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Wednesday, Dec. 8, 2010 at 2:04 pm

CRO Deserves Its Own Line in Your 2011 Budget

By Marijayne Bushey
December 8th, 2010

I’ve got a bone to pick about how a lot of people perceive Conversion Rate Optimization (CRO) relative to all of the other marketing gobbledygook they do. What’s inspired me to pick this bone right nowWell, it’s the holidays, with the New Year right around the corner, and I am willing to bet that a lot of these people are hovered over their desks, forehead planted firmly in one hand, tapping their pencils on their college-ruled, recycled, legal pad with the other, in a staring contest with their 2011 marketing budget. And I’d like to set them straight before they do something they will regret. Although there are still a number of people that confuse CRO for SEO (Search Engine Optimization) or Analytics, many of the people I’ve spoken to over the years rightly do recognize that Conversion Rate Optimization is all about making your website better (meaning more action from your visitors), and seemingly understand that this is accomplished by making marketing work more efficiently (meaning more output for the same amount of input). Some of them even get how and why this is fundamentally different from the goal of other marketing efforts. Many even understand that making your website convert better is not just about addressing a speed or platform issue, incorporating the latest design craze, or adding hot technologies like video and chat.

So, if everyone “gets it” when it comes to Conversion Optimization as a method for improving website performance, what exactly is this bone I want to pick?  Well, if these incredibly savvy marketers truly recognize all of those things about CRO, why then, when it comes time to decide how to spend their marketing dollars, do so many of them say things like, “I’m trying to decide whether or not I should do CRO or more PPC”?  These folks know they want more sales, but when they go looking for a solution, and decide how to spend their budget to achieve that, they are comparing apples to oranges. The evidence is in the countless number of times I’ve heard that comment or one like it, lumping CRO together with SEO, PPC, email campaigns, social media campaigns and other outreach efforts intended to bring people to their site. Why do they do this?  Because they just can’t break out of the 20th century belief that selling more is all about reaching more people. They are stuck in a rationale that looks something like this:

  1. I want to sell more
  2. In order to sell more, I need to get more people into my store
  3. In order to get more people into my store, I need to reach more people with my message
  4. In order to reach more people with my message, I need to advertise more

Their first mistake occurs at step number 2. While they are right that reaching more people, and getting them into your store (online or otherwise), typically does lead to more sales, that is certainly not the only way to make more sales, and it is not what CRO is about. The goal of CRO may be to generate more sales, but it’s mechanism is not the same as PPC or even SEO: its intent is not to generate more traffic to your store, but to make the things you already do, produce more results.

Unlike other marketing efforts, CRO actually can make your website better. It can make your marketing efforts better too. In fact, CRO doesn’t even make sense unless you have other marketing efforts (at the very least, a website) to optimize. Regardless of the Conversion Rate Optimization system you use, the rationale behind the practice looks more like this:

  1. I want to sell more
  2. In order to sell more, I need to improve my marketing so it generates higher returns
  3. In order to improve my marketing, I need to get insight into what motivates my customers to buy my products
  4. In order to figure out what motivates my customers to buy, I need an improvement strategy

So now we have an alternative mechanism for increasing sales. This CRO mechanism for increasing sales can actually enhance the results of your traffic generating efforts, generating comparatively exponential results. Let’s say that you currently get 10,000 visitors each month. That traffic produces 300 sales (your conversion rate is a little above average, at 3%). Let’s do a comparison between the sales generated by increases in traffic alone versus the sales generated by those same increases in traffic coupled with CRO efforts that yield 10% increases in your conversion rate each month. Over the course of four months, starting at 10,000 visits in month 1, increasing to 20,000 in month 2, 30,000 in month 3, and holding at 30,000 in the fourth month, here’s what you’ll see:

And what’s more, increasing the effectiveness of your marketing has lasting effects, unlike the traffic approach to increasing sales.  If you decide to stop investing time and energy in conversion optimization efforts after you’ve doubled your sales, your sales continue at that doubled rate. Can you say the same for PPC efforts?

The single biggest reason you should not lump CRO in with traffic-generation efforts is because if you have traffic generation efforts, you want to make sure they are working efficiently, driving traffic with a high percentage of action, and getting the most bang for your buck. It’s CRO’s job to make sure that is happening. If you’re putting resources toward other marketing efforts (even just a website), you owe it to yourself to plan CRO into the mix. So do yourself a favor, when you sit down to plan your marketing budget, give CRO it’s own line item, and budget for it accordingly.  What marketing efforts are currently competing for a line item in your 2011 budget?  Tell us!

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Comments (15)

  1. I agree with what you are saying, it’s not necessarily about the amount of traffic that you are receiving but the QUALITY of traffic and how targeted that traffic that is. It’s possible to receive a large amount of traffic with terrible conversions at 1:1000 plus. I think the key is in part to work on the traffic numbers, but I agree that time and effort also needs to be focused in order to prompt surfers to take action once they are on your site; that involves tweaking the site and a/b multivariate testing etc.

    If you want to make a lot of money, I think you really need both.

  2. Great Point Marijayne,online marketers should really consider to pay more attention and invest more energy to optimize their conversion rate. Unlike SEO, CRO is something you can totally control. It would generate more income with the same amount of effort you put on SEO.

  3. Excellent article..CRO is so important but its overlooked by the majority of people doing IM of any sort. This is great advice and should be utilized by everyone who reads this

  4. Yea, I’m also amazed at how folks view visitors as just a number and pay no attention to the sources of traffic. One source can convert totally different than another. Google Shopping is great example. You can get tons of traffic from it if you spend the time to optimize and drop your prices, but the conversion is bad and your ROI is horrible b/c of the low prices necessary to rank high. So focusing on a different source is usually a better idea.

  5. Great Point Marijayne,online marketers should really consider to pay more attention and invest more energy to optimize their conversion rate. Unlike SEO, CRO is something you can totally control. It would generate more income with the same amount of effort you put on SEO.

  6. I think the key is in the works in the traffic figures, but I recognize that the time and effort should be directed to encourage people to act once the difference in SEO, CRO something that can completely control. Would generate more revenue with the same amount of effort you put into SEO.

  7. Agreed that CRO deserves it’s own line, but how do you convince management of the ROI on it when you haven’t done anything yet? I struggle in my own projects to convince leadership to give more money to initiatives like this, as they only want to cut costs during this economy.

  8. Hi… CRO is so important but its overlooked by the majority of people doing IM of any sortGreat Point .Marijayne, online marketers should really consider to pay more attention

  9. Conversion rate optimization is simply an art of strategically encouraging the site visitors to take certain actions that benefit you. It helps in increasing profits and sales without having to spend more to acquire website traffic.

  10. I have focused too much on SEO and not enough on CRO – though to be fair my website is still new so I need the traffic before I can measure to impact of changes on conversion.

    Are there any particular websites or books that anyone could suggest on CRO as I’m a newbie to this and working on a small budget.

    Thanks,

    Sean the Pay Raise Guy

  11. CRO is so good for the same . for SEO i spend more then 300$ for my hotel’s website .. such a pain :(

  12. @Pay Raise Guy: since it is the season of horn tooting, I might as well go out on a limb and say: Yes! Our books could help! There are three available on Amazon: 1) Call to action; 2) Waiting For Your Cat to Bark; 3) Always Be Testing. If you want, you can just start by checking out the whitepapers on the resource section of our site. But I would be remiss if I didn’t also point out that there are a number of resources written by other respected industry-leaders too. Check out this Grok post listing resources across a variety of areas that will help you gain a better understanding of how a number of fields play a role in CRO.

  13. Excellent article..CRO is so important but its overlooked by the majority of people doing IM of any sort.

  14. Conversion rate optimization is simply an art of strategically encouraging the site visitors to take certain actions that benefit you. It helps in increasing profits and sales without having to spend more to acquire website traffic.

  15. @DVD Film izle – you are definitely onto something here, but I would take it a step further:
    CRO is the art and science of strategically persuading the site visitors to take certain actions that benefit you. It helps in increasing profits and sales without having to spend more to acquire website traffic. It is the process of making your website and marketing efforts more efficient via an interdisciplinary approach to marketing (using design, technology, statistics, psychology, etc). It makes the marketing dollars you already spend more effective, increasing the ROI on those efforts and decreasing CPC. Higher Average Order Value (AOV), increased traffic quality (for leads, sales, etc), and better search engine rankings, are often a by-product of the practice.

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Mj has been proselytizing the merits of customer-centric, data-driven, continuous Conversion Rate Optimization (CRO) for FutureNow since 2007.

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