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Wednesday, Jan. 12, 2011 at 6:30 pm

Budget for Conversion Rate Optimization Success – Part 1

By Marijayne Bushey
January 12th, 2011

Back in 2010 (ok, so it was only 4 weeks ago) I blogged about why CRO deserves a line item in your 2011 budget.  But just how much should you budget for quality direction?  Are there “hidden” costs you should be aware of?   Choosing something on your site to test, running that test, and then moving on to the next item may sound simple, but there are all kinds of things that can happen along the way to derail you.  To be successful you need to ensure that you have the right combination of mindset, organizational structure, and budget.

So you spent an entire year working on your CMO, CTO, and CEO to convince them that the mish-mash, willy-nilly marketing approach wasn’t working, and that you needed an accountable approach for making your website better.  That time investment in company leadership came in quite handy when you shifted your focus to cleaning up the slew of organizational barriers to CRO success, since those main players greased the wheels with other key company staff to help you overcome those.  Now, after a year and a half, you can finally say that your company as a whole…

  • supports making a continuous series of changes to the site and marketing efforts
  • facilitates your ability to make changes unhindered and thus quickly,
  • advocates an attitude about prioritizing any and all tasks required to make your website and marketing better, and
  • fosters a strong enough belief in CRO to carry on like this indefinitely.

Company mindset?  Check.  Organizational barriers?  Check.  But do you really want to screw it all up with your unrealistic budget expectations?

What factors into your CRO budget

Budgeting for Conversion Rate Optimization is an essential step in your strategy to make your website and marketing better. Your budget has to cover optimization for the full range of marketing you are doing, and the hidden costs of optimization, or it will fail… and take you down with it. Any CRO program comes with both direct costs and indirect costs, and estimating those is not always as easy as it seems.

Estimate what good, comprehensive CRO advice will cost you

The main cost people think of when they are considering doing CRO is the cost of getting expert conversion advice.  The primary factor underpinning what you should budget for comprehensive Conversion Rate Optimization advice is how much marketing you have to optimize.  There are several factors to consider when it comes to determining the scale of your current marketing:

1) Number of marketing channels you’re playing in at any one time – Think about the channels you engage in and make a running count of them.  Your website counts as one.  SEO efforts, PPC or Social Media each count as one.  Higher numbers here mean more conversion pathways (the click-by-click path your visitors follow, all the way from search engine results to landing page, to the cart or “contact us” form) to optimize. Your bottom line reflects the sum of all these little conversion rates.  The more of them you have to impact, the more work will be involved.  That’s more time and effort for analysts, and an increase in the direct cost you can expect to pay for CRO insight or guidance.

2) Speed/frequency at which you shift marketing focus – Within each channel category you listed, tally up the number of campaigns you run on a monthly basis.  You can use this information in two ways…. 1) By comparing the total number of campaigns you do each month in one channel versus the total number you do in another channel, you can get some sense for where your current marketing focus is; 2) By totaling the number of campaigns across all channels, and then dividing by the total number of channels, you can get some sense for how quickly you shift your marketing focus as a whole.  The higher the numbers in either one of these areas, the more budget you will need to invest in CRO. Optimization efforts will need to keep pace with your marketing speed. Why?  You guessed it:  Quicker marketing pace means more conversion pathways to juggle, more data to analyze, and more time and energy for your analysts.

3) Current monthly marketing budget – This is possibly my favorite of all the factors.  The longer we’re in the business, the stronger my belief that this may be the single biggest predictor of what you need to spend on CRO to do the job right.  Why?  Because all those other factors on the list cost you something, whether it’s a line item on your budget or rolled into your company’s operating expenses, and that cost is proportional to the scale of your existing marketing efforts.  If you spend $40k/month on PPC, what does that get you?  It gets you a whole lot of keywords (ie. more conversion pathways) or some pretty competitive keywords (ie. trickier optimization of conversion pathways).  Is it reasonable to expect that expert advice about how to optimize those conversion pathways will cost you $1,000/month?  That’s only 2.5% of your PPC budget; include salaries of internal staff or consultants, and that percentage goes down even further.  That amount of money isn’t really on par with the scope of marketing you have going on.  Ditto for all the money you pay to your advertising agency for the ads they generate for you.  What’s more realistic?  Budget somewhere around 10% of your current monthly marketing spend for CRO. Again, don’t forget about the “hidden” costs of all the things you do internally, like salaries for dedicated marketing, copywriting, design and development staff.

Other Factors Affecting Budget, Plus Ramifications….

Now you have something to think about when it comes to how to account for the direct costs involved in your CRO program.  Crunch those numbers this evening, and get a sense for what you should be paying for comprehensive CRO advice.  Tomorrow, in Part 2 of this article, we’ll cover other costs you should be prepared for when doing CRO, and the ramifications of not budgeting accordingly…

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Comments (7)

  1. Great post. I work with SEO and CRO and never thought about what is on my clients mind. It works as a persuasive argument too.

  2. It’s amazing how the costs can really add up once you start tallying all of your marketing channels. Running one optimization project is simple, but staying focused on 10 or 20 can be downright impossible. Good post…on to the next…

  3. It is hard enough for me to manage and get the most from my online marketing budget for my dental practice, let alone manage “multiple channels”. I did like your 3 points on managing the SEO. I can apply this to my own small business.

    Thanks

  4. By far the most succinct explanation I have read: “Your budget has to cover optimization for the full range of marketing….”

    This explains why one of my clients does not understand how SEO must be built into the budget in the beginning, not an afterthought.

    Perhaps it is the “Not-Made-Here” bias that Dan Airiely talks about in his book, The Upside of Irrationality. I don’t know, but when I talk SEO with my client they seem to “know it all”.

  5. @Joseph Doughty, we sometimes face those same issues with CRO prospects. :-) But there are also those who are very sensible, have thought about all these things, planned accordingly, and are more than willing to accept expert advice. :-) I’m just trying to do my part to foster more of the latter!!!

  6. @Kathy Frazar – we hear these same sentiments from a lot of smaller businesses. Typically, there isn’t enough budget, or there are too few staff for the budget and number of channels being engaged by a company. Sometimes, it’s even the same person processing the orders who is running the website, PPC, SEO, email, and the Facebook/Twitter presence! Wow! It was a mouthful to say, and handling all of that is even more challenging. It’s important for organizations (even small ones) to be realistic about what it will take to be successful online, and the right attitude has to come from the top management down.

  7. Marijayne,
    Thanks for the reassurance that I am not the “only one” overwhelmed by all of this.

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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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