Conversion Rate Optimization Basics

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.

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%.

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.

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.

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.

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.

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.

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: