visitors or users who become customers. CRO can also refer to the process of directing more users to perform a desired task that leads to a conversion.
Why is CRO Important?
Generating traffic and leads is no easy task. The last thing you want to do is lose the opportunity to convert a lead once you have them. CRO gives you insight into why leads don’t convert and what you can do to remedy the situation. In doing so, you’re able to increase revenue and ROI using the traffic you already have. Other benefits of CRO include:
Know If Your Marketing and Product/Service is Working
Knowing your conversion rate is good in general because it gives you an idea of how well your marketing is working and product performance.
Better Understanding of Consumers
As noted above, CRO leads to user behavior insights that can be very beneficial for future product development, branding, messaging and marketing.
Enhanced User Experience and Engagement
A better understanding of visitors and what they want means you can provide a better user experience that leads to more engagement.
CRO allows a business to grow without investing more resources to increase the customer base.
How Do You Calculate Conversion Rate?
Conversion rate is a simple calculation. For a conversion that can happen a single time, such as signing up for an email list, you divide the number of users that took a particular action that’s deemed a conversion by the total number of users. You then multiply that number by 100 to get a percentage, which is the conversion rate.
100 users downloaded an ebook
1,000 users viewed the ebook landing page
10% conversion rate
If a user can convert every time they visit a site or app, to purchase a product for example, then the calculation is based on the number of visits or sessions rather than the total number of users. This accounts for the fact that a single user can convert numerous times.
200 product orders
5,000 user sessions looking at product pages
4% conversion rate
What is a Good Conversion Rate?
What’s considered a good conversion rate varies from one company to the next and can even vary from product to product. A conversion that is subpar for one company can be completely acceptable to another. For example, Company A generates $100 per conversion, but Company B generates $1,000. If they both have a 10% conversion rate that could be great for Company B but might not be so good for Company A. Likewise, if a company has a 2% conversion rate but through optimization increases it to 4% that might be considered good in comparison.
Brandon Weaver from Instapage has a great definition for what is a good conversion rate. He defined it as:
“A good conversion rate is one that’s higher than it is now.”
There are “average” conversion rates out there, but it isn’t an exact calculation. And many businesses aren’t going to openly share how well they’re converting with the world. The averages also vary by industry and can change from year to year. The averages below should be considered a benchmark for your CRO:
eCommerce – 1.6-2.63%
B2B – 5%
Travel – 5%
Real Estate – 2.8%
Business consulting – 5%
Business services – 3.4%
Credit/Lending – 5.5%
Higher education – 2.6%
Home improvement 3.3%
The best way to determine a good conversion rate for your company is to know what your current conversion rate is and set a conversion rate goal for the next month, quarter or year.
What Can Help You Analyze Conversion Rate Optimization?
The first thing you need to do is define what counts as a conversion (whether it’s a primary or secondary conversion) and set conversion rate goals.
In order for CRO to happen, you have to have a way to collect data on your users, analyze that data and track it over time. The most efficient way to do this is with an analytics platform like Mixpanel. Our platform is widely used by companies in many industries to automatically collect data across channels and bring it all together in a single interface for analysis. Out-of-the-box reports make it easy to start the analytics process, but users can customize the type of data that’s collected, how data is segmented and track the results over a specified period.
With CRO there’s always room for improvement and an analytics platform will show you where those improvements can be made and what to A/B test.
That leads us to the next CRO resource, A/B testing software. Companies with landing pages that convert 5x more than the average have one thing in common. They repeatedly test variations of their landing pages to achieve a higher conversion rate. Anyone who has done CRO knows that a single small change can make a big difference for the conversion rate.
Unlike some analytics platforms, Mixpanel also provides the ability to A/B test. There’s even automated A/B testing functionality. If you’re strictly using a single-purpose analytics platform you’ll need to invest in standalone A/B testing software product.
Last but not least, is customer surveys. They can be used to collect additional data directly from users that compliments the data collected by an analytics platform.
What Are the Main KPIs for CRO?
Key performance indicators (KPIs) are metrics that tell you how well you are hitting goals. KPIs that can suggest whether or not CRO is working include:
- Repeat visitors
- Cart abandonment
- Landing page signups
- Average order value (AOV)
- Cost per acquisition
- Customer lifetime value
- Revenue per visitor
Essentially, which KPIs matter most will depend on your optimization goals and the product or service.
How Does Conversion Rate Optimization Work?
CRO is all about understanding the behavior of your target market and finding ways to influence the actions users take on your site or app. Doing so requires data that reveals:
- What needs to be optimized.
- Where in the funnel you need optimization.
- Who needs to be converted.
- How to overcome challenges of converting.
User behavior data provides the answers so that you aren’t making blind guesses. Once you have the data it needs to be tracked and analyzed to find the trends and commonalities. Those insights are used to determine which changes should be A/B tested. A/B testing is a critical part of the process. It verifies your observations and helps you decide which changes need to be implemented to increase the conversion rate.
What is a CRO Strategy?
A CRO strategy is a plan to make specific changes to a website or app based on user behavior data. The strategy will aim to optimize various parts of the funnel. Each stage of the funnel is individually analyzed then optimized. Funnels can be broken down into three primary stages:
Top – The top of the funnel is the beginning when leads are researching and discovering information.
Middle – The middle is when leads are thinking about converting and considering their options.
Bottom – The bottom is the point when leads are making decisions and ready to convert.
There are a number of CRO strategies that can be used at each stage to increase conversions. It all depends on what the data reveals.
CRO Related Terms
A/B Testing – A test that involves two versions of a web page, sometimes called a split test. One version is visible to half of visitors (group A) and the other is visible to the other half of visitors (group B). The results are then compared to determine which version performed the best in terms of converting users.
Above the Fold – The area of a web pages that is visible without scrolling down.
Baseline – The conversion rate before optimization. It can also refer to the version of a web page before A/B testing.
Below the Fold – The area of a web page that is only seen by scrolling.
Bounce Rate – The percentage of people who leave a web page within a few seconds or without viewing any other page.
Call to Action (CTA) – This is a prompt in the form of a link, button or text that encourages users to take a specific action.
Churn Rate – The percentage of customers that discontinue service within a given period of time.
Clickthrough Rate – The percentage of users that click a link or button.
Confidence Level – The probability that a variation of an A/B test won because of superior performance not chance.
Control – The version of a web page before changes are made for A/B testing. The performance of optimized pages are measured against the control.
Eye Flow – How visitors eyes move across a web page indicating what they are looking at and for how long.
Friction – Elements that cause distraction, hesitation or confusion, which ultimately prevents a user from converting.
Funnel – A path that you want the user to take to lead them to converting.
Funnel Testing – A CRO test that includes multiple pages to gauge the performance of a funnel. It’s also referred to as multipage testing.
Heatmap – A heatmap shows where users clicked on a page.
Landing Page – The web page that a user first visits on a website. Often they are directed to the landing page by advertising or a search result.
Lead – A visitor to your website or app that can be converted into a customer.
Primary conversion – The ultimate conversion goal is a primary conversion, also known as the macro-conversion. For example, people who sign up for an email newsletter may be considered a conversion, but the primary conversion is to get those people to make a purchase.
Secondary conversion – A secondary conversion, or micro-conversion, is a desired action that leads to a primary conversion. It typically moves users down the funnel.
Targeting – Focusing on a specific group of visitors. Targeting can lead to different optimization strategies based on the actions of the user segment.
Unique Visitors – Number of people who visit a website or web page in a given period. Each visitor is only counted once even if they visit the site or page multiple times.
User Cohort – A group of users with a similar characteristic such as age, device used, location, etc. Also referred to as a visitor segment.
Variation/Variant – A difference from the control page that is tested for optimization.