{"id":84472,"date":"2017-11-28T11:52:55","date_gmt":"2017-11-28T19:52:55","guid":{"rendered":"http:\/\/thegood.com\/?post_type=insights&p=84472"},"modified":"2021-04-13T20:59:50","modified_gmt":"2021-04-14T03:59:50","slug":"engineering-growth-conversion-roi","status":"publish","type":"insights","link":"https:\/\/thegood.com\/insights\/engineering-growth-conversion-roi\/","title":{"rendered":"Engineering Growth: How Making a Small Bet on Conversion Will Give You a Greater ROI"},"content":{"rendered":"\n

It\u2019s not easy being a Chief Marketing Officer these days. With average tenure being somewhere between two to four years<\/a>, there\u2019s constant pressure to perform. To increase sales. To grab more market share and dominate the competition. To cut costs and boost revenue. And the unfortunate fact is that CEOs often don\u2019t look favorably on CMOs. <\/p>\n\n\n\n

The Harvard Business Review notes<\/a>: A 2012 global survey by the Fournaise Marketing Group highlights the tensions between them: The results reveal that 80% of CEOs don\u2019t trust or are unimpressed with their CMOs. (In comparison, just 10% of the same CEOs feel that way about their CFOs and CIOs.) CMOs also sense a serious problem. <\/p>\n\n\n\n

In our own surveys, 74% of them say they believe their jobs don\u2019t allow them to maximize their impact on the business. This troubled relationship helps explain why CMOs have the highest turnover in the C-suite. According to an analysis by Korn Ferry, they stay in office 4.1 years on average, while CEOs average 8 years; CFOs, 5.1 years; CHROs, 5 years; and CIOs, 4.3 years. It\u2019s not difficult to understand why CMO\u2019s have such difficult task. <\/p>\n\n\n\n

It\u2019s often challenging to show how their work directly relates to the bottom line. After all, how does one evaluate the bottom line impact of a social media brand building strategy or a rebranding campaign? Even measurements like increased reach, more leads, or an eye-catching new product can be difficult to connect directly to profits. <\/p>\n\n\n\n

But what if there was a way to demonstrate the value of the marketing department, impress C-level executives, and directly impact the bottom line? What if there were a structured, proven process, rooted firmly in data, and directly tied to the bottom line? Too good to be true? Nope. That process is Conversion Rate Optimization (CRO). CRO is one of the most underrated and profitable marketing strategies. It checks off all the necessary boxes (tied to revenue, statistics based, etc.) and it\u2019s relatively low risk. If done correctly, it always produces positive results. <\/p>\n\n\n\n

Why is CRO so powerful? Keep reading to learn.<\/p>\n\n\n\n

Your Revenue Increases Significantly<\/h2>\n\n\n\n

Conversion rate optimization always produces a direct and specific measurable impact on your bottom line. It\u2019s not particularly complicated: a higher conversion rate means more sales. Assuming that the higher rate isn\u2019t due to slashed prices, more sales always leads to more revenue. Depending on the amount of sales you make in a given year, even a small conversion rate bump can have huge financial implications. <\/p>\n\n\n\n

Let\u2019s say you\u2019re currently at $1,000,000 in sales per year on a 1% conversion rate and you can increase that conversion rate by 25% to 1.25%. At first blush, that $250,000 dollar increase may not seem like much, but the power comes over time. Imagine if the implications if you could increase your conversion rate by 50% over a year (to 1.5%, which is certainly doable). That quickly increases bottom line numbers. This is the beauty of CRO. Small, incremental changes engineered over time eventually lead to big increases.<\/p>\n\n\n\n

Managing Your Costs<\/h3>\n\n\n\n
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This ability to essentially \u201ccontrol\u201d your costs allows you to be very measured in your advertising. This is particularly important in relationship to advertising and traffic costs. You can almost always send more traffic to your site through advertising and SEO efforts, but that always comes at a cost. But if your conversion rate hasn\u2019t improved at all, your actual net profits are negligible since they\u2019re eaten up by the cost of the traffic. However, if you can increase your conversion rate, increased traffic means increased revenue. <\/p>\n\n\n\n

As advertising and SEO costs continue to increase (and they will), the ability to squeeze more revenue from those on your site will only increase in importance. If you fail to address the issue, eventually your profits will start falling as your costs begin to eat in your sales. Your cost per click and cost per customer acquisition will rise while your revenue remains stagnant, which will eventually become unsustainable. This is why investing in conversion rate optimization is almost always a no-brainer. The wins are clear and the downsides are almost non-existent. <\/p>\n\n\n\n

If you\u2019re willing to patiently work through a system of testing, measuring, retesting, and then doubling down on what works, you can always improve your conversion rate and increase your sales.<\/p>\n\n\n\n

The Key To Differentiating<\/h3>\n\n\n\n

The good news is, in order to begin compounding your revenue, you don\u2019t have to compound your expenses. In order to take a bigger bite out of your target market, you only need to become incrementally better than your competition to start attracting them. You can use conversion optimization to fine tune your user experience and consequently improve your conversion rate, your customer experience, lower your cost per acquisition, increase your customer lifetime value, and more. <\/p>\n\n\n\n

In a crowded ecommerce market, it can be challenging to figure out ways to differentiate yourself from competitors. You could spend more money on advertising and drive more traffic to your site. You could spend more money on product development and try to build unique, never before seen products. Or you could invest in CRO and begin edging out your competitors even if you\u2019re essentially selling the same products. If you have the higher conversion rate, you make more sales than your competitor, and that\u2019s always a win. <\/p>\n\n\n\n

Often times, top-level executives think the way toward massive growth is fast, large-scale changes. And while this occasionally works, it often results in large-scale failure. On the contrary, optimizing conversion rates always yields positive ROI when done correctly. <\/p>\n\n\n\n

Tim Kachuriak puts it this way<\/a>: Because testing and optimization validate your hypotheses, you get insights. <\/p>\n\n\n\n

Insights are learnings that can be repeated from one experiment to another. In other words, your lift from the last experiment becomes your baseline in the next. So, when you apply the optimization process…you don\u2019t just increase revenue. You dramatically increase revenue. And because CRO is based on data, hypotheses, and then conclusions, you can always demonstrate that a specific optimization led to more revenue. <\/p>\n\n\n\n

You can show how a set of changes led your ecommerce browsers to become buyers. This kind of hard data is impossible to ignore. When 10% more browsers are clicking the \u201cbuy\u201d button, even the most skeptical CEOs will be forced to reconsider their position.<\/p>\n\n\n\n

Your Conversion Boost Is Disproportionate To Your Costs<\/h2>\n\n\n\n

Consider all the ways you can boost ecommerce revenue:<\/p>\n\n\n\n