What is Conversion Rate Optimization and Why is it Important? – E-commerce

If you run a website, it’s (probably) not just out of the kindness of your heart. Website owners are business owners, and in the end, the goal for most of them is to make money.

There are tons of different ways to make money on the internet, and almost all of them involve having users interact with your site in some specific way. It certainly helps to have a stunning, well-designed website, but a beautiful website isn’t necessarily a profitable one.

Maybe you’re selling a product, and want users to come to your site and buy it. Maybe you’re running a course and want visitors to sign up and provide their contact information. Even if you’re just in it for display ad revenue, you have an interest in keeping users on the page, scrolling, and racking up as many ad impressions as possible.

Whatever your website’s business model is, it involves your site visitors taking a specific action on the site. You can’t control what those users do, but you can work to guide them in the right direction. That process is called Conversion Rate Optimization (CRO).

What Does Conversion Rate Mean?

Whatever that action is that users need to take to earn you money, some of them will do it, and some of them won’t. When a user takes that specific action, it’s called a conversion. The percentage of users who take that action compared to the total number of site visitors is your conversion rate. At its core, conversion rate is a measure of how effectively your site earns income.

Conversion Rate Optimization Definition

HotJar, a company that one could argue has some significant experience in this field, defines conversion rate optimization as “the practice of increasing the percentage of users who perform a desired action on a website.” This is a good technical definition, but it doesn’t address the complexities of the entire CRO process.

In most cases, it’s probably not just one action, but a sequence of actions that make up the entire conversion process.

For an eCommerce store, a full conversion might consist of landing on a page, finding a product, adding it to their cart, and going through the checkout process (which in itself is a multi-step conversion process). All of these different steps are interconnected, and optimizing for one action may negatively affect another.

You might optimize your checkout process to be streamlined and distraction-free, only to realize that your customers are buying fewer products because you are no longer upselling other items during checkout. Sometimes by optimizing around a specific action or process, we’re removing opportunities for users to take other profitable actions on the site.

What are the Steps of Conversion Rate Optimization?

Just like conversions themselves, conversion rate optimization is a process. It is a sequence of steps, rather than one specific action. The process itself will also differ based on what actions need to occur for a conversion to take place. At its core, however, conversion rate optimization is a process of testing, measuring, and incremental improvements.

Data is the key to effectively optimizing conversion rates. If you are not measuring what’s happening on your site and using that data to inform the changes you make to improve your conversion rate, then you are flying blind.

Here are the general steps to an effective conversion rate optimization process:

1. Understand the conversion process – what actions do users need to take to bring them from landing on your site to making the final conversion and earning you money?
2. Make a hypothesis – based on what you know about your conversion process, what could you change on your site to streamline the entire sequence?
3. Test your hypothesis – using a process called split testing (or AB testing), see how a portion of your site traffic responds when implementing your hypothesized change.
4. Measure the results – track how users react to the changed versus unchanged variations, and measure which is more effective at producing the desired action.
5. Repeat the process – once enough users have gone through your split test, you can see whether or not your change improved the conversion rate, and in turn whether or not the change should be applied to the entire site. Whether or not you end up implementing the change, you are ready to make another hypothesis and run another test.

As you can see, this isn’t something you’re going to knock out in a day. Conversion rate optimization is an ongoing process, where small incremental changes add up over time. It’s likely that you can find some small changes that lead to big improvements early on, like low-hanging fruit. As time goes on and your website becomes more and more optimized, it will become more difficult to find changes that have a large effect on conversion rate. This isn’t a bad thing; it means your process is highly efficient.

The important thing is to always strive to improve, to be open to testing new ideas, and to always use data to inform your decisions, rather than your gut instinct. You may be surprised at what changes improve (or hurt) your conversion rate.

If you feel overwhelmed after reading all of this rather than reassured, that’s okay. CRO is a very high-level technical process, and you don’t have to do it all yourself. Here at Watermelon, we’re always striving to improve our client’s conversion rates, and we’d be happy to do the same for you as well.