In the era of digital marketing rivaling traditional marketing, many businesses are looking to digital for better measuring and attribution of the marketing efforts.
Simply put, businesses are looking for their marketing Return on Investment (ROI).
If you are a business that is about your bottom line, like we all should be, you might be asking yourself which digital marketing channels have the largest impact on business’s bottom line revenue?
Typically, we look at a metric called Cost Per Acquisition (CPA), when we look at the most efficient digital marketing channels for producing revenue. If your CPA is low, you are spending less money to acquire a customer and that is good.
When we look at finding the best digital marketing channel with the lowest CPAs there are two that typically stand out. The first is Search Engine Optimization (SEO). SEO focusses on organic listings within the search engines based on the quality of your content and other important organic ranking signals. Since, organic listings are not ads, they are free placements of your website on the Search Engine Results Pages (SERPs) by the search engines, they naturally have a low CPA.
Email is the other digital marketing channel with a very low CPA. According to study frommarketingcharts.com, email typically has a CPA of $11-$15 across multiple industries.
Statistically, these will be the best digital channels to acquire new customers at the lowest cost possible, but every business is unique and the lowest CPA channel might not always be the best strategy or fit for your business model.
…Let’s now take a step back and look at the big picture.
There Are Only Two Real Ways To Make Money Online
The first is driving more traffic to your website and offering i.e. SEO, email marketing, PPC, etc. The other is often over looked and it is converting more of your existing traffic. Today we will be discussing the latter.
How do you get your webpages to convert more?
We start by looking at your website’s conversion rate. Your website’s conversion rate is the percentage of people who complete a particular goal on your website. This could be: checking out and purchasing a product, downloading your eBook, filling out a lead form etc.
The digital channel for increasing conversion rates is called Conversion Rate Optimization, also known as its acronym CRO.
CRO uses the scientific method to analyze, hypothesize, build, and test different webpages in hopes of increasing conversion of the existing visitor pool to your website.
What makes CRO the low risk channel with high returns?
For one, CRO has an opportunity to correlate directly to increased revenue. Take for instance optimizing your checkout process on your eCommerce site. By optimizing the checkout process through testing a more seamless process, you convert more of your existing visitors into revenue.
We should note CRO also works well with lead generation websites. While converting contact forms or phone calls is not revenue (yet), it is an active lead for your sales team to chase down and convert into revenue through an active sales cycle.
Simply put, by increasing your conversion through a series of CRO tests, you can have extraordinary growth to your bottom line with the existing traffic already coming to your website.
Here is a hypothetical for you. Say you have a website that sells widgets.
Before optimizing your site with CRO, you convince 5% of people to purchase a widget which costs $50 a unit. That works out to be 50 new customers per every 1,000 visitors to your website and $2,500 in monthly revenue. Now, say you optimize your site and raise your conversion rate from 5% to 7.5%. At this rate, 1,000 visitors turns into 75 customers and $3,750 a month in revenue.
CRO becomes the low risk channel because you are only optimizing your current traffic and the rate at which they convert into revenue. A higher risk digital marketing channel for instance would be AdWords because you are competing against a market for market share. CRO is the inverse and you are really only competing against yourself in the sense the traffic is already there and you don’t need to pay for it; you just need to design a better “mousetrap” to convert more of it.
Designing A Better Conversion Path Has Multiple Steps
While the above examples are related to converting visitors towards the bottom of the funnel. CRO is also helpful for moving traffic from the top of an online marketing funnel further down towards your conversion point.
As an example, say you had a Software as a Service (SaaS) website. Your typical user path goes from your home page to features page to your 14-day free trial page.
Home Page => Features Page => 14-day Free Trial Page
While your end goal is to get visitors to sign up for the free trial, you realize through your analytics there is a huge exit rate of traffic between your features page and 14-day free trial page. This means many people are not making it to the page where they even have the opportunity to start a 14-day free trial.
This points to a bottle neck in the sales funnel and the culprit is the features page. As a result, this is a great page to focus on with CRO. Here you would want to start collecting more data from users and analyze user behavior, formulate a hypothesis as to what the changes on the page need to be made, then build and test an improved variation of the page supporting your hypothesis. If it is well thought out and wins the test through higher conversion from the features page to the 14-day free trial page, you have successfully won the test and fixed your bottle neck in your sales funnel online.
As you can see, CRO can be helpful in many stages in the sales funnel because each step in the funnel matters in converting more of your end goal.
Conversion rate optimization is a channel every website should be participating in. There are very few digital channel that carry the perfect balance between low-risk and high reward, when it comes to digital marketing. CRO just happens to be one of the few.
Many companies from Fortune 500 to startups are using CRO to get ahead or stay ahead of the competition. Although, the number of active companies doing CRO is relatively low according to HubSpot, this becomes an opportunity for companies looking to increase revenue in 2017 and beyond.