Everyone loves to talk about their revenue, but most businesses need to increase their profit. Profit is what helps you be better at what you’re doing and is the reward for all of your hard work and risk you’ve taken. When you become more profitable, it’s easier to justify taking chances with your website, marketing, advertising, staffing, products, and policies. Profit frees you up to be creative and increase profit even more.
We have a motto here at Ballistic Agency; “Sales covers a multitude of wrongs.” That means if we create wildly profitable “wins” for our clients, they’ll have much more tolerance for our failed website experiments. No matter what business you’re in, this should be true. If you have enough breathing room with your cash flow and profit, you can afford to take risks in pursuit of getting better at eCommerce. Thankfully, we have the knowledge, data, and experience to get quick wins for our clients, helping free us up to experiment with exponential profit growth.
So how do we go about creating those wildly profitable wins? Conversion Rate Optimization (CRO). When we begin optimizing a website for increased conversions, we’re working with traffic already on the website and getting more return on investment, i.e., profit, for our client. There’s no additional expenditure on marketing, advertising, pay per click (PPC), or search engine optimization (SEO).
For example, in April, your website has 50,000 visitors, a conversion rate of 1.7%, average order value (AOV) of $150, and generates $102,000 in revenue. Your advertising costs were $6,000, $60,000 in cost of goods sold (COGS), and $14,000 in other fixed and variable expenses. Your gross profit is $22,000.
Increase the conversion rate to 1.9% without changing any other variable in the previous scenario, your costs stay the same, but your revenue increases to $114,000, thus increasing profit to $34,000! That’s a 64% increase because of a very modest increase in conversion rate. The power of conversion rate optimization is apparent when you realize that it’s a true multiplier of profit!
A secondary benefit of conversion rate optimization is marketing expenses now generate more return, so the more you spend, the more you make! This allows you to increase your bids on pay per click advertising, and have more confidence that you’ll turn more of those visitors into buyers.
Conversion rate optimization is quite simply the most profitable activity an established eCommerce company can do on their website. If you’d like to unlock the power of CRO for your website, contact us today. We’d love to help you achieve Optimized eCommerce™.