The Fallacy of Conversion Optimization

As e-commerce merchants, there is one key performance indicator that we hold dear to our hearts more than any other: the all allusive “conversion rate.” An increase of 20% in your conversion rate will have a direct affect on your bottom line, and there is no need to increase your marketing budget or overhead. By improving your conversion rate you are growing your business!

The Fallacy of Conversion OptimizationDue to this magical KPI, and its direct affect on our bottom line, we’ve all seen a tremendous surge in vendors offering online retailers a service called conversion optimization. The typical offer involves a few versions of a webpage and then conducting a test to see which one performs best. First an analytics code snippet is placed on to track conversions and traffic. Next, the vendor starts making modifications on certain areas of the website and performs multi-variant testing. The typical offer Finally, utilizing the analytics the vendor proves the improvement generated by the process.
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Improve Your Conversion Rate with a Manufacturing Approach

Conversion Rate with a Manufacturing ApproachWhen we hear words like “continuous improvement” and “reducing defects,” we typically think of a manufacturing operation. However, ecommerce merchants can take the same approach and apply manufacturing concepts to ecommerce conversion-rate improvement.

Valuing Visitor Actions
Every action by a visitor to your website has a certain value. A sale is value-based on the average revenue or gross profit; a lead is valued-based on percentages that convert over time. For example, assume a close ratio — also called a “conversion rate” — on a website is 1 percent and it is equal to $100,000 of value, from a marketing spend of $20,000. If we can increase the close ratio to 2 percent, we will get — for the same marketing spend — $200,000 worth of value. If we increased sales without improving conversion then we would have likely had to increase marketing expense, which would have decreased or destroyed profitability. But using close-ratio improvement allows us to grow sales without increasing expenses, which allows the company to now invest in many other aspects that create additional growth.
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