Why You NEED To Budget For CRO in 2018
It’s that time of year again – Christmas has gone and marketers are busy putting together budgets for the next financial year.
Some of you will have no doubt done it already to follow the calendar year. I hope you allowed some space for discretionary spend in there (or put plenty of fat into other areas that you can siphon off – I know how you lot work ;-)).
Because you need to have CRO in your budget. It’s a must.
In fact, without meaning to scaremonger, you’ve made it near impossible to hit your KPI’s/ targets if you haven’t included it.
Firstly, let’s look at what I mean (and don’t mean) when I say CRO
Let’s get a few misconceptions out the way straight off:
- CRO is not anything to do with Google (you’d be amazed how many people think it has something with SEO, presumably because it shares the word ‘optimisation’).
- CRO is not an after thought. It’s the fundamental part of any business – if there’s no revenue coming in from what you do, your employer will quickly stop doing it, or be out of business themselves soon after.
- CRO is not UX or design… in fact 7 times out of 10, ugly beats pretty. CRO is 70% copy and 30% imagery (again, not design, but the images you use).
So, what is CRO?
CRO (Conversion Rate Optimisation) is the process of persuading more of your website traffic to reach the ‘end point ‘of your web sales journey.
Your ‘end point’ might be to fill in a form as a warm lead (if you’re B2B that’s probably it), subscribe to your list or, of course, the ultimate example is to buy something from your ecommerce store.
Whatever that ‘end goal’ is for your business, that’s your conversion.
And that’s what digital marketing is all about.
More reach, more followers, more branding… they’re all just small milestones on the bigger journey of getting more conversions. No such tasks serve any purpose if those people aren’t – at some point – converting.
All of your KPI’s and targets will come back around to conversions. Your boss knows it and their boss certainly knows it. The sale is king and the king always wins.
So, like breathing, we can agree that it’s pretty important.
But there’s more…
The Power of the CRO Multiplier
What is it?
It’s the big light bulb moment when you realise just how powerful doing CRO is for your business (and this is also how you persuade your boss or FD to let you spend some budget on it).
Increasing your conversion rate is not just a one-hit wonder, it’s Elton John on steroids – hit after hit, CRO keeps on giving a lifetime of wonder (and profit).
Here’s the Maths:
Each month you sell 1000 of ‘widget A’ for £20 a go through your ecommerce store at a conversion rate of 5%.
You increase your conversion rate from 5% to 10%.
You now sell 2000 per month. That’s an extra £20k in revenue.
But you now have 1000 more customers on your books and, on average, your existing customers come back and buy another widget every 6 months.
That extra 5% conversion rate has given you another 1000 customers, who buy twice per year on average… meaning that’s an extra 2 sales (or £40k in revenue) every 12 months.
Now, if you weren’t already persuaded, here’s the final slammer:
Your conversion-optimised web pages are set up and running forever more. It’s not an advertising source that gets turned off when you stop paying. It’s there, on your site and working hour after hour, day after day, month after month and year after year.
So, in our example above, you’ve added 1000 customers for each of 12 months.
That’s 12,000 new customers each buying 2 times per year.
With our widget company at just £20 per sale, that means £480k in extra annual revenue.
From an investment of probably less than £10k.
Show me another part of your budget spreadsheet that gets you that ROI and I’ll eat my hat, coat and even the shoes.
Oh, and one last thing… that example was based on going from 5% to 10% – an improvement of 100%. The average we achieve here at PSM is nearly double that, but I’ll leave you to do those maths…
What You Should Do Now
- Get some money for CRO put in your budget. Or, if you’ve already submitted yours then work out where you can borrow a bit from to get this activity included.
- If you want me to help plan and implement your CRO (like I’ve done for companies such as Samsung, Lloyds Bank, Ferrari, Ricoh, L’Oreal, RBS and Intel) then you can email me on firstname.lastname@example.org or claim your free strategy call.
- If you enjoyed the article and want to share it, then please feel free to do so (as long as you still credit us with it and link back here)