What is conversion rate optimization and why is it so important?

If you’re running a business then you’ve probably heard the terms “conversion rate” or “conversion rate optimization”.

What do these terms mean exactly, and why are they so important to your business?

And more importantly – how can we increase our conversion rates?

Conversion rate is simply the number of visitors to your website that end up “converting” into customers. So for every 100 visitors, how many of those become customers on average?

Usual conversion rates range between 1-10%, depending on the product or service being sold, the quality of the website itself, and also on the source of the traffic for that website.

Why is conversion rate so important?

If you can increase your conversion rate from just 1% to 2% then you are effectively DOUBLING the number of sales WITHOUT needing any more traffic.

Seeing as traffic often costs money (through advertising) then getting your conversion rate as high as possible before paying too much in advertising makes PERFECT sense. In fact – sometimes it’s absolutely necessary to make sure that you’re not LOSING money with your marketing.

Let’s do some basic calculations:

Your product costs $100

Your conversion rate from Google Adwords traffic is 2%

Your CPC (cost per click or cost per visitor) for Adwords is $3

In this scenario, you’re losing money!

100 visitors from Adwords will cost you $300.

However, you’re only going to sell to 2 people x $100 each = $200

If you could increase your conversion rate to 3% you’d be breaking even, and if you could increase it to 4% you’d be making money!

This is another reason why it’s essential to track your conversions – something that’s very easy to do with a Bookible website.

Many people think that just spending more money on advertising is the best way to improve their business – but if they spent more time improving their conversion rates then they could make more money without spending a cent more on advertising.

And when you do spend money on ads – you’ll make more money from them too!

How to improve your conversion rate?

There are many ways to improve your conversion rate, and many great tools for doing so, but let me run you first through some of the most essential elements to get your conversion rates as high as possible:

  • A GREAT PRODUCT OR SERVICE. This goes without saying – and this is not really something we can help you with.
  • A WELL DESIGNED WEBSITE. The design of your website can go a long way to improving your conversion rate. Read THIS POST on 7 essential features of a yoga website (even if you’re not in the yoga business, these features apply universally to any business website).  If your website is old, outdated, hard to navigate, not mobile friendly, has a complicated booking system, or any number of other issues, then that’s the first thing you should look at.
  • TRUST and PROOF. One of the most important ways of improving your conversion rate is by establishing TRUST. Testimonials, social proof, important clients, and time in business can all signal trust to your clients – make sure these things are obvious on your website. Video testimonials are great for this, as are case studies of clients whose lives you’ve improved.
  • Focus on BENEFITS not FEATURES. How will your product or service make the lives of your clients better? What problems will you solve for them? How will it transform them into better people? Focus on the benefits of your offering and watch your conversion rates skyrocket!
  • EASY ENTRY. Make sure you have at least one product or service that allows them to get comfortable with you before committing to spending a lot of money. Whether this be a free trial, or a low cost product, give them a chance to sample your offerings quickly and easily.
  • CREATE A SALES FUNNEL. A sales funnel is a way of transforming visitors from casual browsers to paying customers by slowly marketing to them over time. Most people won’t purchase on their first visit to your website, so make sure you capture their email address or at least tag them with a Facebook pixel so that you can use Facebook’s remarketing ads to lure them back to your site.
  • ADDRESS OBJECTIONS. Think about all the reasons people might not buy from you, and cover those points in your website copy.
  • COMPARE YOURSELF TO COMPETITORS. If you’ve got strong competitors, maybe create a page showing what it is that you offer and they don’t. A checklist is a perfect way of doing this 🙂

What tools to use for Conversion Rate Optimization?

There are many tools for conversion rate optimization, some easier to use than others.

How do these tools work?

The most common form of conversion rate optimization uses A/B testing – which means you create two versions and compare the results.

For example, you might create 2 versions of the same page and see which one performs best. Or you might have two versions of a header image that you use across your entire site.

In order to measure the success of each variation you need to have some kind of goal tracking. The most common is simply tracking the number of sales, but you can also track things like newsletter signups or even views of key pages (such as the pricing page).

Bookible’s Conversion Rate Optimization:

If you’re using Bookible as your platform, then we have a conversion rate optimization tool built right in, which allows you to create multiple A/B tests quickly and easily. You can set up page tests or site-wide tests, and easily track the conversions based on how many sales each variation is producing.

Once you’re sure that a variation is definitely outperforming another, you can delete the losing variation and run just with the winner.

To optimize further, you can create another variation and test it against the winner.

Through a process of trial and error, you should be able to greatly increase your overall conversion rate – generating more sales from your website from exactly the same amount of traffic.

Some other tools for conversion rate optimization:

Google Optimize: Google have created a website optimization tool that works in conjunction with Google Analytics. If you’re already using Google Analytics and are familiar with that platform (it can be quite intimidating!) then this might be a good option for you.

Optimizely: Optimizely has created a very easy to use platform which allows you to quickly run experiments across single pages or an entire website.

The only problem with running tools like Google Optimize or Optimizely is that you have to integrate some new javascript code into your existing website, and because they’re add-ons rather than built in natively, they can sometimes produce undesirable or unexpected results.

However, in general, both these platforms are excellent and provide a wide range of testing and optimization capabilities.

Both also offer free trials.

Final Word: Something Even More Important than Conversion Rate

Although conversion rate optimization is almost essential, there’s something that’s probably even more important and that’s CLV (Customer Lifetime Value).

Think about it: what’s more important?

Getting 100 customers who pay you $10 each ($1000 in total) or getting 50 customers who pay you $100 each ($5000 total)?

Sometimes, just optimizing your website to make the highest number of low dollar sales is not nearly as useful as optimizing it to attract the types of clients who are going to pay you large amounts of money for your services, and keep on paying you for years to come.

For this reason, it’s important to not just track the number of conversions, but the value of those conversions as well.

If you’ve only got one product this doesn’t matter so much, but if you’ve got multiple products then you might want to include the value of your conversions in your calculations.

For complex tracking like this, you’ll need to use a tool like Google Optimize and integrate it with your shop through Google Analytics E-Commerce Integration (sound tricky? It is… If you’re interested in something like this then send us an email and we’ll consider creating a blog post and tutorial about it :))

 

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