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Thursday, Jan. 13, 2011 at 1:51 pm

Budget for Conversion Rate Optimization Success – Part 2

By Marijayne Bushey
January 13th, 2011

Yes.  You know that successful Conversion Rate Optimization means more than having the right mindset and corporate structure.  Yes.  You know you need to allocate budget to your efforts too.  How much budget is the question.

What factors into your CRO budget (cont’d)

Yesterday, in Part 1 of this article, we covered the obvious cost of CRO (getting comprehensive conversion advice) and listed a few tips to help you figure out how much to budget for direct CRO costs.  But is that it?  What about the “hidden” costs of CRO?  Is there such a thing?  We’ve heard more than one story about costs a company didn’t foresee, and how their failure to account for them in their budget derailed their efforts and nullified all the money and effort invested thus far.  Don’t let that happen to you.

Account for “hidden” costs

You’ve paid to get the best CRO advice possible, and you can expect to start seeing some results ASAP, right?  Hmmmm…  You might think Conversion Rate Optimization is as simple as getting expert advice about what’s wrong with your website, but it’s not. Your analytics has to be set up properly to ensure the advice you get is right on.  And advice only pays once you implement it.  Wait!  You wouldn’t implement something without testing it first, would you?  Who is going to do all that for you?  You can’t write off the “hidden” costs associated with optimization if you want to be successful.  Here are the main factors we routinely see linked to our clients’ indirect costs for making their websites and marketing better:

1) Number of dedicated marketing staff (internally or externally) – Ideally, you have one marketing staff for every one marketing effort you have.  If you have a staff person working on two or more marketing efforts, they can only be making changes to one of those efforts at any one moment in time.  Thus, a one-to-one correspondence between staff and efforts ensures that you can optimize all of your efforts simultaneously.  If you outsource any of your efforts (SEO, for example), count that company as one staff member and one effort.  If you don’t have a staff member or outside consultant for each marketing effort you’re doing, you will likely need to hire more people, outsource some of that work, or wait much longer to see CRO impact your bottom line.

2) Implementation – If you contract your website and marketing implementation to an outside vendor, don’t forget that your program of CRO is going to generate more work for them each month.  That means more money.  How much? If you are engaged in a comprehensive CRO program (one that optimizes all of your marketing simultaneously) budget an extra 10 hours worth of design/development work each month for each marketing effort your contractors work on (website=1 effort, website + SEO=2 efforts).  We tell our clients who use outside implementation that they should plan to spend the same amount of money on implementation as they spend on our insight each month, so it roughly doubles their cost.  If you plan to outsource your analytics set-up/copywriting/testing, there will be one time/as-needed/monthly costs associated with those too, although typically not as much as the design/development costs. Think you can get around this cost by doing your implementation in house?  Don’t forget to account for the opportunity cost of having your internal staff work on your project instead of all the other ones they have on their plates.  Will you need to hire more staff, or pay overtime just to get the job done?

3) Amount of monthly traffic you currently get – Just how much traffic do you get… enough to do accountable CRO?  Accountable CRO is based on data… analytics and testing data.  If you don’t get enough traffic, your tests will go nowhere, and slowly.  Let me put that into perspective for you: we see clients with 40k visitors each month waiting an entire month for conclusive results from one test.  That means you have to wait a month to know if you really have a fix for one problem on your site.  What about all the other problems?  Will you have to wait another month for solutions to each of those?  How long will it take to see some cumulative results in your bottom line?  If you have less than 20k visitors to your site each month, you will need to consider ways to increase your traffic if you want to do CRO with testing.  SEO, PPC, and other traffic generation mechanisms cost money. Costs may be related to the market you are in too.  A tight market means more competition to get seen, and more money to overcome the challenges of getting seen.  Again, doing this job internally comes at a cost to your company, whether you realize it or not.  Account for that, because we’ve seen it burn clients in the past.

Budgeting incorrectly could leave your CRO plans dead in the water

It’s pretty obvious that if you don’t budget enough for your CRO program, you may have to stop before you’ve even really begun.  But do you realize that if you don’t budget enough, you could face a situation where you have to pick and choose the efforts or areas of your marketing you are optimizing?  That may not sound like a problem, but consider that your bottom line is driven by your aggregate conversion rate, (the cumulative conversion rates of all your marketing efforts).

When you’re talking about 2 or 3 marketing channels (website, SEO and Facebook for example) and a handful of different campaigns within each, improvements in the conversion rate of one of them may stand a chance of impacting the aggregate conversion rate enough that you see and feel it in your bottom line.  But when you start to talk about more than 3 marketing channels, a number of ever-changing campaigns within each of them, and optimizing your overall conversion rate by optimizing each channel one-by-one, or a few at a time, you’re seriously increasing the chances that it takes 6 months or a year to move the needle.

Most of the companies we have worked with don’t have the stamina to optimize for an entire year, or even 6 months, in the face of lackluster initial results.  Their CEOs or CMOs base their assessments of the company’s CRO investment on the impact they see on their bottom line and how quickly they see increases in it, so not budgeting accordingly becomes a life-or-death situation for your CRO plans.

Did you grossly underestimate the funds you’d need to get the results you want from optimizing the breadth of marketing efforts you do?  Hopefully you can still tweak your 2011 budget to correct that.  But if your budget for this year has already been finalized, you can at least throw your hat into the ring for a chance to win 6 months of CRO with us, on the house.

What are your thoughts on how to budget for CRO?  Are there factors impacting your total costs that aren’t on our lists in Part 1 or Part 2?  Let us know.

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Comments (15)

  1. Budgeting is so tightly related to high CR .. i dont know why people don’t look at that from a more business perspective. I am sure they will realize that’s serious game

  2. I totally agree. The problem is that clients are totally not aware…

  3. I agree with Mike, it’s impossible for any company to properly plan or build a conversion rate strategy without a thorough and accurate budget. Otherwise, it’s all for nothing.

  4. With our current economy and small business hoping to survive I couldn’t imagine a company not planning to optimize it’s performance with a CR strategy. Fail to plan; plan to fail….

  5. when times get tough alot of compamnys cut some terrible things.

  6. The merits of CRO can’t be overemphasized. Unfortunately,for many small business’ that means that one poor soul is doing it all. I keep telling myself that one of these days…only one hat!

  7. I agree with Mike Klingler, it’s impossible for any company to properly plan or build a conversion rate strategy without a thorough and accurate budget. Otherwise, it’s all for nothing.

  8. It is so tough to decide between in house and outside marketing, particularly for small businesses with limited budgets

    although a sure thing is that CRO needs to be near the top of your budget whatever the business size

  9. A clear budgeting and CR strategy are paramount to any successful business.

  10. really Budget and Conversion Rate depends all business platform for Optimization.

  11. @Web Design Company UK – You’ve made me curious for more. Would love to hear in more detail what your thoughts are…

  12. It’s an interesting article and I really found it very useful. I think it’s a sensible idea that there is one marketing staff for every one marketing effort which you have.I completely agree that one to one correspondence between staff and efforts ensures that you can optimize all of your efforts simultaneously.

  13. The trouble is that if you are in this business then you know that everything has to be planned. How many SME’s do you know that have any plan. I think that 99% of companies just exist, they have no plan, timetables, deadlines or idea as to how they are going to progress going forward and they would never have even heard of CRO!

  14. when times get tough alot of companys cut some terrible things.

  15. I totally agree. The problem is that clients are totally not aware…A clear budgeting and CR strategy are paramount to any successful business.

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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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