CRO - Monopoly Financial Payback Example

Answer: Conversion Rate Optimisation (CRO)
The process of Conversion Rate Optimisation for e-commerce websites focuses on converting a greater proportion of your visitors into customers. In other words, it is the process of improving your website’s ability to sell for a given marketing budget.

Getting Started with Conversion Rate Optimisation

The optimisation is performed by finding your website’s weak pages, making changes to them – guided by best-practices and customer research – and testing the new pages directly against the originals in a statistically-valid “A/B” experiment (or “multivariate”, in more complicated scenarios). The experiment is important, because it lets your customers “vote with their clicks”. Your visitors aren’t made aware of the experiment and your website continues functioning as normal, while our software counts the conversion rate for each version of the page and quietly determines the winning page.

As a greater proportion of visitors to your website convert into paying customers, the ROAS of your marketing campaigns and the ROI of your website both increase

Should Your Company be Doing CRO?

If you operate a website whose objective is to get visitors to perform a desired action (to “convert”), then you have a website eligible for conversion rate optimisation.

The desired action can be anything from buying a product, registering for a subscription service, downloading a report, or spending a certain amount of time on the page. All of these actions can be measured using industry-standard website analytics software, and once you start measuring your conversion rate, you can improve it.

A small improvement in your website’s conversion rate can result in a relatively large lift in your website’s ROI. For example, an improvement in your website conversion rate from 2% (good) to 3% (better) is equivalent to a 50% increase in ROI. Going from a 2%-conversion-rate to a 3%-conversion-rate would allow you to reduce your marketing budget by one third, while keeping sales at the same level. This budget can now be re-invested into other sales-generating initiatives such as SEMPPC advertising or SEO.

Can CRO Really Generate 100% ROI Within 12 Months..?

So can conversion rate optimisation get you 100% ROI within 12 months? Let’s do the math here in Monopoly money.

Say it costs your Monopoly website 500 Monopoly dollars to run a conversion optimisation project. Your current conversion rate is 1% on 100,000 monthly visitors and your customer lifetime value is $1.

To get 100% ROI on your 500 Monopoly dollars within 12 months, the conversion optimisation project needs to raise your conversion rate to an achievable 1.08%, as you can see in the table below:

Payback ROI calculations for conversion rate optimisation example project

In our experience, this is an achievable goal for many Australian and New Zealand websites.

If you are ready to increase your website’s conversion rate, please contact us for a no-obligation chat.