Conversion rate optimization

Short description: Concept in digital marketing

A bar chart showing three stages in a "sales funnel": "saw the advertisement" -> "clicked the advertisement" -> "bought the product". The three stages have two conversion rates to be optimized.

Conversion rate optimization (CRO) is the systematic process of increasing the percentage of users or website visitors who complete a desired action, such as purchasing a product, subscribing to a service, or submitting contact information.

CRO is widely used across digital platforms including websites, mobile applications, and online marketing campaigns.[1][2]

## Contents

* 1 History
* 2 Methodology
* 3 Calculation of conversion rate
* 4 See also
* 5 References

## History

Online conversion rate optimization (or website optimization) was born out of the need of e-commerce marketers to improve their website's performance in the aftermath of the dot-com bubble, when technology companies started to be more aware about their spending, investing more in website analytics. After the burst, with website creation being more accessible, many pages with poor user experience were created. As competition grew on the web during the early 2000s, website analysis tools became available, and awareness of website usability grew, internet marketers were prompted to produce measurables for their tactics and improve their website's user experience.

In 2004, new tools enabled internet marketers to experiment with website design and content variations to determine which layouts, copy text, offers, and images perform best. Testing started to be more accessible and known. This form of optimization accelerated in 2007 with the introduction of the free tool Google Website Optimizer.[3] Today, optimization and conversion are key aspects of many digital marketing campaigns. A research study conducted among internet marketers in 2017, for example, showed that 50% of respondents thought that CRO was "crucial to their overall digital marketing strategy."[4]

Conversion rate optimization shares many principles with direct response marketing – a marketing approach that emphasizes tracking, testing, and on-going improvement. Direct marketing was popularized in the early twentieth century and supported by the formation of industry groups such as the Direct Marketing Association, which was formed in 1917 and later named Data & Marketing Association and acquired by the Association of National Advertisers following the announcement on May 31, 2018.[5]

Like modern day conversion rate optimization, direct response marketers also practice A/B split-testing, response tracking, and audience testing to optimize mail, radio, and print campaigns.[6]

## Methodology

Conversion rate optimization seeks to increase the percentage of website visitors that take a specific action (often submitting a web form, making a purchase, signing up for a trial, etc.) by methodically testing alternate versions of a page or process and through removing impediments to user experience and improving page loading speeds. In doing so, businesses are able to generate more leads or sales without investing more money on website traffic, hence increasing their marketing return on investment and overall profitability.[7]

Statistical significance helps us understand that the result of a test is not achieved merely based on chance.[8]

There are several approaches to conversion optimization with two main schools of thought prevailing in the last few years. One school is more focused on testing to discover the best way to increase website, campaign, or landing page conversion rates. The other school is focused on the pretesting stage of the optimization process.[8] In this second approach, the optimization company will invest a considerable amount of time in understanding the audience and then creating a targeted message that appeals to that particular audience. Only then would it be willing to deploy testing mechanisms to increase conversion rates.

## Calculation of conversion rate

A conversion rate is defined as the percentage of visitors who complete a goal, as set by the site owner. It is calculated as the total number of conversions, divided by the total number of people who visited your website.

Conversion rate=ConversionsNumber of visitors

For example, a website that receives 200 visitors in a day, and 30 of those visitors sign up for its email newsletter (its owner's chosen conversion to measure). The site's conversion rate would be 15% for that day.

## See also

* Audience screen
* Behavioral targeting
* Conversion marketing § Conversion rate
* Digital marketing engineer
* Direct marketing
* Internet marketing
* Multivariate testing
* Promotion
* Split testing
* Web personalization
* A/B testing
* User Intent
* Search engine optimization
* Google PageSpeed Tools

## References

1. ↑ Saleh, Khalid; Shukairy, Ayat (Nov 1, 2010). Conversion Optimization: The Art and Science of Converting Prospects to Customers. Sebastopol, California: O'Reilly Media. pp. 2. ISBN 9781449397692. OCLC 733752533. https://books.google.com/books?id=USIKL4celYcC. Retrieved May 7, 2021.
2. ↑ Ash, Tim; Ginty, Maura; Page, Rich (April 24, 2012). Landing Page Optimization: The Definitive Guide to Testing and Tuning for Conversions (2nd, illustrated ed.). Indianapolis: Wiley. pp. 13. ISBN 9780470610121. OCLC 751127244. https://books.google.com/books?id=d7xvcnxYa1wC. Retrieved May 7, 2021.
3. ↑ Page, Rich (2012) (in English). Website Optimization: An Hour a Day. Wiley. ISBN 9781118196519. OCLC 940552907.
4. ↑ Davis, Ben (October 11, 2017). "Research shows fewer marketers see CRO as 'crucial' in 2017, but is the discipline misunderstood?". Centaur Media. https://econsultancy.com/research-shows-fewer-marketers-see-cro-as-crucial-in-2017-but-is-the-discipline-misunderstood/.
5. ↑ "ANA to Acquire DMA" (Press release). New York City: Association of National Advertisers. May 31, 2018. Archived from the original on January 28, 2021. Retrieved May 7, 2021.
6. ↑ Caples, John; Hahn, Fred E. (1997). Hahn, Fred E.. ed. Tested Advertising Methods (5th, revised ed.). New Jersey: Prentice Hall. ISBN 9780132446099. OCLC 924986866. https://books.google.com/books?id=0cBfQgAACAAJ.
7. ↑ Goward, Chris (2013). You Should Test That: Conversion Optimization for More Leads, Sales and Profit or The Art and Science of Optimized Marketing. Hoboken, New Jersey: Wiley. ISBN 9781118301302. OCLC 1159801038. https://books.google.com/books?id=2N1DwBhcMTkC.
8. ↑ 8.0 8.1 McFarland, Colin (August 17, 2012). Experiment!: Website conversion rate optimization with A/B and multivariate testing. Berkeley, California: New Riders. ISBN 9780133040081. OCLC 817741617. https://books.google.com/books?id=Z9B-7cHB5UwC. Retrieved September 13, 2020.

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