Chapter 1: Understanding Conversion Rate Optimization

Section I: What is Conversion Rate Optimization?

There are two ways businesses can increase revenues through a site. The first method focuses on driving more and more qualified visitors to a site. To do this, marketers might use free and paid marketing methods, from implementing a Pay-Per-Click (PPC) campaign to investing in SEO.

The second method focuses on extracting more value from the existing traffic to a site. Thus, instead of turning 1 out of 100 visitors into a customer, you might focus on converting 2 out of 100 visitors into paying customers, effectively doubling your revenues.

Conversion rate optimization focuses on this latter approach and involves identifying roadblocks on your pages, hypothesizing and testing solutions, and implementing the best results.

More often than not, the two methods - increasing traffic or improving conversion rates - go hand in hand. CRO is not a replacement for your existing marketing tactics but an addition to it. When you undertake a CRO campaign, your content, social media, paid marketing campaigns will carry on as usual (and be more effective since you’ll turn more visitors into customers).

Before you establish a framework for conversion rate optimization, let’s take a look at exactly what CRO involves.

CRO Defined

CRO is the process of changing elements on your site in order to create valuable experiences for your visitors that will convert them into customers.

How you measure success in CRO will depend on your target metrics. For example, if you are in the media industry, the number of newsletter subscriptions or page views will likely be your conversion metric. For a SaaS startup, the number of sign-ups or conversion rate from free to paid users might be a more relevant conversion metric.

Keep in mind that you’ll likely have different metrics for different conversion funnels. An eCommerce store, for example, might have one conversion funnel for turning its blog readers and social media followers into email subscribers. For this funnel, the email opt-in rate might be the target metric.

This same store might have another funnel for turning email subscribers into paying customers. For this funnel, the subscriber to customer conversion rate would be the target metric.

Now let’s take a look at common elements that are often under scrutiny during the optimization process.

Three Elements of CRO

Conversion rate optimization is a holistic process that spans multiple skillsets. A successful CRO campaign would test multiple designs, tweak landing page copy and use in-depth analytics data to understand the results and draw conclusions from it.

Based on this, we can say that the three elements of CRO are:

  • Design

  • Copy

  • Analytics

Let’s understand each of these elements in further detail.

1. Design

Design lies at the very heart of the conversion rate optimization process. A CRO-focused design traverses a fine line between being usable and profitable. While it may be tempting to create an aesthetic design to impress visitors, it can be disastrous for achieving your business goals. You need to strike a balance between the two and create a design which sells.

More often than not, focusing on the user experience in your design also helps move your business goals. If you understand what your users want on a page and make it easy to do it, you’ll likely increase your conversions.

On Amazon’s product pages, for instance, the highest priority action a customer wants to take is to buy the product. Amazon makes this easy by placing the “Buy” button above the fold and giving it a color that stands out on the page:

CTA Amazon

Let’s take a look at another example in which redesign helped a company reach their conversion goal.

Highrise (now Basecamp) is a software tool that helps team members work better together. You can share notes, deals, email history and more with your team members.

When Highrise wanted to increase user signups from their landing page, they altered the design radically.  

Here is an image of the company’s original page

Basecamp example

This redesign led to an increase in 102% user signups.

Basecamp improved page

Why did this work?

  • The new version is not cluttered with too many distracting elements

  • There is an obvious call-to-action in a contrasting color

  • There is an effective use of white space causing user attention to be diverted to where Highrise wants.

  • The use of large image instills trust while also capturing the user’s attention.

2. Copywriting

While a good design will leave a positive impression and keep visitors lingering on your site longer than normal, your conversion rate may still suffer due to lack of a persuasive copy.

This is the second element of conversion rate optimization and is equally crucial to the conversion process.

Your site’s copy serves as an opportunity to verbally hook and convert visitors. A relevant copy can make the difference between users staying on your site or leaving. It can also improve conversions by emphasizing your products values and benefits.

More often than not, the copy informs the design process instead of the other way around. Which is to say, designers create designs that emphasize the copy’s readability and persuasiveness.

For instance, the popular SaaS landing page design popularized by Bootstrap is effective largely because it revolves around the copy.

Bootstrap copy

The landing page has a strong headline above the fold with subsequent sections focusing on the product/service’s benefits. Purely informational copy that contributes the least to the conversion process - such as a FAQ or disclaimers - occupy the often-ignored footer area.

Understand that copywriting isn’t just for entire landing pages; it is also for individual elements on any page, such as the headline, an opt-in pop-up or a product description.

Here’s an example of strong informational copy for a product landing page, courtesy of Amazon:

Copy Landing Page Amazon

This tells readers about the product’s technical specifications (such as device thickness) without being obscure.

Even the “Read More” link at the bottom of a blog post can benefit from strong copywriting. On SocialTriggers, for example, this link uses copy and design to persuade readers to read more content:

Persuasive Copy Example

We’ll look at how to write effective copy in later sections.

3. Analytics

Improving your design and copy may lead visitors to the brink of conversion but there still may be an unknown issue which you simply can’t recognize without data. Analytics enables you to make decisions based on fact rather than instinct.

In a CRO process, you might rely on multiple tools to understand your results. You’ll get data from your testing software that will tell you which variant is working, which isn’t (more on this later). You’ll also use an analytics tool such as Google Analytics to get in-depth data on what people are doing on your site.

The Fourth Element: Customer Psychology

Analytics, copywriting and design are critical for running an effective CRO campaign.

However, these skills only define the how of CRO, not the why. A marketer with these skills will be only half-effective at conversion rate optimization.

This is why the fourth, and arguably most important ingredient of CRO, is customer psychology.

Customer psychology goes far beyond any marketing tactic. Instead, it focuses on the fundamental triggers that guide customer behavior on a website and in real-life.

There are two elements to understanding customer psychology:

  • Principles of Persuasion

  • Customer Behavior

Let’s look at these in more detail.

1. Persuasion Principles

Human beings, as you might have seen first-hand, are very susceptible to suggestions and cognitive biases. For instance, knowing that something is popular causes it to become even more popular (until the inevitable backlash). How much you like someone personally affects how you perceive their work. And the rarer and more exclusive something is, the more valuable it becomes.

An understanding of CRO requires that you understand these biases and the persuasion principles behind them.

For example, a common piece of CRO advice is to add “social proof” in the form of testimonials and reviews to a landing page. As the most case studies report, adding this social proof almost always results in higher conversions.

Social proof is the subject of persuasion principles.

As Robert Cialdini, author of Influence: The Psychology of Persuasion notes, “We view a behavior as more correct in a given situation to the degree that we see others performing it”. Social proof, thus, is essentially man relying on his natural instincts to figure out the right behavior.

A background in persuasion will help you with copywriting, design and any sort of selling - online or in real life. Knowing the principles that cause someone to believe - or reject - an idea will fundamentally transform the way you approach CRO, marketing, business, and even life.

For a self-learner, the following books are highly recommended for grounding yourself in psychological principles of persuasion:

  • Influence: The Psychology of Persuasion, by Robert Cialdini

  • Thinking Fast and Thinking Slow, by Daniel Kahneman

  • The Power of Habit: Why We do What We Do in Life and Business, by Charles Duhigg

  • Hooked: How to Build Habit Forming Products, by Nir Eyal

2. Customer Behavior

People don’t read online; they scan.

This was the conclusion of user behavior research carried out by the NNGroup.

Other user behavior reports are equally enlightening. This study, for instance, found that when offered different alternatives, people prioritize avoiding losses because the pain of losing is worse than the pleasure of winning. Another study discovered that younger people are more likely to see flat design as “trustworthy” than their older counterparts.

Studying user behavior can give you similar insight into why people do what they do on a web page, and how you can use this information to build better-converting sites.

There are two ways to go about studying user behavior:

  • Tests and in-person interviews: Watching a user, which can be a potential customer, interact with your site in real-time can give you insights that no amount of data can reveal. Plus, it can help you spot conversion bottlenecks and design pages that give users what they want.

  • User behavior studies, guidelines, and books: Reading and learning from the existing body of research on user behavior can be vastly helpful in understanding user and customer psychology.

We’ll cover how to do the former in later sections. For the latter, we highly recommend the following:

  • The Design of Everyday Things, by Don Norman

  • Don’t Make Me Think, by Steve Krug

  • 100 Things Every Designer Needs to Know About People, by Susan M. Weinschenk

  • Usable Usability, by Eric Reiss

  • NNGroup User-Experience Articles

Combined with persuasion studies, this will give you a much more fundamental understanding of how users behave on your site. Armed with this knowledge, you’ll be able to create better-converting pages.

Types of Testing

There are two types of testing methodologies employed in CRO and they are:

There are a variety of tools you can use to conduct these tests such as Omniconvert.

Before we go in-depth on how to carry out these tests, keep in mind:

  • Not to cram everything into one test: The more variables you add, the more difficult it becomes to discern which of those variables is providing the impact you desire.

  • Have a control group: A control group makes it easy to spot differences between how visitors interact with your site presently as opposed after you change it.

Let’s learn more about these two testing methodologies below:

A/B testing

A/B Testing is a technique in which you set up two different landing pages with one differing element between them. You then test each version simultaneously with equal traffic split between them to determine which variant leads to your goal.

Here is an example of a very simple A/B test conducted by GetResponse.

GetResponse is an email marketing platform which allows you to create a list of prospects, partners, and clients enabling you to develop relationships with them. In this test, GetResponse wanted to determine the effect of free trials in driving purchases of their paid services.

Here is their original landing page with no free trial option (option A):

CTA option 1

And here is the page they tested with the free trial option added (option B):

CTA option 2

The results showed that by offering free accounts, GetResponse achieved a 158% increase in signups. Furthermore, free accounts did not negatively influence the number of paid accounts that were being created.

While A/B tests can deliver data quickly, they do not reveal any information about the interaction between variables on a page as it happens in multivariate testing.

Multivariate testing

In multivariate testing, traffic is also equally diverted to different versions of a page. However, instead of comparing two elements, multivariate testing allows you to create and test different combinations of elements against the conversion goal.

Multivariate testing yields much faster results than A/B testing if you have multiple combinations of elements to test.

For example, suppose you wanted to test two different headlines and two different images. Thus, you would have four page variants:

Tabel Variants

To test all these out, you would end up running six tests:

  • Original vs. Variant A

  • Original vs. Variant B

  • Original vs. Variant C

  • Variant A vs. Variant B

  • Variant A vs. Variant C

  • Variant B vs. Variant C

This would be time-consuming and would yield very slow results.

Here is an example of a multivariate test that HawkHost ran to test something similar.

HawkHost is a service which provides high-quality web hosting. On its landing page, it wanted to test which headline and image combination gives the best results:

Here is an image of their original landing page with the two variables HawkHost wanted to test

Original Page

Here is the altered page with a different image and headline:

Different headline

In this test, the only variation which provided an increase in conversion was in which the image was changed. The above version led to 3x conversions.

Multivariate tests can help you redesign entire pages by providing information about elements that if changed on your page will provide the most impact. Unlike A/B testing, however, multivariate testing takes time and requires heavy traffic to yield measurable results.

For most purposes, you’ll likely only use A/B testing.

Section II: Why Does CRO Matter?

Online traffic is fickle in nature.

If visitors land on your site and you are unable to place them in your conversion funnel, that is a lost opportunity unlikely to return. If you are serious about the growth of your business, it is absolutely essential to engage in CRO to retain as many potential customers.

CRO is cost-effective and grows your business from the traffic you already have. You can increase traffic to your site through advertising and other marketing tactics, but you’ll need time and money to see any measurable results. If you choose to engage in marketing without optimization first, your efforts are bound to be only marginally effective.

Investing in CRO means that you can confidently invest in growth strategies knowing that you’re sending traffic to a site optimized for conversions. In addition, CRO can help you better understand your users, and thus, make better UX decisions.

The Benefits of CRO

Let’s look at some ways CRO can benefit your business:

1. Lowers customer acquisition cost

Since optimization leads to conversion of a greater percentage of visitors from existing traffic, there is no additional cost associated with conversion. This greatly reduces your customer acquisition cost and enables you to make more profit off each customer.

2. Leads to more time spent on site by visitors

Improving user experience through conversion rate leads to visitors lingering on your site longer which translates into a higher chance for conversions. An engaged user is also more likely to be influenced by your brand.

3. Improves user experience

In a highly competitive market, visitors are inundated by choices. Unless you provide them with something remarkable, they will always be searching for alternatives.

Through the CRO process, you’ll gather tons of actionable insights into your customers’ behavior. With these insights, you can build something your customers truly want, and thus, improve their experience.

Who is CRO Useful for?

CRO can be beneficial for businesses of varying sizes and involved in diverse industries.

Here are common business use cases for CRO:

1. Building a list or capturing leads

Visitors are unlikely to purchase on their first visit to any page. In fact, according to a study, 96% of first-time visitors are not willing to commit to a purchase.

Customers need time to conduct research, engage in a discussion, and establish a relationship before they buy.

As a business, your first task in such a scenario would be to capture visitors as leads.

How CRO helps with lead generation

Lead generation is the initiation of consumer interest and inquiry into a product or service by means of their contact information. While there is little doubt regarding the importance of capturing leads, the ability to do so effectively is crucial.

While a well-designed lead capture form provides you an opportunity to get to know your prospect, a bad design will lead to them away from your site. This is precisely where CRO comes in handy.

Case Study: Focusing on benefits improves lead capture rate by 30%

Providing reassurance may convince some users to part with their information, but if your signup form doesn’t focus on the benefits of signing up, you likely won’t see strong conversions.

Telekom Romania is one of Romania largest telecom companies. On its website, it wanted to increase the number of leads it captured via an opt-in form.

Here is the original opt-in form:

Version A Telekom

To capture more leads, Telekom Romania launched a CRO campaign focusing on improving the copy on this opt-in form.

Here is the modified version:

Version B Telekom

This version focuses on helping customers choose the best option instead of merely capturing emails. The CTA has an affirmative copy as well.

The modified version helped Telekom Romania capture 30% new leads and increase overall lead capture rate by 38%.

Case Study: Reducing the number of fields to be completed to increase signups by 14%

When visitors are contemplating filling out forms online, they take into account the “opportunity cost of time”. This is an instinctive measure of how much value would they receive from you compared to the amount of time they need to invest in providing their details. If they do not see value, they will not sign up.

Therefore, having a minimal number of fields on your forms is key to not overwhelming your visitors.

Marketo, a provider of marketing automation software implements a content-fueled strategy to drive traffic to their site. Although a majority of the content on the site is ungated, some content is gated and requires users to register to their site for access.

The company decided to test various form lengths to determine which yielded highest signup rates.

Here is the first signup page with 5 fields:

Form

Here is the second signup page with 7 fields

Form 7 fields

And lastly, here is the final signup page with 9 fields

Form 9 fields

The results were hardly surprising: the signup form with the lowest number of fields (5) yielded highest conversion rate of 14% compared to the other variants which saw a conversion rate of 12% and 10% respectively.

2. E-commerce stores selling products online

Shopping cart abandonment is a significant roadblock faced by many digital commerce businesses. In fact, according to Baymard Institute, the average cart abandonment rate can reach as high as 68%.

Placing effort into site design, payment handling, and shipping costs only to lose out on almost 70% of sales due to shopping cart abandonment is reason enough for your business to invest time in CRO.

People often abandon a purchase during the checkout process due to:

  • Distractions: Customers may be distracted away to other sites or may unexpectedly leave their computer and forget about the purchase

  • Difficulty of checkout: The site may not provide options such as guest check-out which ease the process of purchasing for the first time customers

  • Surprises: Visitors may become surprised by hidden costs such as shipping that they were unaware of

A CRO campaign that identifies and addresses such bottlenecks can significantly improve conversion rates.

Let’s look at a couple of examples.

Case Study #1: ASOS removes mandatory site registrations, leading to a 50% increase in sales

Asos is an online fashion store which focuses on products mainly for young adults. To bypass abandonment during the signup stage, the company tested a strategy in which they chose to avoid referring to user registration to proceed for purchase.

Here is their original checkout page which specifically mentioned the need for login and signup with the service in order to purchase.

ASOS control

And here is the redesign in which new customers are simply asked to click a button to continue.

ASOS variation
 

Even though customers still had to go through the same process as they would when registering, this little trick increased sales by 50%.

This worked because it removed a major bottleneck in the checkout process - customers want to buy, not get into a relationship with your store.

Case Study #2: Helping customers select watches improves revenue by 66.75%

Product discovery is a major challenge for online shoppers. Finding a product that meets their budget and taste requirements is a big bottleneck to the conversion process.

Watchshop.ro is one of Romania’s leading digital stores for watches and accessories. Because of the large selection, customers struggled to find products within a price range they could afford.

To counter this, Watchshop tested a pop-up filter that helped customers only select products that fit their budgets.

WatchShop pupup

This filter was only shown to a narrow audience segment that had:

  • Visited more than 2 pages on the site.

  • Not used the price filters.

  • Hadn’t seen any other pop-ups before.

As a result of showing this pop-up, Watchshop increased the conversion rate by 74.51%. It also increased revenue by 66.75% and revenue/visitor by 81.52%.  

3. Businesses that want to capture more emails or reach a larger audience

For most businesses - especially media companies - reaching a larger audience through social sharing and email marketing is critical for growth. In fact, with more and more companies taking to content marketing, getting more shares and capturing more emails is critical for the growth of any company, regardless of its industry.

CRO can help with this as well by helping you test sharing buttons, blog post titles and email capture forms.

Case Study #1: Changing button placement increases shares by 52%

Studies have shown that when users view a page, their initial focus is drawn to the left side of a page thus making it the ideal location to place share buttons.

Venture Harbour is an online growth consultancy service. In an attempt to drive traffic to their own service, they decided to test location of share buttons on their blog page.

To do this, they carried out an A/B test compared a floating sidebar on the left to buttons on a static bar above the fold.  

Here is an image of the buttons in their original location placed above the fold of the blog:

Venture Harbour Control

And, here is an image of page with the buttons placed on the left as a floating sidebar

Venture Harbour Variation

This simple adjustment increased Venture Harbour’s share rate by 52%.

Case Study #2: Changing copy and design leads to 279% increase in sign-ups

Wall-Street.ro, the most-read business publication in Romania, wanted to get more people to subscribe to its newsletter. Its original newsletter sign-up form, however, was small, poorly designed and placed in an obscure part of the page.

Wall Street Form

In a bid to increase sign-ups, Wall-Street tested a larger opt-in pop-up that covered the screen and focused on the benefits of signing up.

Wall Street Form popup

This redesigned pop-up increased sign-up rate by a whopping 279%.

Why?

  • The pop-up form copy focuses on the benefits of signing up.

  • The larger pop-up dominates the screen and can’t be missed.

  • The image of the busy professional resonates with Wall-Street.ro’s business audience.

Case Study #3: Removing social share button increases conversions by 12%

Adding social share buttons to every page has become a common practice in nearly every industry today. Not many businesses, however, realize that social share buttons with a low share count serves as negative proof and can harm your conversion rates.

Take Taloon as an example. Taloon is a Finnish based hardware eCommerce portal dealing in plumbing, electrical and gardening material.

Their site had social sharing buttons on their product pages which were meant to serve as social proof. However, in a test in which the company decided to remove the sharing option, the results showed the exact opposite.

Here is their product page with social sharing options:

Taloon control

The user has the option to share via Facebook, Google+, and Pinterest.

And here is the redesign without any social sharing options:

Taloon variation

Removing social buttons increased their conversions by 11.9%.

This was because each product had very low shares, serving as negative social proof. It also distracted users from the main goal of buying the product.

4. B2B SaaS companies

According to research by MarketingSherpa, the average website conversion rate for B2B and SaaS companies is just 7%.

As a B2B marketer, you may feel overburdened and overwhelmed by having to constantly focus your efforts in a wide variety of domains such as lead generation, email marketing, and being active on social media.

Focusing on CRO can help you capture more leads and get more sales without investing heavily in attracting more traffic. For B2B SaaS companies struggling to grow revenues, a well-optimized page is as close as it gets to a “silver bullet”.

Let’s take a look at how some B2B SaaS businesses have used CRO to grow revenues and leads.

Case Study #1: Testing different pop-up banner designs increases conversion rate

Omniconvert, which, as you might know, offers a complete CRO testing and optimization tool, wanted to keep visitors from leaving its site.

To do this, we used a pop-up banner with a striking image and an offer to “create a free account”.

In a bid to maximize conversions from this banner, we tested three different banner designs:

A funny banner with a goldfish:

Gold fish

A banner featuring Omniconvert’s CEO:

CEO

A banner featuring persuasive copy and a “magic” lamp:

 

Lamp

Testing the three banners, the funny banner with the goldfish won over all the others with 8.7% conversion rate, vs. 8.2% and 7.64% for the other two variants.

This case study illustrates the importance of testing every element on your site. It also shows how trying out radical ideas (such as the goldfish image) can sometimes yield surprising results.

A Real World Business that Benefited from CRO

Now that we have seen a variety of ways in how individual elements can be improved by CRO, let’s take a look at a real business which used a CRO framework to reach their conversion goal.

Moz made $1 million from a landing page and a few emails. How? Let’s see!

The first step in making money online is to understand your audience. You have to find out what’s working for your paying customers and what is holding your non-paying customers back.

Moz, one of the largest provider of tools and resources for online marketing did just that. Moz conducted a series of chronologically ordered optimization tests to improve their conversion rate at each step along their funnel.

The whole process took four months and was split into phases.

Phase I: Audience research

Before making any change to your site, you must listen to your current and potential customers.

By surveying both kinds of customers, Moz gathered insights into their needs and wants by asking questions such as:  

  • What did the paying customers like about the service

  • Which Moz tools did non-paying customers find helpful and least helpful

  • What would make non-paying customers sign-up for their service

  • Why had users canceled their subscription

With this information, they redesigned their landing page with a long copy which:

  • Aroused curiosity

  • Explained in-depth what each offering would provide

  • Highlighted features which had been taken for granted

  • Augmented their message via a video

Here is an image comparing the two landing pages:

Original vs Redesigned

Phase II: Using audience research to create new products

Since Moz now had insights into what was holding potential customers back from signing up, they began to create different products at different price points to determine which yielded the most signups.

Moz:

  • Created a special one-month full feature trial of the software for just $1

  • Sent targeted email to users who still did not want to pay $1 to ease their fears

Here is an image of the targeted email which ensured that all visitors would sign up.

SEOMOZ outreach email

Phase III: Plugging leaks in the funnel by providing unexpected value to users

Moz’s goals were not only to have a boost in $1 trial members but to keep these trial users beyond the month at full cost. To do this, Moz transformed itself into the “go to” resource for people who wanted to learn more about its field.

By staying close to their users and sending them educational material to learn the software, they positioned themselves as an expert in the field.

Here in an image of an email informing trial members of these extra perks.

SEOMOZ email 2

Conversion rate optimization does not always mean A/B testing an element to find the best fit.

Elements on a page can interact with each other to drive your business and you must be able to understand these interactions to be able to present them in a way your customers prefer.

Remember, conversion rate optimization is not only about tools and gimmicks but about getting inside the mind of your visitors, understanding them, and aligning your offerings to their interests.

Chapter Summary

  • Conversion rate optimization is the process of designing and testing different versions of a page in order to meet business goals (increase sales, sign-ups, shares, etc.).

  • CRO has three elements: design, copywriting and analytics.

  • CRO has another element - user psychology. This requires an understanding of user behavior and persuasion principles.

  • There are two types of testing available to CROs: A/B testing and multivariate testing.

  • Anyone, regardless of industry or experience, can take advantage of CRO to meet their business goals.

Go back to the Table of Contents or read the next chapter.