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The Conversion Rate Optimization Puzzle Has Only Two Pieces

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In retail ecommerce, conversion rate optimization (CRO) is about making those deliberate tweaks to your site funnel to improve a certain visitor path — typically checkout. Conversion itself defines a certain action you want a site user to take. This is usually associated with completing a transaction or a sale, but it could be something as simple as filling out a sign-up form (form completion) or downloading a whitepaper (click).

What’s a simplistic way but highly targeted way of looking at CRO?  In its purest sense, you can boil it down to the following two things to test.

Element #1:  Test your offer.

Offers drive sales, and the best offers are those that produce incremental revenue gains. Begin by identifying a critical element you want to test for lift, and form your hypothesis. For example, you could be testing raising a price point with bundled free shipping (compared to lower price with paid shipping). Keeping all other factors constant on the page — design, layout, shipping rates, image sizes, colors and fonts — test the bundled offer and how it positively or negatively affects customer behavior, as defined by either higher or lower sales conversions. Did testing your new price scheme get people to buy more or less? Did they order earlier rather than later? The key takeaway here is to test the offer, and only the offer. Nothing more.

Element #2:  Test your flow.

As compared to testing offers, here you are testing flow—also called visitor flow, site scent, or user experience (UX). Elements such as colors, navigation hierarchy, sizes, images, weight of fonts, buttons, and calls-to-action are candidates to test.  For example, when entering your buy-flow (checkout), count the number of form fields as well as the amount of clicks needed to reach your thank-you page. From here, you can create iterative tests of form layouts with fewer (or more) form fields or other layout ideas, and test with your hypothesis to see if changing these actions improves checkout and add lift.

A 3-Step Method to Optimization Success

Step 1: Optimize based on the data you collectAgain, start with a hypothesis. For example, my hypothesis is that fewer form fields required for checkout can bring higher conversions. Narrowly carve your test iterations and deploy via any real-time testing service. Monitor your results for statistical validity (90% or greater confidence). Call your tests winners or losers, based on comparison to your control.

Step 2: Validate your test results and any lifts by verifying with complementary metrics – For example, AOV (average order value) is a key metric. New versus existing customers (shows incremental gains) is another important figure. While your test may be statistically valid, there may be some instances where you don’t want to deploy the test as a new control (e.g., timing, internal communication, impact on other departments). A second set of metrics to help you verify and guide your business intuition can be quite helpful.

Step 3:  Back-test if you have any doubters or naysayers – I like to say that haters can hate and they’re entitled to their opinions, but ideology needs to prove out in the data; otherwise, they are just senseless (or nonsensical) opinions.  If your test causes the doubters in your organization to come out of the woodwork — and they will — back-test so everyone is appeased.  Yes, it’s extra work. But it’s smart practice as a data-driven marketer as it statistically validates your results and slams the door on chatter. It also shifts discussions from opinions to the reality of customer behavior.

Remember: CRO is only one element contributing to online success. It’s an important one, but other forensic data inside your metrics (such as product productivity at the unit level, often called merchandising, or right message, right offer, right person) is equally important.

A related task is to study how your marketing and merchandising promotional schedule influences site traffic to help drive product level demand. In my opinion, this focus is even more important than CRO efforts, but it is one that is often lost because no one talks about it. For more on this aspect of online merchandising, see my recent article on The Crystal Ball to Higher Online Product Sales.

Image:  Puzzle Pieces — Original Billboard Image from Shutterstock

About the Author

Daryl Logullo is a 13-year veteran of D2C and B2C retail ecommerce. He is currently leading a world class ecommerce team at Kellyco Metal Detectors, the world's largest metal detector superstore for outdoor hobbyists and enthusiasts, including gold, silver, treasure and relic hunters, located in the Orlando, FL.

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