What is conversion rate optimization (CRO)?

Conversion rate optimization (CRO) is a system for increasing the percentage of website visitors who take the desired action. This actions can vary from taking surveys to purchasing goods. The goal is to understand user behavior on the website. Why are they taking some actions and, most importantly, what is preventing them from finishing the desired action? This process should increase the percentage of visitors to a website that converts into customers.

What is a conversion?

A Conversion is a term for a visitor completing a website goal. There are two types of conversion: macro-conversion and micro-conversion. For example, macro-conversion can be purchase making and micro-conversion can be signing up for a newsletter.

What is the conversion rate?

Website's conversion rate is the percentage obtained by the number of times a user completes a goal divided by a website's traffic. These can be many actions from e-mail to purchasing products.

Statistical value

Customer behavior may vary due to many factors and that can lead to bad conclusions. Sometimes the source of the customer behavior may lay in some external conditions like time of the year. In most cases, the bigger traffic on the website will lead to better conclusions because of the bigger amount of data that is being analyzed.

What makes successful optimization?

Successful optimization requires clearly defined goals. There is a need to define what to optimize on which part of the website, by what means and for which type of consumers. Detailed preparation is needed for this in order to save time and money and of course to get accurate results.

When CRO should be used?

CRO should be used every time when it is expected that it would help to reach the desired objectives. It is an iterative process and each iteration improves the chances of reaching those objectives.

How to calculate the conversion rate?

This will depend upon can users convert each time they visit a website or they can convert only once.

If users can convert each time they visit the website it can look something like this:

• First visit – User was just exploring the website and made no conversion,
• Second visit – User made a conversion. For example, he bought some product,
• Third visit – User came back to the website and made another conversion. For example, he bought a new product.

This gives us the basis for calculating the conversion rate. We should take the number of unique purchase orders and divide it by the total number of sessions. In our example, the user converted two out of three times they came to the site. When we divide the number of unique orders with the numbers of sessions we get a 66% conversion rate.

If users can only convert once, for example on the websites that sell subscriptions, it can look something like this:

• First visit - User was just exploring the website and made no conversion,
• Second visit – User made a conversion and subscribed to a monthly service,
• Third visit – User came back to gather some new information but didn't make any new conversion.

In this example we cannot look at the number of sessions, instead, we need to measure conversion success by the number of visitors. We should take the number of unique orders and divide it by the number of unique users. In our example, one unique order was taken by one unique user. When we divide the number of unique orders with the number of unique users we get a 100% conversion rate.

Benefits of CRO

1. A better perspective on customer's behavior - This is prerequisite for any other action concerning improving business management. It is crucial to know which type of customer we are addressing, their needs and demands.

2. Helps with gathering more customers – Improved website design and usability, as a result of CRO, leads to a better adjustment to the customer needs that result in a bigger percentage of customers that decide to make a purchase.

3. Improved user experience – Users tend to spend more time on the website where they fell comfortable with the website's features and that can eventually lead to purchase.

4. Advantage against the competition – Sometimes companies don't value CRO as they should. That opens up a huge opportunity for their competition to take advantage of that.

5. Improved scalability – CRO allows growth with limited resources and audience insight.

6. Maximizes use of current website traffic – CRO uses the full potential of the current website traffic and requires only initial investment in the optimization.

7. Improved return on investment – Analyzing the process of dealing with the customers can lead to a bigger amount of conversion without the need to attract more customers.

8. A rise in profits - It is important to always keep improving optimization since the competition will try to do that also. Small steps can bring great results in the long run.

9. Improving the company's reputation – It is crucial that the website looks authentic. Customers must have confidence in it or they will not make a purchase.

10. Boosting customer lifetime value – Good CRO will usually not just result in a single purchase by a customer but will lead to more purchases in the future.

Methods

Quantitative data analysis

This method focuses on numbers behind user actions. It deals with information like:

• basic information about customers,
• where do they find a link to the website,
• used browsers,
• a starting point of search on the site,
• where they spend the most time on the website,
• what features do they use the most,
• why do they decide to leave the website without making the purchase.

The gathered information will lead to a better direction of attempts to improve the website.

Qualitative data analysis

This method focuses on the reason of user behavior. Prior to the usage of this method, the quantitative method should be employed in order to determine target customers.

There are several approaches to obtain this data:

• website surveys,
• satisfaction surveys,
• usability testing,
• A/B testing.

The gathered information will obtain valuable information about users like:

• the reason why they visited the website,
• which parts of the website did they like and they didn't like,
• main differences from competitors,
• how would they describe website to somebody else.

In order to get a broader perspective, it is best to combine this method with quantitative data analysis.

Conclusion

Conversion rate optimization is a great system for the soaring website's conversion rates. It gives insight into real user behavior. Pure statistical information about the market cannot give this information. It should be stressed that this process should be verified and repeated to bring the best possible results. Without that, it can lead to some mistakes like the ones that occur with just analyzing statistical information. When used well, it will improve the current business of any company and set a good course for future improvements.