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Conversion Rate Optimization Basics

Reading time: 4 minutes
Katie
Written by
Katie Cudnowski
Business Manager and Marketing Asst.
Person typing on a laptop keyboard

If you’re not optimizing your website to increase conversions, you’re leaving money on the table. Conversion rate optimization leads to exponential growth and revenue for your business and improves your conversion funnel all around.

What Is CRO, and Why Is It Important?

CRO stands for conversion rate optimization. It's the process of optimizing your website or landing pages based on visitor behavior to help improve desired actions or conversions. Your profit is sensitive to your conversion rate, so once you improve your conversion rate, your revenue can increase exponentially.

Investing in CRO is important not only because it increases revenues, but because those revenues can continually be reinvested. Being able to reinvest the profit you see from it into ad traffic can then bring potential customers to your CRO-optimized pages, further expanding profitability. There’s a multiplicative exponential growth pattern, which makes CRO hard to pass up.

How Do You Calculate Your Conversion Rate?

To calculate your conversion rate, you’ll need two numbers, the number of visitors and the number of those visitors who take action or convert. Your conversion rate is expressed as a percentage. So if you have 10,000 visitors and 500 take action, your conversion rate is 500 over 10,000, or 5%.

What's Considered a Good Conversion Rate?

It varies by industry and by what you're converting, meaning it depends on each specific use case. There are many variables, but a better conversion rate at present than you had last quarter is a good way to look at it. It's about continuous optimization and continuous improvement. The goal is always to improve your CRO so that it drives more revenue and drives all of the exponential growth factors.

What Testing Methods Can I Use to Improve Growth?

There are many options, such as A/B testing, multivariate testing, and UX testing. The main objective is to gather data from a page, try to improve it, and then confirm improvement through statistical validation.

A typical example is A/B testing a web page. Let’s say A is the current page, and B is the changed page that you think will increase conversions. When you split traffic between the two, the hard numbers might say that B is better. If B is better, then keep B. If you want to improve our conversion rate further, then you could do a new test with B and C. Again, the possibilities are endless with CRO.

However, there’s a certain amount of testing that’s not valuable. Testing button colors or captions on the buttons are not particularly helpful if you don't already have a lot of traffic on your page. Button colors will not help you drive revenues. What you should be focusing on is changing customer behavior.

How Do You Know If Your Growth Testing Is Set Up Correctly?

Any good testing platform will tell you how long you should run the test, given your traffic. On the other hand, running a test for too long can actually invalidate it. That could be because the same traffic is hitting the site over and over, such as when people's cookies clear.


How Do You Know When It's Time to Stop Testing?

In CRO terminology, it’s called the local maximum. You’ve tested, you've optimized along the way, and now something about the architecture or the system you're dealing with isn’t working. This is when it makes sense to start over, reinvest in a redesign.

Of course, you can take the data you had already acquired and apply it to the redesign. Starting over completely isn’t necessary, but it’s important to understand that you can reach a local maximum with your website, and you can reach a stopping point.

What Are the Best Tools Available to Begin Working on CRO?

When it comes to observing user behavior, tools like Hotjar and Crazy Egg are great for developing heat maps and recording visitor behavior.

There are also some free tools like Google Optimize that can be good. Paid options like Optimizely can do personalization, A/B testing, and other complex things such as intent-based pop-ups and reactions. Start with a few tests to get going, and then you can improve as you go along. Starting is the most important part.

What Is the Benefit of Having an Agency Partner Handle CRO for You?

By leveraging the right agency partner, you're getting an unbiased, fresh perspective. They’re someone that can break down the data into a digestible format. CRO can get highly technical and overwhelming, so bringing in the right partner who has a solid process to achieve those results can be extremely useful.

If a company tries to do CRO on their own without training or background, low-value testing can waste a lot of time and resources that could be going towards exponential growth. Without the right understanding of the statistical significance and how certain tests work at a deep level, you'll sometimes see tests that harm you.

Watch our full YouTube playlist on CRO:


About Katie Cudnowski

Katie comes to O8 with a background in all things communications and marketing and a desire to learn the ins and outs of agency life. While keeping up with all things digital and marketing, she assists O8's CEO with business management. Prior to joining the O8 team, Katie graduated from the University of Wisconsin-Eau Claire with a degree in Communications and Event Planning and has experience as an account executive and marketing specialist. Katie loves dissecting brands and figuring out their "voice", as well as the challenge of adapting to different communication styles. When not at work...

WHO WE ARE

At O8, a global digital agency based in Minneapolis, MN, USA, we specialize in delivering measurable growth on demand for marketing and sales teams. We pride ourselves on our transparency, agility, and deep technical expertise. In a world that's often stressful and chaotic, we offer experienced, actionable guidance to help you achieve your goals. Our approach is professional, clear, and authentic, ensuring you receive customized, data-driven solutions that drive results.