The Guaranteed way to Sell Conversion Optimization to your Client

 

Many people struggle with selling conversion optimization to their clients/boss. This is because they are not able to convince why ‘conversion optimization’ is worth the effort and deserve dedicated resources (time, budget, professionals etc).

To be honest, no amount of words, testimonials or case studies are going to help you much in selling conversion optimization.

Your clients know as well, as you that each website is different, each industry is different and past performance is no guarantee of future results. What works well for one, may not work at all for another.

So you need to prove to your client/boss how much money they can make and save and not how much money your ex-client has made or his neighbour has made through conversion driven campaigns. Same is the case with selling SEO, PPC or any marketing service.

talk-about

You need to learn to speak in a language which business people understand and can relate to like: Sales, Cost, Profit, Opportunity Cost….

Speak in numbers. Numbers don’t lie. Numbers speak louder than words.

“Spend X and you will get 2X or 3X in return”. That’s how business people get excited.

I can tell you conversion optimization success stories all day long. But will that make you more excited about conversion optimization than you already are?……… No.

What that will make you more excited is that if I can prove it to you that

Conversion driven campaigns are always more profitable than Traffic driven campaigns when it comes to increasing sales. 

This is what I am going to do next. So sit tight.

 

Let us suppose you own an e-commerce website which has got following traffic stats:

Average monthly visits – 10000

E-Commerce Conversion Rate of the website – 0.25%

Average order value – £100

Now you want to increase your sales. You have got £2000 of monthly budget.

You have got two options.You can either choose to spend this £2000 on acquiring more traffic to increase sales or you can spend the same amount on conversion optimization to increase sales.

 

Increasing sales by acquiring more Traffic

Let us suppose you choose to acquire more traffic with the aim to increase sales. After all, ‘conventional wisdom’ dictates that “more traffic means more orders”.

If you are spending £2000 a month, then you would need at least £2000 of additional sales in return just to break even (no profit, no loss)

So, Number of additional orders required for £2000 sale = Additional Sale/Average order value = £2000/100 = 20

So you would need 20 additional orders each month just to cover the cost of your marketing campaigns. Obviously you need much more than 20 orders in order to make profit.

In order to get a reasonable positive ROI say 100% (means you spent ‘x’ and earned ‘2x’ in revenue), you would need at least 40 additional orders each months from your marketing activities. Only then you will generate an ROI of 100% and additional sales of £4000 (40 orders * £100 average order value) each month.

 

Now Additional Traffic required to get 40 orders = number of additional orders required to get 100% ROI / e-commerce conversion rate = 40 / 0.25% = 16000 visits

So you need to increase your website traffic by 160% ([26000 – 10000]/10000 *100]) to generate an additional sale of £4000 per month, provided the ecommerce conversion rate at least remains constant, if it doesn’t decrease.

The 26000 figure is derived by adding 10000 of average monthly traffic and 16000 of additional monthly traffic.

 

So average value of each additional visit to your website = £4000 / 16000 = £0.25

We call this average value ‘ecommerce per visit value’ which measure how valuable your website traffic is.

 

Now how long do you think it will take to increase the existing website traffic by 160%?

Let us suppose it takes 6 months (still a conservative figure)

So after 6 months you would have spent £2000 * 6 = £12000 in acquiring additional traffic to generate an additional £4000 in monthly sales.

 

Increasing sales by improving conversion rate

Let us suppose you choose to increase only your conversion rate in order to increase sales and your monthly spend on conversion optimization is the same £2000

Now in order to get a reasonably positive ROI of 100%, you need additional 40 orders each month as calculated previously in this post.

So conversion rate required to get additional 40 orders each month = number of additional orders required/ present website traffic = 40/10000 = 0.40%

So if you increase your conversion rate from 0.25% to 0.40%, you will generate an additional 40 orders each month, provided your website traffic volume at least remains the same, if it doesn’t increase.

Now the average value of each additional visit to your website = £4000 / 10000 = £0.4

Now to summarise it all,

In case of Traffic driven campaign, the average value of each additional visit to your website is £0.25

In case of Conversion driven campaign, the average value of each additional visit to your website is £0.4

So just by focusing on conversion optimization, you increased the ecommerce per visit value by 60% ([0.4-0.25]/0.25 * 100])

So when you focus on conversion optimization, your traffic becomes 60% more valuable for your business than when you focus only on traffic acquisition.

Now how long do you think it will take to increase the ecommerce conversion rate to 0.40%

Let us suppose it takes 3 months (pretty realistic figure) and after which you stopped the conversion optimization campaign.

So after 6 months you would have spent £2000 * 3 = £6000 to generate an additional £4000 in monthly sales.

Now to summarise it all,

In case of traffic driven campaign, you spent £12000 in acquiring additional traffic to generate an additional £4000 in monthly sales.

In case of conversion driven campaign, you spent £6000 in improving conversion rate to generate an additional £4000 in monthly sales.

So is conversion driven campaign more profitable than traffic driven campaign? ……. absolutely.

 

Now let us suppose that you didn’t stop your conversion optimization campaign and after 6 months your ecommerce conversion rate increased from 0.25% to 2% and your website traffic is still around 10k visits.

So with 1.75 (2-0.25) percentage point increase in conversion rate and 10k traffic, you would be generating 175 (1.75% * 10000) additional orders each month after 6 month.

If the average order value is still £100 (highly unlikely, as it should improve when you do conversion optimization), you would still be generating an additional sales of £17500 (175 orders * £100 average order value) each month after 6 months.

So after 6 months you would have spent £2000 * 6 = £12000 to generate an additional £17500 in monthly sales.

 

Now to summarise it all,

In case of 6 months traffic driven campaign, you spent £12000 in acquiring additional traffic to generate an additional £4000 in monthly sales.

In case of 6 months conversion driven campaign, you spent £12000 in improving conversion rate to generate an additional £17500 in monthly sales.

So is conversion driven campaign more profitable than traffic driven campaign? …… absolutely.I have proved it twice now.

I have also proved it to you that conversion driven campaigns become progressively more profitable. The longer you will run such campaigns, more profitable you will become.

 

Conversion driven campaign reduce acquisition cost, increase customer lifetime value and website traffic

Conversion driven campaigns will not only reduce your cost per acquisition over time, thus making you more and more profitable but it will also increase customer lifetime value and increase your website traffic.

You may ask,

How a conversion driven campaign will increase website traffic?”

Well, your conversion rate is not going to increase on its own. It is going to increase only when you are providing something of value to your target audience and you are getting better and better in providing such value over time.

The more value you provide to your target audience, more customers you will attract. More satisfied customers means higher customer life time value, more word of mouth publicity, recommendations, social mentions and thus higher traffic volume.

You really can’t go wrong with conversion driven approach to increase sales.

 

Conversion driven campaign has higher lifetime value than Traffic driven campaign

Even if you stop spending money on conversion optimization at some point, you will continue to get the benefit of increase in ecommerce conversion rate for a very long time. This is not really the case with traffic driven approach to increase sales.

Your traffic will deteriorate much faster than your ecommerce conversion rate. If in doubt, switch off all of your paid marketing campaigns for the time being and you will get my point.

Other than that, the cost of acquiring news customers will always increase. So as long you will stick to traffic driven approach to increase sales, your cost per acquisition is only going to increase over time. It is not going to decrease.

And at some point your cost per acquisition will become so high that advertising will no longer be profitable for you. So obviously the life time value of conversion driven approach to increase sales and remain profitable is much higher.

 

Other article you will find informative: How to find your Best E-Commerce Clients & improve bottomline

 

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