Customer Value Optimization

CRO vs. CVO: Why CRO can’t help eCommerce companies grow in the long-term

To define the context properly:
There are a lot of eCommerce consultants, agencies, and internal T-shape marketers that are driving millions in revenue for eCom startups by doing CRO.

I don’t argue with the fact that CRO is vital to an eCommerce and that is not moving the needle.

Why can’t CRO help eCom companies grow in the long-term?

Most eCom startups have limited resources, a lot of enthusiasm, and a need to be fast. However, that makes them launch their websites with poorly UX, maybe some speed performance issues that need to be fixed, etc.

If they have a good product, outstanding customer acquisition & CX skills, are well funded or if they are really lucky to find a generous market, they end up generating enough traction.

But that is not the case of most of them.

Since 2013, >19k websites have used Omniconvert for A/B testing and personalization.

We had access to a lot of data and a lot of feedback, from agencies, and from eCommerce companies, as well. So, we identified this pattern:

The CRO process stops after ±9 months. After the initial fixes of the UX, and a few funnel optimization experiments, the process doesn’t continue for some reason. Our assumptions was the lack of impact, education, performance, ROI.

That’s why, an eCommerce company needs to first understand his customers and their needs before pouring resources into customer acquisition.

CRO has been seen as a silver bullet that could fix all of the eCommerce problems.

But, what’s the outcome if you convert more visitors into buyers, but you don’t convert more customers into delighted repetitive customers?

While most eCommerce companies think they have a traffic or conversion problem, they actually have a customer lifetime value problem.

That was really strange for us: we’ve seen that after fixing the UX and doing a few funnel tweaks via A/B testing, most eCommerce companies stop their CRO efforts.
That made us realize that they have a more systemic challenge: they either reached a plateau, either haven’t got access to talent to move the needle further.

Fact is that CRO ended up to be some sort of a fix for bad crafted websites, instead of being a strategic approach to improve the whole customer value.

After working closely with a few eCommerce leaders, looking at their data, we understood why CRO is not working for them anymore:

They misunderstood CRO for continuous website testing.

And, while this can pay off for large-traffic websites, for small and midsize companies is not efficient after a certain moment.

Because what they need is to optimize customer behavior, which is not happening only on the website.

Why is everybody obsessed with the conversion rate (CR), and not revenue per visitor (RpV) or customer lifetime value (CLV)?

Due to an incorrectly understood eCommerce Growth formula.

Most of them mistake traffic and conversion rate for long-time growth.

It is counter-intuitive, but generating more traffic and a higher conversion rate, can be toxic for some companies.

How?

It is not profitable for them to acquire more customers if more customers mean higher losses for those companies.

But not all the CRO agencies are aware of that, as it is tedious to monitor CAC and CLV for their customers, and it is also hard to make them customer-centric overnight.

That’s why we have consciously decided to pivot from CRO to CVO.

The shift is already happening for many eCommerce players and for many agencies, as well.

Unknown strangers > Known Customers

Known Customers > Lifetime Customers

It is about the order of operations. About common sense. About beginning with the end in mind.

So, that’s why we’ve decided to pivot our company and build Reveal.

To help midsize eCommerce companies thrive by improving what matters:

Customer Lifetime Value

See what Reveal is all about in this 2′ video:

Even more curious?
See Reveal in action or signup for an account on Shopify – it’s completely free until the end of 2020.

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