What is CRO?

What is CRO?


Conversion rate optimisation – which is often abbreviated to CRO – is the task of increasing the percentage of conversions a website generates. Your website conversion is the number of visitors divided by the number of conversions. For most eCommerce brands a conversion is counted when a sale occurs. CRO involves developing experiments to improve site performance, experiments that are then run to assess which ones work best. The best are then rolled out permanently to all users. Good CRO will be data driven and informed by site analytics and performance. While it has data driven experimentation at its core, it is also as much an art as science – combining experience design to come up with experiment ideas as much as data.

Why is CRO important ?

CRO is important because as an eCommerce site you want to maximise the number of people who arrive, and then buy on your site. Retail shops in the real world have for many years worked very hard to make sure that when someone sets foot in a store they increase the chances of them buying. They will optimise the customer experience down to minute details: the hot air that blows from above the door on a cold winter’s day, the sales assistant asking if you need help, the smells, the visual merchandising – everything about the in-store experience is designed to increase the chances you will buy. Online eCommerce is a different channel but the same principles apply. If you create a great frictionless experience then more customers will buy, increasing your conversion rate.

A working example of CRO in action

A great conversion rate will increase sales but also maximise the investment of your marketing efforts. Why? Well let’s look at an example.

Let’s say you invest £700 in Tik Tok ads to drive sales on your site. For that investment you generate 2,000 visitors to your site and your conversion rate is 2%,this means you generated 40 sales for an investment of £700 – so your cost per sale is £17.50.

Now lets see what happens to your cost per sale if you improve your conversion rate.

Imagine you increase conversion rate to 3%. Suddenly you have the same investment, same number of visitors, but more sales. For your £700 investment in Tik Tok ads you now generate 60 sales and your cost per sale goes down to £11.67. You improved your Tik Tok investment by 33% without even touching the Tik Tok ads. That’s the magic of CRO.

What is a good conversion rate for an eCommerce store?

eCommerce stores on average target a conversion rate of 2%-5%. Anything below 2% and you have work to do on your conversion rate. Between 2% and 5% is considered average, and above 5% you are rocking but also unlikely to improve it much beyond that. There are outliers to this e.g Amazon, which has upwards of a 10% conversion rate, but these are generally the accepted benchmarks.

What can affect conversion rate ?

Conversion rate is affected by lots of different variables. Here are some of the variables that affect conversion rate:

  • Page load time. If it is too long consumers will bounce
  • Purchase path. If it is too laborious people will give up
  • Free shipping. Most users expect free shipping on orders over a certain value at the very least
  • Mobile experience. If the site is not optimised for mobile, users will leave the site
  • Design. Where buttons are placed, colours, look and feel.
  • Photography. Poor product photography reduces trust and conversions
  • Call to action. Lack of clarity on next steps increases drop off rate on the path to purchase

What does a CRO expert do

A Conversion rate optimisation expert will analyse your site performance data and then generate a range of hypotheses for what is causing any drop off and then suggest some tests to improve each area. The test priority should generally be ranked in order of effort Vs reward. You want to run the tests that have the least amount of effort (in terms of development or design) Vs the potential reward. The experiments will then be ordered, with specific metrics / KPIs attached to each test so you can run the experiment and see if it improves conversion.

To develop and run the experiment a CRO expert will usually have a suite of tools they use. This may include Hotjar (to track what a user focuses visually on when visiting a site) or VWO, which enables eCommerce stores to test different variations of the home page on given users, to see which version improves conversion.

Once the experiments have been set up and run for a period of time the CRO expert will assess which ones have worked (vs the existing set up) and then make recommendations on which tests to roll out.

The roll out of successful tests will usually involve close collaboration between the CRO expert and the site dev team to make sure they are implemented correctly.

How much does CRO cost ?

Hiring a CRO expert should pay for itself. If it doesn’t look like it will return an investment then you shouldn’t do it. To figure out whether it’s worthwhile investing in CRO you can do some basic maths based on your website traffic, current conversion, and average order value.

If your website traffic only generates 1,000 visitors, with a conversion rate of 1% and average order value of £20 then if you double conversion to 2% you are only going to add £200 of monthly revenue through conversion rate optimisation. So if your CRO expert costs more than that then it isn’t worth doing.

If you are a large website though with a £100,000, 1% conversion rate, and £20 average order value then you double it to 2%, you increase revenue by £20,000. Almost certainly worth doing.

In conclusion, you should look at the potential revenue opportunity given your current traffic, conversion and average order value, to help you decide whether you should hire a CRO expert.

Stefan Bardega is Co-Founder at Traktion.ai in London, helping businesses hire the best marketing talent. As well as 15 years’ experience working for clients including Square, Next, Apple, Microsoft, Sonos, Intel and Sky; Stefan has worked in an advisory capacity for Facebook, Google and IAB, and has been featured in Google Think With Innovators, Business Insider, Campaign, Yahoo! and the BBC.

Connect with Stefan on LinkedIn or via Traktion.ai.