Beginner’s Guide to Conversion Rate Optimization
Conversion rate optimization has quickly become a hot “buzz” term in the valley, catching on as quickly as SEO or content marketing. But while CRO and AB testing are important, the term “CRO” has become almost an obsession among Silicon Valley, and it’s best to know what you’re getting into before you dive in.
Absolute vs. Relative Lift
The key mistake I see professionals make all the time is not understanding the difference between absolute and relative conversion lift. All AB Testing delivers is a relative lift in conversion rate. It cannot deliver an absolute improvement of 10–20%, as your ultimate conversion rate depends on other factors such as seasonality, pricing, and traffic quality.
Here’s an example -
As an e-commerce retailer, your stats for November look like this:
- 100,000 monthly visits
- 3% conversion rate
- $100 AOV
- $300K Gross Revenue
In December — without making any adjustments to your site design — your figures look like this:
- 100,000 monthly visits
- 4% conversion rate
- $100 AOV
- $400K Gross Revenue
Now let’s say that you found a winning variation on your website that delivered a 25% improvement in conversion rate. Had the winning variation been implemented, your figures would have looked like this:
- 100,000 monthly visits
- 5% conversion rate
- $100 AOV
- $500K Gross Revenue
Do you see the difference here? What AB Testing (or “CRO”) does is simply multiply your business. In December, e-commerce retailers can expect their conversion rates to improve naturally because of seasonality, but with CRO, their sites can multiply their sales, increasing by another 25%.
The flipside here is also true. If your sales go down, CRO will help by maintaining your conversion rate. You will not see your conversion rate improve because CRO is simply delivering a relative vs. an absolute lift.
Be careful when you are completing your tests that you understand that a 10% lift in conversion as reported by testing software does not guarantee your conversion rate will jump from 3% to 3.3%. It only means that your conversion rate will continue to fluctuate, that you’ve gotten a relative boost, and that you need to continue to drive quality traffic to your site in order to achieve sales.
