What is CRO, and why should you care?

This is part of a series of digital marketing basics aimed to help marketers and business owners learn the lingo of the online marketing world. We selected the most commonly asked questions by our clients and new hires when entering the digital realm.

What's CRO?

"CRO" is an abbreviation for Conversion Rate Optimization. The goal of CRO is to improve the conversion rate of websites, advertising, sales or marketing.

Hold up! This is marketing basics, right? So what's a conversion?

In simple terms, it's the goal of getting a person to take a specific desired action.

For example, when I was a kid, I sold lemonade iced-tea by the side of the road in front of my house. I wanted people to buy my drinks so I could buy the latest Lego set. In this case, my "desired action" was a person handing me money in exchange for a drink.

So what's a conversion rate then?

The conversion rate is the number of people who took the desired action divided by the number of people who were presented with the choice.

In my lemonade iced-tea stand example, my conversion rate is calculated by the number of people who bought iced-tea from me divided by the total number of people who passed by my stand.

Okay. You're not reading this article for advice on running a street corner lemonade stand but because you have (or want to have) some sort of digital presence, like an e-commerce store, website, blog or Facebook page. So let's use an online store example: a store that sells powdered lemonade iced-tea. On your product page, you have one main conversion goal: you want people to add the powdered lemonade iced-tea to their cart and ultimately make the purchase. CRO aims to increase the number of people clicking the "Add to Cart" button. But how do you do that?

How do you optimize conversion rate?

It has to be done scientifically. The first action should always be research. Abraham Lincoln phrased this very well:

Give me six hours to chop down a tree and I'll spend the first four sharpening the axe.

Conducting research is like sharpening that axe. You want to increase your chances of chopping the tree down at the first attempt, rather than swinging away hoping to hit something that may or may not even be a tree.

To increase our chances of achieving our goal, we must gather information, analyze the data and strategize a method of approach.

Unlike other facets of marketing, CRO is a multidisciplinary strategy that involves a lot of trial and error. Michael Aagaard from Unbounce describes CRO as having "psychology, statistics, UX & design, web analytics, research, copywriting and not least business sense" as its core components.

What I believe Michael means is that to analyze and optimize human behavior on the internet, we need to involve several fields of study.

Okay, it all makes sense, but why should I (my business) care?

CRO is valuable because it's a way to improve processes within your business.

For example, say a significant amount of money was spent on radio ads and TV commercials to drive people to visit your website. If CRO is used to improve the conversion rate of your site, not only does it generate more conversions from organic visitors (visitors from unpaid sources such as links from other sites, Google search or Facebook), it also improves the ROI (return on investment) of all the upstream investments (the TV commercials and radio ads) that were made to get people to your website to begin with.

Best Buy improved their sales using CRO. Like all big-box retailers, Best Buy feared losing buyers as they expected potential consumers to visit their retail shop, try out its products and then buy from the e-commerce giant, Amazon. By analyzing their customers' behavior, Best Buy optimized the buying process by implementing customer service improvements and price-matching tactics that converted their shoppers into buyers.

Still not convinced? Let's crunch some numbers

Here's an example. Jon sells vitamins online and has a monthly average of 30,000 organic visitors on his site. About 0.5% of them make a purchase. That's about 150 transactions per month (30,000 × 0.005), averaging $50 each, or $7,500 in gross sales per month ($90,000 yearly).

Jon then runs a three-month CRO campaign for $6,000 that optimizes his checkout process. The campaign consists of:

• Adding extra payment options to reduce payment frustration.
• Adding reviews on the product pages to instill confidence in the shopper.
• Reworking the pricing to include free shipping.

The result is an increase in transactions to 0.8%. His traffic stays the same at 30,000 visitors, but his transactions rise to 240 a month (30,000 × 0.008).

	Before	After CRO
Monthly visitors	30,000	30,000
Conversion rate	0.5%	0.8%
Transactions per month	150	240
Gross sales per month	$7,500	$12,000
Gross sales per year	$90,000	$144,000

That's 90 more transactions a month, or $4,500 more in gross sales per month, which averages to an increase of $54,000 yearly. (This is an illustration with made-up numbers, not a promise of results.)

It gets sweeter with other marketing efforts

Whether it's paid advertising, inbound marketing, SEO or offline marketing, they all benefit from an increase in conversion rate. More marketing effort brings more visitors to your site, which leads to more sales.

I'm digging this. Where do I start?

It all starts with research and understanding the problem and the goal. What needs to change might be a shopping cart redesign, a product page content refresh, or even a full new site. Some tasks can be very time-consuming, but there are also a lot of quick wins.

Start by observing and analyzing your current visitors to collect important information. Don't have the tools in place yet? Do it now.

What tools do you use? How do you conduct research? Want to know more or need help getting started? Give us a shout.