Digital Marketing

Driving Digital Marketing ROI with Conversion Rate Optimization (CRO)

February 13, 2020
By Nick P – Optimization Architect,

Let’s face it, digital marketing costs are rising. What was budgeted the previous year is not bringing in the same return on investment (ROI). Increased competition using ad spend across available Facebook, Google and other media is constantly driving prices up. Increasing advertising spend to maintain brand exposure is a concern especially when the ROI for pay-to-play is decreasing.

LiveIntent reported in an October 2019 survey of marketers with spend of >$100K on Facebook that cost per impressions (CPM) on Facebook have grown 90% YoY for marketers, and that number only continues to grow. In that same study, 47% of the marketers worry that if costs continue to rise, they could be priced out of Facebook advertising.

There has to be a way to get the most out of your ad spend to keep up.

Good news, there is.

A primary focus for many Ecommerce Managers has been to master search engine optimization (SEO), acquire traffic through online/social ads, and drive content exposure. These are all absolutely necessary to compete. The big question is, what calculated effort is being spent on improving the customer experience these audiences are being directed to? Let’s take a look at how effective a good CRO program can be.

All else being equal:

  • As cost to acquire traffic increases, ROI decreases.
  • As revenue per visitor (RPV) increases, ROI increases.

So, let’s say you spend $20K this month and see a revenue of $200K. Let’s see how increasing the rate of conversion from onsite improvements can benefit ROI.

Take a look at how 5% increase in the cost of marketing impacts when all else is equal.

5p-increase-mktg-dollars-cro

Now let’s look when the conversion rate (CR) is also increased by 5%.

5p-increase-CRO

Now, let’s imagine you are working to increase both conversion rate and average order value (AOV) for the traffic you are already attracting to visit your experience.

Increase both Conversion Rate and AOV

In this example, a dedicated CRO program achieved moderate increases and in the face of rising marketing costs, squeezed an additional 30% revenue.

Real world Example: More Ecommerce Revenue with 20% less traffic!!!

In July of 2019, Digital Operative started a CRO program with a new client, Baby Tula. Baby Tula specializes in providing comfortable and exclusive luxury baby carriers and accessories to the global baby carrying community.

Our strategy was focused on testing solutions to decrease friction, tactics like minimizing blocks of copy, optimizing placement of value messaging, and increasing skimmability on their mobile platform. The CRO program also worked to increase overall value articulation through homepage and product page testing, leading to incremental performance improvements. Our overarching goal was to increase RPV. We executed on that approach leading up to the holiday season, seeing steady increases in CR and AOV along the way. During November and December, one metric stood out, traffic to the site was substantially less than the previous year.

It turned out that Baby Tula was spending similar amounts in 2019 as they did in 2018; however, costs had increased along with other factors so much so, site traffic was down 20% YoY. Through smart optimizations, Baby Tula’s internal team’s dedication, and program testing solutions, we optimized the experience prior to the holiday season. As a result, revenue increased by 16% while visitors to the site decreased 20%.

CRO Program - Gains

As visitors move from offsite to onsite, analytics-based optimizations seek to provide the highest probability pathways through which visitors convert, we call these the “Happy Paths” of the experience. CRO employs motivational consistency, removing barriers to purchase, value positioning, personalization, and many more tactics.

Ultimately, we know you have to make hard decisions to prioritize your marketing budgets against your goals. With increased competition for ad space driving costs higher, increasing your conversion rates per visitor is more important than ever. As demonstrated, even a modest percentage increase to your CVR can have a significant impact on your ROI across all channels.

A properly executed CRO program can be the secret weapon to drive up your Revenue Per Visitor (RPV), get the most out of the audience you already have, and increase ROI of your marketing acquisition activities as you scale.

Economics of CRO (Listen to our latest podcast!)