Why Conversion Rate Optimization(CRO) Is Important

What is Conversion Rate Optimization?


What is Conversion Rate Optimization
Conversion Rate Optimization

Conversion rate optimization (CRO) is the systematic process of increasing the percentage of website visitors who take the desired action say like filling out a form, becoming customers, etc. The CRO process involves understanding how users move through your site, what actions they take, and what’s stopping them from completing your goals.

What is a conversion?

A conversion is a general term for a visitor completing a site goal. Goals come in many shapes and sizes. If you operate your internet site to sell products, the number one goal (called the macro-conversion) is for the consumer to make a purchase. There are smaller conversions that can happen before a user completes a macro-conversion, such as signing up to receive emails or exchanging phone numbers, etc. These are called micro-conversions.

What is the conversion rate?

Conversion rate is the number of times a user completes a goal divided by the site traffic. If a user can convert in each visit such as by buying a product, divide the number of conversions by the number of sessions i.e the number of unique times a user came to your site. If you sell a subscription then divide the total number of conversions by the total number of users.

Conversion rate optimization happens after the visitor makes a visit to your site. This isn’t like conversion optimization for search engine marketing or paid ads, which focuses on who clicks through in your web site from the organic search results, how many clicks you get and which key phrases are driving traffic.

How to Calculate Conversion Rate
How to Calculate the Conversion Rate

Benefits Of CRO

1. CRO gets you more customers

everyone wants more customers without having to spend a penny more on advertising.

Your revenue is equal to…

  • your number of visitors multiplied by,
  • your conversion rate (the percentage of your visitors that turn into customers) multiplied by,
  • the lifetime customer spend (the amount that each of them spends with you).

hence if you double your conversion rate, you double your revenue.

Benefit Of Conversion Rate Optimization 1
1 Benefit Of Conversion Rate Optimization

2. Your profit is even more sensitive to your conversion rate than your revenue is

Your profit is your revenue minus all your costs:

Profit = Revenue – Costs

When you double your conversion rate, all your costs don’t double:

  • Your variable costs do double by definition. This includes all costs that scale in proportion to the number of units sold, including the cost of goods sold, the costs of direct labor, distribution, and customer support.
  • But your ad costs remain the same.
  • And your fixed costs stay the same.

As a result, your profit increases disproportionately. Sometimes profoundly.

Your profit is surprisingly sensitive-to-Conversion-Rate
Your profit is surprisingly-sensitive to Conversion-Rate

3. CRO opens up floods of traffic

Once your conversion price has increased, you’re extra profitable. It will pay to sacrifice some of that profit into growing your advertising and marketing bid prices which can dramatically increase your number of Leads. You can outbid your competitors and profitably dominate all the advertising space in your market.

Many times for small-medium sized companies or startups, Conversion Rate Optimization is the catalyst that allows them to begin advertising in different mediums like in PPC, direct emails, television, radio, magazines, newspapers, etc. Clients also end up able to pay associates more, which wins the associates over from their competitors, this is known as Affiliate marketing.

Clients also turn out to be capable of pay affiliates more, which can take over the affiliates from their competitors.
The principle even applies to SEO: if a company will generate twice as much revenue from the number one spot, it can afford to spend twice as much to capture it.

This principle is so extreme that many advertising agencies pay us to work on their clients’ websites because they understand that CRO allows their clients to profitably increase their ad spends. With the proper blend of

CRO and site visitors buying you could displace your competitors for good.

Benefit 1 × Benefit 2 × Benefit 3 = The Power Law of CRO


Power Law Of Conversion Rate Optimization
Power Law Of Conversion Rate Optimization(CRO)

Other General benefits of CRO

  1. Improved customer insights. Conversion rate optimization can help you better understand your key audience and find what language or messaging best speaks to their needs. Conversion rate optimization looks at finding the right customers for your business. Acquiring more people doesn’t do your business any good if they’re not the right kind of people!
  2. Better ROI: Higher conversion rate means making more of the resources you have. By studying how to get the most out of your acquisition efforts, you’ll get more conversions without having to bring in more potential customers.
  3. Better scalability: While your audience size may not scale as your business grows, CRO lets you grow without running out of resources and prospective customers.  Audiences aren’t infinite. By turning more browsers into buyers, you’ll be able to grow your business without running out of potential customers.
  4. Better user experience: When users feel smart and sophisticated on your website, they tend to stick around.  CRO studies what works on your site.  By taking what works and expanding on it, you’ll make a better user experience. Users who feel empowered by your site will engage with it more — and some may even become evangelists for your brand.
  5. Enhanced trust: In order for a user to share their credit card, email, or any sort of personal information, they have to genuinely trust the site.  Your website is your number-one salesperson. Just like an internal sales team, your site needs to be professional, courteous, and ready to answer all of your customers’ questions.


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