Conversion Rate Optimization

What is Conversion Rate Optimizatation? Ultimate Guide to the World of CRO.

12
minutes to read

Conversions are a major business driver, whether you’re a SaaS company, an e-commerce business, or an agency. Optimising conversions gives you the ability to attract more potential customers without spending an additional budget.

In this guide, we will explain what conversion rate optimization is, why it is important, and how to launch your first CRO campaign in 7 steps. At the end, we’ll also share some tips and tools to help you get started with CRO!

What is conversion rate optimization and why should I care about it?

To put Conversion Rate Optimization (CRO) in simple terms: CRO is the process of ensuring that more people who visit your website do what you want them to do—such as buying your product, signing up for a demo, clicking ‘add to cart’ or subscribing to your newsletter.

The improvement process typically begins by analyzing your current data, identifying weak spots, creating hypotheses, and then A/B testing these changes to confirm that the new solution enhances user experience and increases the conversion rate.

Even though conversion rate optimization focuses on visitors, click-through rates, clicks, bounce rates, and other metrics, this is just one part of the bigger picture. Behind these numbers are actual humans who navigate and explore your website.

Understanding their intentions, needs, and experiences will provide invaluable information on how to make it better, and combined with statistical analysis, it can prepare you to execute a successful conversion rate optimization campaign.

A successful conversion rate optimization campaign can:

  • Increase the revenue per session
  • Decrease customer acquisition costs
  • Increase user experience and attitude towards your brand
  • Increase the number of clients
  • Grow your business without having to spend additional money

Improving your conversion rates is not a one-time fix and there is always room for improvements.

Top companies are constantly monitoring and improving their sites to create a better experience for their users and grow conversions.

Let’s dive deep and look at how we can run a Conversion Rate Optimization campaign from start to finish.

Step 1: Defining Goals

Before we start any optimization project, it’s important to define a clear and specific goal for your CRO campaign.

Based on your business goals, some of the things you could consider are: increasing revenue, boosting lead generation, or improving user engagement. For example, an e-commerce business might be focusing on product sales, add-to-cart button clicks, and checkout completion whereas a SaaS would focus on sign-up form fills, booked demo meetings or new customers acquired.

We often use a model called ‘SMART goals’, which stands for Specific, Measurable, Achievable, Relevant and Time-based.

SMART - Specific, Measurable, Achievable, Relevant and Time-based

Specific

What specifically are you planning to achieve? An unspecific goal would be - I want to grow. We need to be more specific like: I want to grow my monthly revenue

Measurable

The goal should be measurable. ‘I want to grow’ is not specific enough and won’t help you to conclude whether the goal was achieved. A measurable goal would be - I want to increase my monthly revenue to 10M monthly.

Achievable

How realistic this goal is? Setting achievable goals requires assessing your progress and adjusting them to be more realistic based on your benchmarks. We also need to think about long-term and short-term goals.

If the goal is set to reach 10M in revenue and the company has been generating 100k in monthly revenue, it would be unrealistic to reach this in a short period of time. A better goal would be - ‘I want to increase monthly revenue by 20% to 120K’

Relevant

We need to ensure that the goal is aligned with the overall direction we want to move toward. If it isn’t, adjust the goal or find a way to measure its impact. For example, improving sales is typically relevant if you want your company to grow.

Time-based

We always set a deadline to achieve a specific goal, allowing us to track our progress over a defined period. For example, if we aim to increase sales by 20% within 6 months, we know we should achieve a 10% increase within the first 3 months.

However, if after 3 months we’ve only achieved a 6% increase, we recognize the need to either adjust our initial strategy, increase our efforts, or revise the timeline accordingly

If we combine everything, here is what a S.M.A.R.T. Goal would look like:

Increase monthly revenue by 20% from 100K to 120K within 6 months

This goal is specific, measurable, achievable, relevant and time-based. Once you have chosen your conversion goal, you can start by identifying the baseline conversion rates for this metric.

Step 2: Calculating baseline conversion rate

After defining your goals, you need to establish a baseline conversion rate. We usually start by analyzing current performance metrics to understand where your conversion rate stands before any changes are made. This will help us to set a reference point and measure the success of the optimization efforts.

How do you calculate the Conversion rate?

The formula to calculate your conversion rates is simple. You must take the number of conversions (this can be the number of sales, purchases or ‘add-to-cart’ button clicks), divide it by the number of visitors, and multiply by 100%.

This is how conversion rate is calculated

So, for example, if you had 243 purchases last month, and 7526 visitors, your conversion rate from visitor to purchaser would be equal to approximately 3.23%

243 sales ÷ 7526 visitors × 100% 3.23%

This is the most used method to calculate the overall website performance, taking all conversions/sales and dividing by all visitors.

However, you can take this formula and start identifying the conversion rates of different funnels and landing pages. Instead of taking the total number of sales and the total number of visitors, you would analyze the metrics of a specific landing page or funnel.

This will give you a better understanding of which parts of your website are underperforming, and by focusing on these, you will likely make a bigger impact and get results faster.

Here is an example of a typical e-commerce funnel:

A typical e-commerce sales funnel: A visitor lands on the page, clicks on the product, adds to the cart, starts a checkout, and completes a purchase.

Most analytical tools like Google Analytics 4, Hotjar or Heap, can create similar funnels. In this example, we can calculate the overall conversion rate, which is 0.66% (46 ÷ 6962 × 100%).

In addition, we can see the conversion rates between each step (highlighted in blue in the picture above). This is a good time to start the research of high-exit pages (for example step 1 in the funnel above) and analyze why visitors are dropping off.

Step 3: Research and data collection

In this step, we start analysing our visitors’ behavior on the website. We do this by using both quantitative data and qualitative data. Quantitative data is everything that is number-based, countable and measurable. Analytic tools have a variety of this type of data, few examples are:

  • Sessions
  • Pages per session
  • Bounce rate
  • Time spent on page
  • Add to cart rate
  • Checkout rate

Qualitative data, on the other hand, can describe qualities or characteristics. This type of data can be collected using questionnaires, interviews, or observation. Some of the popular methods in conversion rate optimization consist of:

  • Post-purchase questionnaires
  • Client surveys
  • Website heat maps
    • Click heat maps
    • Scroll heat maps
    • Section heat maps
  • Visitors’ session recordings
Example of click heat map

Example of scroll heat map

It a common practice to use both - qualitative and quantitative data. Our suggestion would be to start with quantitative data and find obvious weak spots on your website. Then using qualitative data, dig deeper to understand what the main causes are.

Here is an example of a thought process during research:

Let’s start by identifying pages with a high number of visitors, but lower-than-average conversion rates. In this way, we know that positive changes to the conversion rate will significantly improve the performance.

In some cases, if you can’t identify a page with high traffic/low conversion, start by putting focus on high-value pages. For a company, which is offering 5 different products at 5 different price ranges, improving the highest-value product page could simply lead to higher revenue in comparison to working on cheaper product pages.

Once we select pages that require optimization, we can investigate click and scroll heat maps, and recordings to better understand why visitors are not converting on this particular page.

The reasons ‘why’ differ from business to business, but the most common ones are:

Too much/too little information

Research shows that only a small percentage of your visitors ‘read’ your website. Having too much information on a single page can be overwhelming for a visitor. Most of them are looking for solutions by scanning it. They are looking for scannable text, such as:

  • highlighted keywords
  • Bullet points / USPs (Unique Selling Propositions)
  • headings
  • short paragraphs

On the other hand, having too little information can also cause visitors to leave early. Aiming for a well-balanced text with the information that matters, will give you the best results.

Also, look at where you place your content. Many of our clients used to put the most valuable content ‘below the fold’. Below the fold refers to sections or parts of a webpage that are not immediately visible when the page loads, requiring the visitor to scroll down to view them.

It’s important to keep hierarchy in mind and start with the most important information at the top of the page.

Slow page load speed

Page load speed is one of the main factors when it comes to the performance of the web page.

It has been pointed out before that if your webpage takes more than 3 seconds to load, you lose up to 50% of your audience and with those potential conversions.

One of the easiest ways to identify whether your page is loading slowly is to use Google’s PageSpeed Insights

Most of the time, the loading speed is affected by high-quality images which are also in a wrong format.

We recommend using .webp or .jpeg formats. You can use this free tool to quickly convert jpg or png to webp. A good rule of thumb is that large images should not exceed 150kb in size. Avoid using .png at all costs.

Poor user experience (UX) on mobile devices

More and more visitors choose to visit websites using their mobile devices. Since 2015, Google has shifted its focus to ‘Mobile-first’, which just confirms that your website must be optimized for smart devices. Google has created a Mobile-friendly test tool for you to be able to see if your web page is optimized for mobile devices. You can also find this information using Google Search Console - Find a section ‘Page Experience’ under the ‘Experience’ tab.

To follow best practices, make sure that text is visible, links and buttons are large enough for visitors to click on and media is optimized for smaller size screens.

Lack of trust - no client testimonials or reviews

Lack of credibility or trust is another major thing that reduces conversion rates. It’s in human nature to be interested in knowing what other people say about the product that we are about to buy or make any other decision.

It’s almost like asking friends or family for recommendations, client testimonials can give that secure feeling and confidence.

Without showing off your reviews or testimonials your website may face these problems:

  • Lack of trust - Your visitors may find it harder to trust the product, service, or brand in general
  • Low Conversion Rates: Without reviews, visitors will be hesitant to make a purchase leading to lower conversion rates
  • Less Credibility: Your business will appear less credible or established. Visitors may get suspicious about why no one has reviewed the product or service. This leads them concerned about its quality or reliability.
  • Decreased SEO Performance: Reviews contribute to fresh and relevant content on a webpage, which can improve its organic search engine rankings

Now, that we analysed everything, we can move to the next step and start thinking about what changes could help us increase the conversion rate.

Step 4: Creating potential improvements

In this step, we will develop different hypotheses or simple ideas based on the data we collected in step 3. These could be anything from simple design or layout changes to rearranging categories and products - anything that could improve our website’s conversion rates.

So, the hypothesis is a statement that predicts how these changes will impact our conversion rates.

Here is an example of a potential hypothesis:

Changing the layout of the collection page, where we position best-selling, more expensive products at the top, should increase the average order value and thus increase the revenue

You may and should have more than one idea to improve conversion rates, but this raises a question: where should you start your optimization efforts? What should you prioritize?

To make this decision easier, we began using a framework called ICE, which stands for Impact, Confidence, and Ease. For each category, you assign a score from 1 to 10. Then, you multiply the scores using the following formula:

Impact x Confidence x Ease = Score for the idea. The idea with the highest ICE score goes to the top of your priority list.

Pros and cons of using ICE framework

Pros:

  • Simple and easy to understand
  • Makes ideas somewhat measurable and comparable
  • Increases the speed of decision-making

Cons:

  • Subjectivity in scoring
  • Ignores risks
  • Oversimplification

How to set an Impact score?

When thinking about the Impact score, try to imagine what effect it would have if the idea is successful. A high-impact idea would have to significantly improve the current situation; raise revenue, drastically increase AOV or similar. It can also help to explain the idea to other people and see how much they think it would affect the current situation - the average of all the scores can be your impact score. Other things to consider is to think about how many visitors will it affect or how much new business can it generate. You want to be as objective to it as possible.

How to set a Confidence score?

In simple terms, a confidence score shows how sure you are that an idea will work. The higher the score, the more confident you are. How accurate this score is usually depending on your experience in making educated guesses—the more you do it, the better you get. Itamar Gilad has a system that helps you decide on a confidence score. See the picture below:

Itamar Gilad system to set aconfidence score

How to set the Ease score?

The score refers to how easy it would be to implement a certain idea. You need to think about the complexity, how many people and resources you will need and how long will it take.

For example, redesigning and restructuring the layout of a new landing page will most likely take more time than changing a certain image or adjusting CTA placement.

Calculating ICE score

Now that you have familiarized yourself with evaluating different scores, it’s time to add everything together.

Let’s take an example of changing the placement of CTA. We know that the current landing page doesn’t have a CTA above the fold and the heat map showed that only 1 out of 15 people reaches CTA, which is located closer to the bottom of the page.

We believe that the IMPACT should be quite significant, so we will be giving it a solid 8.

We also know that content above the fold is more visible and we have a study from Google to support this idea. We would give a confidence score of 10.

Lastly, we have talked with our design and development team regarding the current workload, and how difficult it would be to change the placement of CTA.

They said that it would be easy and wouldn’t take much time, so we will be giving a score of 10.

If we take the formula above (Impact x Confidence x Ease = Score) and plug in our numbers, we get a score of: 8 × 10 × 10 = 800.

Now we can take this number and compare it to numbers you get evaluating other ideas, which will give you a better overview of what to prioritize.

Step 5: Testing your idea

It’s finally time to start testing your idea. First, you must decide what type of test you want to run. These are 3 most common types of tests:

  • A/B Testing - testing two different variations against each other - the control (A), which is the original version, and variant (B), which is the new updated version.
  • Multivariate Testing - Testing multiple variations simultaneously to see which combination performs best.
  • Split URL Testing - Testing two entirely different pages against each other, for example, two different landing pages for the same product.

For beginners, we usually recommend starting with A/B testing, which is usually the simplest and most effective method.

The next step would be to determine sample size and duration. You can use any of the sample size calculators online to determine how many visitors need to see each variation to achieve statistically significant results.

What is statistically significant?

Statistically significance helps you determine if the results you got from your test are coming from the changes you’ve made or merely due to random chance.

It is measured by confidence level and the standard confidence level is 95%.

This means that you are 95% sure that the result is not due to random chance.

This information is usually available within your A/B testing platform, like Optimizely Web or VWO, but you can also use the VWO A/B Test Statistical Significance Calculator to calculate your statistical significance.

The fewer visitors you have daily, the longer you will have to run your test to reach a statistically significant conclusion.

To implement the test, you will need a testing tool like, Optimizely, AB Tasty or VWO. There you can set up your test, the right targeting and see other metrics to understand how your conversion optimization campaign is performing.

Remember, it is important that you only test one change at a time, because it will be hard to know which change has made the impact. The exception to this is that if you are testing the conversion rate of two different landing pages.

Step 6: It’s time to analyse the results

Once the test reaches statistical significance, it’s time to analyze the results to see which variation performed better.

There are 3 possible outcomes here: The variant (B) has proven to be a better performer than the control version (A), the control version (A) has performed better than variant (B), or there is no significant difference between these two variations.

Most of the ideas fail

According to Optimizely, only 12% of experiments produce a winning result, which means that even if the idea seems great from the beginning, it may not necessarily help grow your conversion rate.

Experimentation and testing are just a part of learning more about your audience and your business.

If done right, testing and learning from it will help you to get better ideas (more tailored to your business and your clients), and run better tests.

Not all tests have to be winners, but even the ideas that fail can give you new insights.

If you’ve been successful and one variation came out on top, it’s time to implement it on your live website.

Step 7: Learning and starting again

As you probably already know, conversion optimization doesn’t stop here. It’s an ongoing process, so after implementing a successful idea, you return to the data collection phase to identify new opportunities for optimization, ensuring continuous improvement.

Bonus: Tips and Tools

1# Tip: Simplify your user experience

  • Reduce Friction: Simplify forms, minimize required fields, and make the checkout process as straightforward as possible.
  • Remove or hide: Reduce clutter on your page, create some breathing space and your important content will be even more noticeable

2# Tip: Optimize for speed

  • Make sure your website loads quickly - faster loading time leads to lower bounce rates and higher conversions. Aim to keep your load time under 2 seconds.
  • Implement ‘lazy loading’ on images that are below the fold. This would delay loading images that aren’t in view and make your website finish loading much faster.
  • Use correct image format: Create a habit of scaling down images and export it as .jpeg or .webp. This will give you

3# Tip: Start with High-Impact Areas

  • Focus on optimizing the pages and sections with the highest traffic and the most significant impact on your bottom line, like landing pages, sign-up forms, carts and checkout pages.

Heatmaps and session recording tools:

  • Google Analytics 4 - even though this is the most widely used web analytics tool, a lot of businesses are still not using it. This free tool will give you deep insights into your website like traffic, user behavior and much more
  • Microsoft Clarity - this is a free tool to use. You will get more insights like heatmaps, session recordings and some other analytics that will help you greatly to decide where to optimize.
  • Hotjar - This tool has a free package, which limits the number of sessions you will be able to record per day, but it has unlimited heat maps.

FAQ SECTION

Frequantly Asked Questions & answers.

If you still having second thoughts or just want to ask another question, don't hesitate and reach out to us. We are really quick at responding. One of our team members will get back to you within 24 hours!

Reach out to us

What is Conversion Rate Optimization (CRO)?

This is one of the foundational questions for beginners. CRO is an ongoing process of increasing the percentage of website visitors who take a specific action, such as purchasing, filling out a form, or signing up.

Why is CRO important for my business?

Dedicating time to work on your conversion rate optimization, can significantly boost revenue without needing to increase website traffic, providing better ROI on existing traffic.

How do I calculate my website’s conversion rate?

To put simply, conversion Rate is equal = (Total number of conversions / Total number of visitors) x 100%.

How long should I run an A/B test?

The most common problem is that tests that run too short can give misleading results. The length of test depends on traffic volume, but typically tests should run until statistical significance is reached, which could be weeks or even months.

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