Conversion rate – The cheapest way to double your profitability

best way to increase profitability - conversion rateAll businesses have a pretty clear grasp on what they need to achieve to make money. You probably know vaguely how many customers you need to pull in each week in order to cover your running expenses, pay your staff and make a small profit.

If your business sells products and services on the internet then you are also probably clear on how much web traffic you need to pull in each week in order to make a certain number of sales/leads and to then close those sales.

One piece of the puzzle that is often overlooked or at least shuffled to the bottom of the pile is website conversion rate. Business owners fret about getting x number of visitors to their site each day but the site conversion rate is often a secondary metric; perhaps because it is viewed as an easier dial to tune up whenever necessary? However, I personally think that it is down to 2 things: blindness and laziness.

Blindness

Some businesses will spend a large sum of money on a website rebuild and then tick off that box as done – it looks good to them and their team so it’s done, they then adjust their focus elsewhere.

This is blindness combined with craziness – do shops keep the same layout and display for years on end, well OK, my local newsagent doesn’t seem to fuss too much, but the large retailers with multiple stores certainly do not; they seem to care a great deal about the presentation and layout of their shops and change it and test it frequently. So why is this? It’s simply because it makes a difference – they get more customers leaving their stores with a bag full of purchases rather than empty-handed.

The same is true online – you need to have an infrastructure in your business where if someone has a great idea on how to turn more of your website visitors into customers then you need to trial it, and not in 2 years when you next have the budget for a rework of the site – but today.

Laziness

Site conversion rate is something that most website owners are aware of, they probably know the exact conversion rate of their site over the past month and they also probably have some ideas on how to improve it. They also probably take time to look at what competitors are doing and log the good ideas that they see away in their brains for later implementation. However, nothing happens, an already long list of tasks restricts them from taking any action (not physically but psychologically).

Why is website conversion rate so important?

There is a simple comparison to make here. How much would it cost you to double your profit through driving more traffic to your website versus how much would it cost you to double your profit through improving your conversion rate by 100%?

Assume we have a retail business selling products for an average order size of £50 and selling 20 units per day – here is an example of how increases in conversion rate could alter the profitability of the business.
conversion rate increases
Obviously to hit the same increases in profit the website traffic would need to be increased at the same rate as shown below.
increasing website profitability through traffic
So let’s look at the options for increasing your profitability to find out which method is easier.

How much does it cost to double orders through more traffic?

The easiest way to increase traffic in the short term is to use PPC marketing on Google Adwords. Assuming that you have an average CPC of 50p then increasing traffic to 4000 from 2000 clicks per day will cost you an additional £1000 per day or £365,000 per year. For a daily increase in revenue of £300 this is obviously not a viable option.

You could therefore look at other channels such as social media marketing and affiliate marketing. Social media takes months to get going for a small business so let’s look at affiliate marketing for a moment.

Affiliate marketing is really a low risk option as you pay an affiliate website a percentage of your profit on sales that were actually initiated by the affiliate sending you traffic.

So for example; if you received the additional 2000 visits through affiliate sites and then gave them 50% of your profit in compensation for their hard work then you would just have a cost of £150 for driving 2000 more clicks to your site.
Sounds good right? However; this is theory, the reality is that affiliates are financially motived as much as you are so if they saw on paper that they would have to drive 2000 clicks to your website for a payment of £150 (7.5p per click) then they would tell you where to go. Affiliates promote the websites in the niches related to them that have the ability to earn them the most money; and which sites are these? They are the high converting sites.

How much does it cost to double orders through conversion rate?

Now, do not get me wrong here; I am not for 1 minute suggesting that a conversion rate increase of 100% is easy – it is going to take some serious work.

But it could be approached in the opposite way of the traffic increase; through back tracking from the increased profit.

So, imagine your profit increased by £300 per day and stayed at that higher level consistently every day for 12 months. That is a total increase in annual profit of £109,200. How much would you be willing to pay for that?

These are a few ways that you could approach the task.

1)    Outsource the whole job to experts.

There are specialist conversion rate improvement companies. Perhaps the best known and most consistently successful are the conversion rate experts you can check out their site for case studies and details on how they work and also their pricing. They are not cheap but they do have a track record of delivery.

Another good organization but with a focus on providing a good testing tool as well as some expertise and support in making your changes are Maxymiser – Again they come at a cost and I doubt they will give you any guarantees on the % improvement that they will deliver but they do have a track record of successes.

2)    Do it yourself for a lower cost.

If you are keen to invest some time and energy in this exercise then you can probably get there with a minimum of help as the tools to achieve this do now exist. if you take this on then you need to be committed as it takes a lot of effort on your part.

First and foremost – research

Surveying Customers

•    What are the key concerns of your customers when they get on the phone to you?
•    Look at all of your customer service emails and determine what the nature of the queries is by grouping them and analyzing both quantitatively and qualitatively.
•    What are the first questions that people ask when they call your company?
•    Run a survey to all of your existing customers that really gets high quality feedback – this means open and honest answers; do not give them multiple choice questions or closed questions. You need to find out what their concerns and fears are and understand how well you are doing at meeting these needs and then how well your website communicates this. Survey’s can be easily conducted using technologies such as Wufoo forms (http://www.wufoo.com/) in collaboration with your email marketing system.
•    Do not bother asking them directly what they think of your website – you have to go more fundamental than that – what are their needs and desires?

Analysing your current website performance

•    Use Google Analytics or another similar tool to analyse the flow of traffic around your website – how easy is it for users to go from your core landing pages to the page where a sale/conversion takes place? What is the flow of information like in this process?
•    Use Crazy Egg to see where users are clicking on your core pages – understand why they are clicking where they are and then cross reference this behavioural data with the data gathered through talking to customers and surveying them.

Making the changes to get the results you need

Once you have a very clear picture of what your customers need and also where your site is currently going wrong it is a lot easier to form a coherent solution to the problem.

There are a number of ways to achieve the necessary improvements.
One thing that is for certain is that you will probably not hit the nail on the head immediately so you need to be prepared for a fair bit of testing of different ideas.

Both text and design are incredibly important to this process so you will need to spend time thinking about the content you need on the page/s. You may find this article on using persuasion triggers to understand your customers needs helpful.

Of course we are advocates of video as we know for a fact that many of our customers have seen massive increases in conversion rate through using our videos on their homepage or other landing pages within their websites.

One of our videos helped Virgin Holidays to achieve a 30% increase in upgrades on their flights which for a huge business like that has an incredible effect on their bottom line.

The videos have also affected conversion rate increases of 100% or more on multiple occasions.

Now, I would NOT suggest that you scrap all the research and just task a video production company to create you a video for a few thousand pounds and be done with it.

We have found that the videos that we have the most success with are the ones where the customer has a clear idea of what they need and then let us translate their ideas into a creative video that helps them communicate their business benefits clearly and succinctly.

It’s not really one or the other

Throughout this post it may have seemed as though I am down on online marketing in favour of conversion rate optimisation. This is not the case at all. The point that i am making is one of prioritisation. If you can get your conversion rate up first then it makes it twice as easy to turn a profit from any additional traffic that you drive to the site. However, I do feel that conversion rate optimisation has suffered a little bit as the quiet shy kid in the corner whereas traffic generation has been the brash outlandish brute waving a big stick at us all and laughing.

So, what are you waiting for? It’s all out there ready for the taking.

MWP are a video strategy, production and marketing company with a focus on delivering measurable results.

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